The greenback staged a recovery over the week following Thanksgiving holidays on the back of positive economic data releases, imminent tax cuts, upbeat Fed statements, even though there was a major development as far as Trump’s troubles are concerned.
The dollar gained against other currencies after the highest new home sales data in a decade was announced. The dollar gained further ground because of a big increase in consumer confidence and a GDP upgrade to 3.3 percent. Fed Chair Janet Yellen’s upbeat comments, Jerome Powell’s message that he will largely continue with the Fed’s current policies, and imminent tax cuts further supported the U.S. dollar.
However, Friday’s news that former NSA chief Flynn will testify against Trump spoiled the party a little bit. The pound managed to stand out and defy the dollar on the back of an optimism related to Brexit. However, the euro suffered a setback because of lower inflation data and the decision by the OPEC to extend cuts in oil production cuts. This has already been priced in.
The key releases scheduled for the upcoming week include the non-farm payrolls and rate decisions from Canada and Australia. Here is an outlook on some of the major releases for the coming week:
#1: U.K. Construction PMI (12/04/2017 Monday 9:30 GMT)
In the U.K., the IHS Markit/CIPS Construction PMI for October rose to 50.8 from September’s reading of 48.1, which was the lowest in 15 months. Growth was driven largely by house building. However, the business confidence for the next one year fell to the lowest level since December 2012 because of concerns about UK’s economic prospects and the non-availability of new projects. Forecast for November: 51.2
#2: Reserve Bank of New Zealand Governor Grant Spencer Speaks (12/05/2017 Tuesday 00:15 GMT)
Grant Spencer, Governor of the Reserve Bank of New Zealand, is scheduled to speak in Wellington on the subject “Low inflation and its implications for monetary policy”. Markets may remain volatile during his speeches. This is because traders look for clues on interest rates.
#3: Australia Current Account (12/05/2017 Tuesday 00:30 GMT)
Australia’s current account deficit rose to A$9.562 billion in the second quarter from that for the first quarter which was revised upward to A$4.754 billion. Analysts had expected the deficit for the second quarter to come in at A$8.1 billion. This is the largest deficit in as many as three quarters. Forecast for the third quarter: deficit of A$8.8 billion
#4: Australia Retail Sales (12/05/2017 Tuesday 00:30 GMT)
In Australia, retail sales remained at the same level in September after the reading for the prior month was revised downward to a decline of o.5 percent. Analysts had expected retail sales to increase by 0.4 percent. Forecast for October: an increase of 0.3 percent
#5: #5: Australia Cash Rate (12/05/2017 Tuesday 3:30 GMT)
The Reserve Bank of Australia decided to leave the cash rate at the record low level of 1.5 percent during the meeting in November as was widely expected. Policymakers noted that the Australian economy is likely to grow at the annual rate of 3.0 percent during the coming years because of an improvement in the outlook for non-mining investments. However, they added that the inflation would improve gradually as the economy gains strength. Forecast for December meeting: 1.5 percent
#6: Reserve Bank of Australia Rate Statement (12/05/2017 Tuesday 3:30 GMT)
The rate statement of the Reserve Bank of Australia is the monetary policy Board’s tool for communicating with investors as regards the monetary policy. The statement contains details about the monetary board’s recent decision on cash rate and a commentary on the economic conditions that impacted the decision. More importantly, it provides the economic outlook and clues on future decisions.
#7: U.K. Services PMI (12/05/2017 Tuesday 9:30 GMT)
In October, the UK’s IHS Markit/CIPS Services PMI rose to 55.6 from September’s 53.6 level. The reading for October beat analysts’ expectation of 53.3. This is the fastest services growth in as many as six months because of a rebound in new orders from the 13-month low reported in September, improved domestic demand, and successful launch of new products. Input costs rose because of higher food prices, transport costs, energy bills, and staff salaries. Forecast for November: 55.2
#8: Canada Trade Balance (12/05/2017 Tuesday 13:30 GMT)
Canada’s trade deficit for September was C$3.17 billion. In fact, it was same as that for August (C$3.18 billion). The trade deficit for September came in above analysts’ expectation for a deficit of C$3.0 billion. Exports declined by 0.3 percent because of lower light truck and passenger car exports. Imports also decreased by 0.3 percent because of lower prices. Forecast for October: deficit of C$2.3 billion
#9: U.S. ISM Non-Manufacturing PMI (12/05/2017 Tuesday 15:00 GMT)
In the U.S., the ISM Non-Manufacturing PMI for the month of October came in at 60.1 from the reading of 59.8 recorded in September. The reading for October beat the market expectation of 58.5. This is a new high for the index since August 2005. Production, inventories, and employment continued to increase and the business conditions outlook remained positive. The index crossed the 60 level for the fourth time in the whole series. Forecast for November: 59.2
#10: Australia GDP (12/06/2017 Wednesday 00:30 GMT)
Australia’s GDP grew 0.8 percent in the second quarter, which was much stronger than the 0.3 percent growth recorded in the March quarter. The reading for the June quarter was in line with the analysts’ estimate. The economy grew because of net exports and strong domestic demand. Forecast for third quarter: 0.7 percent growth
#11: U.S. ADP Non-Farm Employment Change (12/06/2017 Wednesday 13:15 GMT)
In the U.S., private businesses hired 235,000 workers in October after the reading for the previous month was revised upward to 110,000 job addition. The reading for October beat analysts’ expectation of 200,000 job additions. This is the highest hiring since March. Forecast for November: 191,000 job additions
#12: Bank of Canada Rate Statement (12/06/2017 Wednesday 15:00 GMT)
The Canadian central bank uses the rate statement as a primary tool to communicate to investors as regards the monetary policy. The statement consists of the outcome of the monetary policy committee members’ decision on the Overnight rate and commentary on the economic conditions that impacted their decision. More importantly, the statement discusses the economic outlook and provides clues on future decisions.
