Weekly Forex Market Outlook for November 28, 29, 30 and December 1, 2, 2016
The US dollar touched new highs against the yen and the euro last week, but profit taking prior to Thanksgiving was witnessed towards the end of the week. Durable goods orders for the month of October surged 4.8 percent on stronger sales. Orders have risen for four of the last five months. This indicated that corporate investments are growing. The durable goods orders came in much above the analysts’ expectation of 1.2 percent increase. The fact that there was an increase in core orders – 1 percent gain following 0.2 percent increase in the month before – was also very encouraging. These positive data releases raised hopes that business investments are finally rebounding and is likely to improve.
Economic data releases that are likely to move the market in the coming week includes the US GDP data, Canadian GDP data, US consumer confidence and the US Non-Farm Payrolls data.
#1: ECB President Mario Draghi Speaks (11/28/2016 Monday 14:00 GMT)
President of the European Central Bank Mario Draghi is scheduled to testify before the Economic Committee of the European Parliament in Brussels on economic/monetary developments after the Brexit vote. Recently, Draghi noted that the €1.7 trillion bond-purchase plan will be extended by the ECB in December and warned that the economic weakness in the Eurozone remains clouded because of downside risks. He also noted that the Eurozone is heavily dependent on the stimulus being provided by the ECB.
#2: BOC Governor Stephen Poloz Speaks (11/29/2016 Tuesday 1:00 GMT)
Stephen Poloz, governor of Bank of Canada, is scheduled to deliver a speech on the role of services in Canadian economy in Toronto at the C.D. Howe Institute Annual Benefactors’ Lecture. The text of his speech will be released 15 minutes prior to the speech. Further, a press conference will be held 60 minutes after delivering the speech. Markets remain volatile during his speech as traders try to decipher interest rate cues.
#3: US Preliminary GDP (11/29/2016 Tuesday 13:30 GMT)
The US economy rebounded in the third quarter after three unimpressive quarters. In the third quarter, the economy advanced 2.9 percent as per the initial report, which was slightly better than what the analysts expected. It is expected that in the second release, the growth figure is likely to be upgraded to and annualized 3 percent growth.
#4: US CB Consumer Confidence (11/29/2016 Tuesday 15:00 GMT)
In October, CB consumer confidence index dropped to 98.6 from 103.5 in September. This suggested that the households were remaining cautious about weaker economic growth and uncertainty related to the US presidential election. Economists expected the index to edge down to a reading of 101.5 only. However, the analysts feel that this decline is temporary and it is just a reflection of the nervousness regarding the presidential election. Nevertheless, they have continued to spend supporting growth. For the month of November, analysts forecast an increase to 101.3.
#5: New Zealand Central Bank Financial Stability Report (11/29/2016 Tuesday 20:00 GMT)
Released twice a year, the report provides insight into the central bank’s view as regards inflation, growth and other economic factors that are likely to affect interest rate decisions in the future. If the report reflects a more hawkish than expected tone, it is good for the New Zealand dollar. The release is often followed by a media conference that is held 120 minutes after the release. The media conference is webcasted from the central bank’s website. Markets may remain volatile during the period as traders look for interest rate clues.
#6: New Zealand Central Bank Governor Wheeler Speaks (11/30/2016 Wednesday 00:10 GMT)
Graeme Wheeler, governor off the Reserve Bank of New Zealand is scheduled to testify before the Parliament Select Committee in Wellington about the Financial Stability Report. Markets often remain volatile during his speech.
#7: UK Bank Stress Test Results
The stress test involves applying synthetic market conditions to large banks’ balance sheets in order to determine their capital reserve adequacy and stability.
#8: OPEC Meetings
The meeting of the members of the Organization of Petroleum Exporting Countries held twice a year usually in Vienna, is attended by representatives from thirteen oil-rich nations. A host of issues related to energy markets are discussed and agreement as to how much oil is to be produced is arrived at. Traders look for oil price clues.
#9: ECB President Mario Draghi Speaks (11/30/2016 Wednesday 12:30 GMT)
European Central Bank president Mario Draghi is scheduled to speak at the University of Deusto Business School in Madrid about the future of Europe. Markets may remain volatile during his speech.
#10: US ADP Non-Farm Employment Change (11/30/2016 Wednesday 13:15 GMT)
The ADP employment report for October was disappointing as only 147,000 new positions were added. This is the weakest figure after April 2013 following a drop in jobs in the construction and education sectors. The overall trend is that the job gains is weakening. Though the jobs growth remains strong, the pace of growth is slowing down. The ADP report for November is expected to reveal a jobs gain of 161,000.
#11: Canada GDP (11/30/2016 Wednesday 13:30 GMT)
The Canadian GDP advanced at its slowest pace in as many as three months. GDP expanded 0.2 percent in August, 0.4 percent in July and 0.6 percent in June. On year over year basis, the Canadian GDP grew 1.3 percent in August 2016. While the manufacturing industries that mainly contribute to the country’s GDP grew by 0.7 percent from July, but fell 0.9 percent from a year ago, the service sector was unchanged in August. Forecast for September: 0.1 percent GDP growth.
