American Core Durable Goods Orders US weekly Unemployment Claims and New Home Sales are the major events on the verge of the Holiday Season. Here is an outlook on the market movers this week.
Last week FOMC indicated that improvement in economic conditions will not deter them from infusing the proposed $600 billion of bonds through June into the financial system so long as unemployment remains high. Will this strong-minded view to pump the stimulus help US economy or further destabilize it?
- Australian Monetary Policy Meeting Minutes: Tuesday, 0:30. The Australian Bankers’ Association claimed in November’s Monetary Policy meeting that the cost of banks’ funding has increased beyond the official cash rate. Members noted that there is a possibility that banks would increase interest rates on loans by more than any move in the cash rate.
- Japan‘s Rate Decision: Tuesday. In November, Bank of Japan decided to leave its lenient monetary policy unchanged at a range of 0.0%-0.1% and decided to purchase trust funds under its new Y5 trillion asset-purchase program. BOJ intends buying a wider range of securities than previous programs, including more speculative BBB-rated corporate bonds. The rate will probably remain 0.10%.
- Canadian Core CPI: Tuesday, 12:00. Core consumer price inflation in Canada rose more-than-expected in October rising 0.4% following 0.2% rise in September while expecting 0.1% rise. CPI, including volatile food and energy costs also rose more-than-expected, increasing by 0.4% in October, after rising by 0.2% in September. Analysts had expected CPI to rise by 0.2% in October. Core CPI is expected 0.3% rise and CPI 0.4% rise.
- Britain‘s MPC Meeting Minutes: Wednesday, 9:30. Bank of England policy stayed intact after the nine-strong Monetary Policy Committee (MPC) repeated the three-way split in the vote occurred in October where the majority voted to maintain rates. Despite the unchanged policy UK economy has grown better than expected since the October meeting, expanding 0.8% in the third quarter which may indicate changes in the next meeting.
- US Existing Home Sales: Wednesday, 15:00. Existing home sales declined by 2.2% in October reaching 4.43 million while expecting a 1.1% decline. This indicates a recession in the housing market where quantitative easing will only provide limited support due to poor credit quality for a significant subset of buyers and the stubbornly high unemployment rate. A rise to 4.72 million is predicted.
- New Zealand GDP: Wednesday, 21:45. GDP for April to June grew by 0.2% well below market predictions of around 0.5 percent. The Reserve Bank forecasted 0.9% growth for the quarter in its recent Monetary Policy Statement Indicating that recovery is slow. A moderate rose of 0.1% is expected now.
- Canadian GDP: Thursday 13:30. Canada’s gross domestic product declined 0.1% in September after rising 0.3% in August contrary to 0.1% rise expected by analysts. The main reason for this drop is a decline in exports and lower investment in housing. The domestic economy is improving but export is being hurt by the strong dollar and the weak recovery in the U.S. GDP is forecasted to climb by 0.3% this time.
- American Core Durable Goods Orders: Thursday 13:30. U.S. core durable goods orders plunged unexpectedly by 2.7% following 1.3% gain in September contrary to analysts expectations of 0.4% rise. Durable goods orders also plunged to a seasonally adjusted 3.4% in October, after rising by 5.0% in September. Analysts expected 0.3% decline. Durable goods are expensive items designed to last at least three years, although the data is highly volatile, analysts see a trend in orders as a valuable leading economic indicator. Following the decline, Core Durable Goods Orders are inspected to rise by 1.7%.
- US Unemployment Claims: Thursday 13:30. U.S. jobless claims shows signs of a pick up in the labor market with a better than expected decrease of 3,000 in the number of unemployed to a seasonally adjusted 420,000. However economists claim the decline is still not sufficient to reduce the 9.8% unemployment rate. New unemployment claims is predicted a small rise to 421K this week.
- US New Home Sales: Thursday, 15:00. US new home sales dropped by 8.1% in October reaching a disappointing 283,000 from the revised September rate of 308,000. New home sales are again very close to record low levels, confirming that the US housing market remains extremely weak as unemployment remains high, despite recent signs of improvement, and credit is still tight. “Improvement in job market conditions, and attractive affordability conditions, sales should steadily improve to healthier levels of above 5 million by spring of next year” said Lawrence Yun, NAR chief economist. An improvement in Home Sales is predicted with 301,000 new home sales.
* All times are GMT.
- For EUR/USD, check out the Euro/Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Australian dollar (Aussie), check out the AUD forecast.
- For the New Zealand dollar (kiwi), read the NZD forecast.
- For USD/CAD (loonie), check out the Canadian dollar forecast.
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