The US dollar managed to recover in the week after Thanksgiving on positive data, upbeat Fed statements, imminent tax cuts, and despite a major development in Trump’s troubles. The Non-Farm Payrolls is the key event and we also have rate decisions from Australia and Canada Here are the highlights for the upcoming week.
The best level of new home sales in a decade sent the dollar higher. It then got a boost by a big rise in consumer confidence and an upgrade of GDP to 3.3%. Adding in some upbeat comments from Yellen, a message of continuation from Powell and imminent tax cuts, and the dollar certainly had reasons to rise. The party was partially ruined on Friday as news emerged that former NSA Flynn will testify against Trump. The pound stood out and defied the dollar thanks to optimism for a Brexit breakthrough. The euro suffered lower inflation and the OPEC meeting resulted in an extension of oil production cuts, but this was priced in.Updates:
- Australian rate decision: Tuesday, 3:30. The Reserve Bank of Australia has not changed its interest rate since last cutting it to 1.50% in August 2016. This is the last decision of the year and the RBA does not meet in January. They are not expected to make any change now. However, lower inflation and the recent stabilization of the A$ could trigger some kind of a dovish hint from the team led by Phillip Lowe and his colleagues.
- ISM Non-Manufacturing PMI: Tuesday, 15:00. The services sector report is part of the buildup towards the Non-Farm Payrolls on Friday. In October, the score hit 60.1, a very high level which reflects robust growth. The figure for November is projected to be slightly lower: 59.2 points.
- Australian GDP: Wednesday, 00:30. The land down under publishes its GDP report relatively late: over two months after the quarter ends. Nevertheless, they do it only once, and with no revisions. giving it a bigger impact. The economy expanded by 0.8% in Q2 2017, up from only 0.3% in Q1. We may get a slower growth rate for Q3: 0.7% according to the projections.
- ADP Non-Farm Payrolls: Wednesday, 13:15. ADP’s private sector jobs report is not always correlated with the official BLS report on Friday, but it always moves markets. The firm reported a gain of 235K jobs in October, better than expected and in line with the private sector section of the official NFP. A more moderate gain of 191K jobs is estimated.
- Canadian rate decision: Wednesday, 15:00. The Bank of Canada signaled a long pause after raising rates twice in a row. Stephen Poloz and his colleagues are not expected to change course this time. In the previous meeting, they were quite dovish, expressing worries about a slowdown. Since then, the economic figures have not been that convincing. Will they be even more dovish? Markets still expect the BOC to hike in 2018, but nothing is certain.
- Mario Draghi talks Thursday, 16:00. The President of the ECB will hold a press conference in front of the Bank of International Settlements. This comes one week before the central bank makes its decision and also publishes new forecasts. Draghi may react to the upbeat growth figures, but also to the latest disappointment in inflation developments. He usually moves the euro.
- Japanese GDP: Thursday, 23:50. Revisions to Japan’s GDP can be quite significant. The initial report for Q3 showed a worse-than-expected growth rate of 0.3%. If growth is confirmed, it will complete 7 consecutive quarters of growth, the longest streak in a decade. An upgrade to 0.4% q/q is on the cards.
- US Non-Farm Payrolls: Friday, 13:30. The US economy gained no less than 261K jobs in October, a compensation for hurricane-skewed job growth of 18K in September. The report for November will likely be more in line with the average of around 200K: exactly 200K is on the cards. Wages badly disappointed in October with 0% m/m and 2.4% y/y and now we can probably expect it to pick up. A monthly gain of 0.3% is expected. The unemployment rate dropped to 4.1%, a very low level, but on top of a low participation rate. No change is expected there. This is the last NFP before the Fed decision in December, in which Yellen is expected to complete 3 hikes in 2017. Only a terrible report would derail the hike.
- US consumer confidence: Friday, 15:00. The University of Michigan publishes its preliminary read for consumer confidence for December, quite early in the month. A small rise from 98.5 in November to 99.2 is on the cards. All in all, consumers are quite confident, also according to other surveys such as the CB one.
*All times are GMT
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