Forex Market Outlook For The Week December 3 – 7, 2018

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The greenback ended November on a mixed note. The EU Summit accorded approval for the Brexit deal as was anticipated. However, it is not sure as of now whether the UK government would be able to get it passed in the parliament. Meanwhile, indications that Italy is ready for a compromise provided support to the euro.

In the upcoming week, the first trading week of this year’s last month, the key data scheduled to be released include the full build-up to the most important Non-Farm Payrolls and unemployment numbers, among others. Here is an outlook on some important releases from around the world.

#1: U.S. ISM Manufacturing PMI (12/03/2018 Monday 15:00 GMT)

forex market outlookIn the U.S., the manufacturing PMI, reported by the Institute for Supply Management, dropped to the 57.7 level in October from the 59.8 level in the previous month. The reading for the month also came in below analysts’ expectations of the 59.0 level. The reading points towards a slowdown in growth rate in factory activity in as many as six months after touching the highest level in August since 2004. Production, new orders, and employment eased, while price pressures continued.

#2: Australia RBA Rate Statement (12/04/2018 Tuesday 03:30 GMT)

Released on the first Tuesday of every month, the RBA uses the Rate Statement as a tool to communicate with the investors as regards monetary policy. It provides the outcome of the meeting on deciding the interest rates and a commentary on the economic conditions that impacted the members’ decision. More importantly, the Statement discusses the economic outlook and provides clues on future monetary policy decisions.

#3: U.K. BoE Governor Mark Carney Speaks (12/04/2018 Tuesday 09:15 GMT)

Mark Carney, Governor of the Bank of England, three Deputy Governors are scheduled to testify before the Treasury Select Committee in London about the Brexit Withdrawal Agreement. Markets often turn volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates.

#4: Australia GDP (12/05/2018 Wednesday 00:30 GMT)

Australia’s GDP grew 0.9 percent in the second quarter of this year. The reading for the quarter came in above analysts’ expectations for a growth of 0.7 percent. The reading for the previous quarter was revised upward to represent a growth rate of 1.1 percent. The growth was supported by stronger foreign trade and domestic demand while fixed investment remained flat. For the year to the June quarter, the economy expanded 3.4 percent, following the 3.2 percent growth in the prior period. The reading for the period beat analysts’ expectations for a 2.8 percent expansion. This is the fastest yearly growth rate since the third quarter of 2012. Forecast for the third quarter: a growth rate of 0.6 percent is expected

#5: Euro Area ECB President Mario Draghi Speaks (12/05/2018 Wednesday 08:30 GMT)

Mario Draghi, President of the European Central Bank, is scheduled to deliver the opening remarks in Frankfurt at the bank supervision organized by the ECB. Markets often remain volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates in the future.

#6: U.S. Federal Reserve Chair Jerome Powell Testifies (12/05/2018 Wednesday 13:15 GMT)

Jerome Powell, Federal Reserve Chair, is scheduled to testify in Washington DC on the economic outlook before the Joint Economic Committee of Congress. The text of his testimony will be released at the listed time. The testimony will be delivered 120 minutes later.

#7: Canada BoC Rate Statement (12/05/2018 Wednesday 15:00 GMT)

Released eight times in a year, the Bank of Canada uses the Rate Statement as a tool for communicating with traders and investors as regards the monetary policy. The Statement provides the outcome of the members’ decision on setting interest rates and a commentary on the economic situations that impacted their decision. More importantly, the Statement projects the economic outlook and provides clues on future decisions.

#8: Canada Overnight Rate (12/05/2018 Wednesday 15:00 GMT)

The Bank of Canada decided to raise the overnight rate by 25 basis points to 1.75 percent during the meeting held on October 24, 2018, from the 1.5 percent level. This was widely expected by the analysts. This was the third increase in this year and the overnight rate touched the highest level since December 2008. According to the policymakers, more increases are needed to maintain inflation at the target level of 2.0 percent. The Canadian economy remains strong and it is expected that the new USMCA Agreement would help to reduce economic uncertainty. The central bank also noted that the households in Canada are getting used to higher costs of borrowing. The corresponding Bank and deposit rates are 2.0 percent and 1.50 percent, respectively. Forecast for December 2018: 1.75 percent

#9: U.S. ISM Non-Manufacturing PMI (12/05/2018 Wednesday 15:00 GMT)

In the U.S., the ISM Non-Manufacturing PMI declined to the 60.3 level in October from the 61.6 level in September. The reading for October, however, beat analysts’ expectations of the 59.3 level. New orders, production, and employment slowed down even though the remained strong, in general, in the services industry. However, the concerns about capacity, tariffs, and logistics continue despite the fact that the respondents are positive as regards the current business conditions. Forecast for November 2018: 59.2