#13: Canada Overnight Rate (12/06/2017 Wednesday 15:00 GMT)
The Bank of Canada decided to hold the benchmark overnight rate steady at 1.0 percent during the meeting held on October 25 after increasing it during the previous meeting. The Canadian central said that the current decision is appropriate. Further, the policymakers noted that the inflation is likely to touch the central bank’s midpoint goal of 2.0 percent by the second half of next year. Forecast for December: 1.0 percent
#14: Crude Oil Inventories (12/06/2017 Wednesday 15:30 GMT)
In the U.S., crude oil stocks dropped by 3.429 million barrels during the week that ended on November 24 after recording a decline of 1.855 million barrels in the prior period. Analysts had expected the stocks to decline 2.301 million barrels. However, gasoline stocks rose by 3.672 million barrels, following the 0.044 million barrel increase in the prior period. The increase in gasoline stocks was much higher than analysts’ expectation of 1.199 million barrels socks increase. This the biggest increase in gasoline stocks since January.
#15: Australia Trade Balance (12/07/2017 Thursday 00:30 GMT)
Australia’s trade surplus zoomed to A$1.75 billion in September after the reading for the prior month was revised downward to A$0.87 billion. Analysts expected a surplus of A$1.2 billion. This is the biggest trade surplus since May. Exports rose by 3.0 percent to A$32.96 billion, but imports remained flat at A$31.21 billion. Forecast for October: surplus of A$1.41 billion
#16: U.S. Unemployment Claims (12/07/2017 Thursday 13:30 GMT)
The number of American people filing for jobless benefits dropped by 2,000 to 238,000 during the week that ended on November 25 after the reading for the previous week was to 240,000. The reading for the current week came in below analysts’ expectation of 240,000. With this, the initial jobless claims have declined for two weeks in a row. Meanwhile, the claims taking procedures continued to be affected in the Virgin Islands. Forecast for the next period: 241,000
#17: European Central Bank President Mario Draghi Speaks (12/07/2017 Thursday 16:00 GMT)
Mario Draghi, the President of the European Central Bank, is scheduled to attend a press conference in Frankfurt at the Bank for International Settlements. Markets often remain volatile during his speeches because traders look for interest rate clues.
#18: U.K. Manufacturing Production (12/08/2017 Friday 09:30 GMT)
In the U.K., manufacturing production rose by 2.7 percent on a year-on-year basis in September after registering a 2.8 percent increase in August. The reading for September came in above analysts’ expectations of 2.4 percent gain. The increase in manufacturing production was driven by transport equipment. On a month-on-month basis, manufacturing production increased by 0.7 percent, which is the biggest increase this year as production of equipment and machinery surged 3.2 percent following a flat growth in August. Forecast for October: 0.1 percent decline
#19: U.S. Average Hourly Earnings (12/08/2017 Friday 13:30 GMT)
In the U.S., the average hourly earnings, the amount the businesses pay for labor, excluding agricultural sector, remained flat in October after increasing 0.5 percent in the previous month. Analysts had expected a growth of 0.2 percent on a month-on-month basis. Forecast for November: 0.3 percent increase
#20: U.S. Non-Farm Employment Change (12/08/2017 Friday 13:30 GMT)
In the U.S., the non-farm payrolls increased by 261,000 in October against analysts’ expectation for an increase of 310,000. Forecast for November: 200,000 increase in private jobs
#21: U.S. Unemployment Rate (12/08/2017 Friday 13:30 GMT)
In the U.S., the unemployment rate dropped to 4.1 percent in October following a decline in the number of jobless people by 281,000 to 6.5 million. This is the lowest unemployment rate since December 2000. Forecast for November: 4.1 percent