#12: US Crude Oil Inventories (11/29/2016 Wednesday 15:30 GMT)
Crude oil stocks in the US declined during the week that ended on November 18 after registering an increase in inventory for the previous three weeks as imports declined and refineries increased output. Crude oil stocks fell by 1.3 million barrels following an increase of 671,000 barrels in the previous reporting period.
#13: Australia Private Capital Expenditure (12/01/2016 Thursday 00:30 GMT)
The Australian Bureau of Statistics releases this report on a quarterly basis and about 55 days after the end of the quarter. The report indicates a change in new capital expenditures (the total value on inflation-adjusted basis) incurred by private businesses. If the actual figure comes in better than the forecast, the Australian dollar gains. Traders care because it is a leading indicator of the country’s economic health.
#14: China Manufacturing PMI (12/01/2016 Thursday 1:00 GMT)
The NBS Manufacturing PMI rose to 51.2 in the month of October, from 50.4 in the previous month, beating market expectations. The index reading for October the highest since July 2014. Output and new orders grew at an increased pace and business expectations improved slightly. However, new export orders declined. Forecast for November is 51.0.
#15: China Caixin Manufacturing PMI (12/01/2016 Thursday 1:45 GMT)
The Caixin Manufacturing PMI also rose to 51.2 in the month of October from 50.1 in the previous month. The reading came inn better than market expectation of 50.2. With the increase in October, the index has risen for four straight months. Further, the reading has been the highest since July 2014. Output increased the most since March 2011 and new orders rebounded. Forecast for November is 50.9.
#16: UK Manufacturing PMI (12/01/2016 Thursday 9:30 GMT)
On a seasonally adjusted basis, the Markit/CIPS Manufacturing PMI dropped to 54.3 in the month of October from 55.5 in the previous month. The reading came in slightly below the market expectations for a reading of 54.5. This was attributed to the easing of growth of new export orders and increase in input costs to the highest level in 69 months because of weaker pound. Forecast for November is 54.4.
#17: US Unemployment Claims (12/01/2016 Thursday 13:30)
The number of people in the US applying for unemployment benefits increased marginally from the 43-year low recorded last week. However, it remained positive, but reflected a tightening in the labor market. The new claims rose by18,000 to 251,000 on a seasonally adjusted basis against economists’ expectation for a reading of 241,000. Claims have now remained below the 300,000 mark for 90 weeks in a row. Forecast for the next reporting period is expected to be 252,000.
#18: US ISM Manufacturing PMI (12/01/2016 Thursday 15:00 GMT)
The ISM manufacturing index rose in October to 51.9 from 51.5 in September. However, the reading came in a little lower than the analysts’ expectation of 51.7. Though the index representing production rose to 54.6 from 52.8 in the previous month, orders index fell to 52.1 from 55.1. However, the employment index registered growth to 52.9 from 49.7. The ISM manufacturing PMI is expected to strengthen to 52.1 in the month of November.
#19: Australia Retail Sales (12/02/2016 Friday 00:30 GMT)
Retail sales rose 0.6 percent on month-on-month basis (highest since October last year) in the month of September after the reading for August was revised upward to a gain of 0.5 percent. The reading for September, however, beat market estimates that retail sales will increase by 0.4 percent. Forecast for October is an increase of 0.3 percent.
#20: UK Construction PMI (12/02/2016 Friday 9:30 GMT)
In October, the Markit/CIPS Construction PMI edged up to 52.6 from 52.3 in the previous month. The reading beat market expectation of 51.8. It pointed out that the expansion in construction activity since March is strong. Residential work growth contributed a great deal to the strength in the construction sector. Forecast for November is 52.3.
#21: Canada Employment Change/Unemployment Rate (12/02/2016 Friday 13:30 GMT)
In Canada, 44,000 new jobs were added in the employment market in the month of October. Analysts expected that the overall job loss would be 10,000 only. The increase in number of jobs available in the part-time employment sector offset the loss of jobs in the full-time employment segment. The reading, however, confirmed that Canada is struggling to make available quality, high-paying jobs.
In October, the unemployment rate was unchanged at 7.0 percent with more people entering the labor market for finding a job.
It is expected that the Canadian employment market will add only 100 jobs in the month of November and that the unemployment rate would remain at 7 percent.
#22: US Average Hourly Earnings (12/02/2016 Friday 13:30 GMT)
In the US, average hourly earnings rose by 0.4 percent or 10 cents in the month of October from the previous month. The figure for September was revised upward to 0.3 percent. Forecast for November is an increase of 0.2 percent.
#23: US Non-Farm Employment Change/Unemployment Rate (12/02/2016 Friday 13:30 GMT)
The non-farm employment report for the month of October showed a smaller than expected increase in the number of jobs. About 161,000 jobs were added in October. However, the unemployment rate remained steady at 4.9 percent. According to analysts, the conditions are just right for the Fed to increase interest rates in December.
It is expected that 165,000 new jobs will be added in the month of November. Further, the unemployment rate is expected to remain steady at 4.9 percent.