#10: Australia Retail Sales (12/06/2018 Thursday 00:30 GMT)

In Australia, retail trade increased by 0.2 percent on a month-over-month basis in September, following the 0.3 percent increase in the prior month. However, the reading for September missed analysts’ expectations for a 0.3 percent increase. The food retailing sector led the rises and was followed by restaurants, cafés, and takeaways. On the other hand, footwear, clothing, and personal accessories sales fell. Sales remained unchanged in household goods, department stores, other retailing sectors. Forecast for October 2018: an increase of 0.3 percent is expected

#11: OPEC Meeting (12/06/2018 All Day)

The Organization of the Petroleum Exporting Countries (OPEC) is scheduled to meet in Vienna on December 6 amid worries as regards the U.S.-China trade war, a glut in supply, and a slowdown in demand, according to experts in the field. It is expected that the OPEC will manage to bring about stability in the oil market by using the appropriate language. They are expected to indicate a production cut in the range of 1 million to 1.5 million barrels to stabilize the market. The oversupply situation is attributable largely to the light crude production in the U.S. and Saudi Arabia’s oil production increase to all-time high levels in November as reported by Reuters.

#12: Canada Trade Balance (12/06/2018 Thursday 13:30 GMT)

Canada’s trade deficit narrowed to C$ 0.42 billion in the month of September from the revised deficit of C$ 0.55 billion reported for the prior month. Analysts had expected a trade surplus of C$ 0.15 billion. Exports declined 0.2 percent because of consumer goods, while imports fell 0.4 percent pulled down by aircraft as well as other transportation equipment and energy products and parts.

#13: Canada BoC Governor Stephen Poloz Speaks (12/06/2018 Thursday 13:35 GMT)

Stephen Poloz, Governor of the Bank of Canada, is scheduled to speak on the economic outlook, risks related to the financial system in Canada, and the interest rate decision in December in Toronto at the Breakfast Seminar organized by the Chartered Financial Analyst Society. The audience is expected to ask questions. The text of his speech will be released at the listed time. He will deliver the speech 15 minutes later.

#14: U.S. Federal Reserve Chair Jerome Powell Speaks (12/06/2018 Thursday 23:45 GMT)

Jerome Powell, Federal Reserve Chair, is scheduled to speak on the economy and rural America in Washington DC at the annual event of the Housing Assistance Council. Markets often remain volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates in the future.

#15: Canada Employment Change (12/07/2018 Friday 13:30 GMT)

In Canada, employment rose by 11,200 in October, following the 63,300 job additions in the prior month. The reading for the month came in above analysts’ expectations for an employment increase of 10,000. Full-time jobs jumped, but part-time jobs declined. Employment increased a little in Saskatchewan, but there was no change in other provinces. More people were hired by businesses, building and other support service providers, wholesale and retail traders, and social assistance and health care providers. In contrast, fewer workers were hired in other services, finance, insurance, rental, real estate, leasing, and natural resources sectors. There was no change in the number of people employed by the private and self-employed sectors. Further, there were only a fewer number of public sector employees.

#16: Canada Unemployment Rate (12/07/2018 Friday 13:30 GMT)

In Canada, the unemployment rate dropped to the 5.8 percent level in October form the 5.9 percent level in the prior month. Analysts had expected the jobless rate to remain steady at the 5.9 percent level. This is by far the lowest unemployment rate since July mainly because of an 18,200 decline in the labor force.

#17: U.S. Average Hourly Earnings (12/07/2018 Friday 13:30 GMT)

In the U.S., the all employees’ average hourly earnings on private non-farm payrolls increased 0.2 percent on a month-over-month basis in October, following the 0.3 percent increase in the prior month. The reading for the month matched with analysts’ expectations. The average hourly earnings rose by 3.1 percent over the year. This is the biggest increase ever since 2009. It is also higher than the 2.8 percent rise reported in September. Forecast for November 2018: an increase of 0.3 percent is expected

#18: U.S. Non-Farm Employment Change (12/07/2018 Friday 13:30 GMT)

In the U.S., non-farm payrolls rose by 250,000 in October after the job additions for the previous month was revised downward to 118,000. The reading for the month came in well above analysts’ expectations of 190,000 job additions. More workers were hired by health care, manufacturing, construction, and transportation and warehousing sectors. Forecast for November 2018: 200,000 workers are expected to be hired

#19: U.S. Unemployment Rate (12/07/2018 Friday 13:30 GMT)

In the U.S., the unemployment rate remained unchanged at the 3.7 percent level in October. In the month of September, the Bureau of Labor Statistics had reported the 49-year low level of 3.7 percent. The reading for October was in line with analysts’ expectations. The number of jobless people rose by 111,000 to 6.08 million and employment increased by 600,000 to 156.56 million.

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