After a week to remember in UK politics, Lagarde’s first decision at the helm of the ECB, the last Fed decision of the year, another chapter in the trade drama, life goes on. Apart from the reactions to previous events, final US GDP, the Bank of England’s rate decision, and a mix of data from all over the world will set the tone Here the highlights for the upcoming week.
- Euro-zone PMIs: Monday, 8:15 for France, 8:30 for Germany, and 9:00 for the whole euro-zone. Markit’s forward-looking Purchasing Managers’ Indexes have to point to a recovery of sorts in November. The initial figures for December are projected to show further improvement. In France, both the manufacturing and services sectors are growing, albeit it a slow pace. The German manufacturing sector is still in the doldrums – contracting at a rapid clip, albeit off the lows. The PMI for the industrial sector stood at 44.1 points and is expected to advance to only 44.3 – below the 50-point threshold that separates extraction from contraction. In the meantime, the continent’s largest economy is seeing its services sector slowing down, with 51.7 points. The composite index for the whole continent is set tick from 50.6 to 50.9 points, indicating meager expansion. All in all, investors want to see if the recent green shoots can turn into growth, or if they are only a temporary recovery before another downturn.
- UK PMIs: Monday, 9:30. The preliminary PMIs for the UK have been compiled before the elections, and may not fully reflect the full reaction. Nevertheless, they may move the pound. The manufacturing sector is set to recover from 48.9 to 50.7 points, while the services sector carries expectations of falling from 49.3 to 48.9 points in December – reflecting weakness in Britain’s largest sector.
- UK jobs report: Tuesday, 9:30. Unemployment has stood at the historic low of 3.8% in September and a minor increase to 3.9% is on the cards now. Wages have continued advancing at a satisfactory pace of 3.6% – both including and excluding wages. The figures have no political impact at this point, but they will influence the Bank of England’s decision later in the week.
- German IFO Business Climate: Wednesday, 9:00. Similar to PMIs, Germany’s No. 1 think tank has been showing a minor recovery. The main indicator stood at 95 points while the Current Assessment was at 97.9 points in November. The last release of 2019 will likely show similar figures.
- UK inflation figures: Wednesday, 9:30. The Consumer Price Index has been slipping to lower ground, hitting a low of 1.5% yearly in October. A minor acceleration to 1.6% is on the cards. Core CPI is set to remain unchanged at 1.7%. This is further input for the BOE.
- New Zealand GDP: Wednesday, 21:45. The South Pacific nation, recently hit by an eruption of a volcano, has seen yearly growth at 2.1% in the second quarter. A minimal slowdown to 2% is on the cards for the third one. New Zealand releases Gross Domestic Product numbers only once per quarter, making every release more impactful.
- Australian jobs report: Thursday, 00:30. Australia’s labor market badly disappointed in October with a loss of 19,000 jobs. Expectations are higher this time, with an increase of 15,000 positions and an increase from 66% to 66.1 in the participation rate – keeping the jobless rate unchanged at 5.3%.
- Japanese rate decision: Thursday, early in the morning. The Bank of Japan has left the interest rate unchanged at -0.10% for several years, as it aims to lift inflation without hurting banks too much. It also aims to keep long-term lending costs muted – by targeting the ten-year yields. Haruhiko Kuroda, Governor of the BOJ, has kept the door open for more stimulus but has only tweaked the bank’s pledge to keep rates low for as much as needed. The Tokyo-based institution will likely leave rates unchanged at the last meeting of the year.
- UK rate decision: Thursday, 12:00. Two members of the Bank of England surprised markets by voting for a rate cut in November. Despite deteriorating economic conditions, the BOE will likely leave interest rates unchanged at 0.75% in its last meeting of the year. Mark Carney, Governor of the Bank of England, is set to end his tenure at the end of the year but may be asked to stay on for longer. The accompanying meeting minutes are of interest, as they will shed light on the voting pattern and also set the stage for policy in 2020. The latest jobs and inflation figures may be referred to in the publication.
- UK GDP: Friday, 9:30. The final read of Britain’s GDP growth in the third quarter is expected to confirm the 0.3% read – which showed that the UK avoided a recession. Any downgrade may weigh on the pound, especially as recent monthly GDP numbers for October have shown no growth.
- US GDP: Friday, 13:30. The second read of Q3 GDP surprised with an upgrade to 2.1% annualized growth – better than 1.9% originally reported. A similar figure is likely in the third and final read. Any change may move markets amid thin liquidity, as many traders will have left for their Christmas holidays.
*All times are GMT
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