The first week of the last month of 2019 is jam-packed with top-tier events, culminating with the all-important Non-Farm Payrolls. How will currencies move? Here the highlights for the upcoming week.
The Thanksgiving week saw the US and China clashing over the Hong Kong bill which President Donald Trump signed into law. The US dollar advanced as Jerome Powell, Chairman of the Federal Reserve, said that he sees the US economy as “glass more than half full.” US data indeed mostly beat expectations, with GDP upgraded to 2.1% annualized in the third quarter, and Durable Goods Orders pointing to a leap in investment in October. Housing figures were mostly positive while the Fed’s preferred inflation figure, Core PCE, disappointed with 1.6% YoY. In the UK elections, YouGov’s all-important MRP poll showed a landslide for Prime Minister Boris Johnson’s Conservative, but the pound’s gains were limited. Euro-zone core inflation surprised with 1.3% YoY as the debate within the central bank rages. Let’s start:
- Chinese Caixin Manufacturing PMI: Monday, 1:45. This independent gauge of the world’s second-largest economy’s manufacturing sector has reflected expansion in the past three months, with an increase to 51.7 points in October – the best since April 2017. A moderate drop to 51.4 is expected in November, which saw growing uncertainty about trade relations.
- US ISM Manufacturing PMI: Monday, 15:00. ISM’s Purchasing Managers’ Index for the manufacturing sector has fallen short of expectations in the past four months, standing at 48.3 in October – below the 50-point threshold that separates expansion from contraction. Improvement is likely in the report for November. The data point serves as the first hint toward Friday’s jobs report. An increase to 49.4 is on the cards.
- Australian rate decision: Tuesday, 3:30. The Reserve Bank of Australia left the interest rate unchanged at 0.75% in November, after gradually cutting it from 1.50% during the year. Recent comments from the Canberra-based institution have shown that the door is open to further easing. However, Governor Phillip Lowe and his colleagues will likely leave the Cash Rate unchanged at this point, before heading to the summer vacation. The RBA meets to set rates again only in February.
- Australian GDP: Wednesday, The Australian economy expanded by a healthy 0.5% quarterly in both the first and second quarters of 2019. The upcoming publication for the third quarter is forecast to be identical with 0.5%. The economy in the land down under has been suffering from the Sino-American trade wars. While the Gross Domestic Product statistics are due out after the RBA’s decision, central bankers may already have the data in front of them.
- US ADP Non-Farm Payrolls: Wednesday, 13:15. America’s largest payroll provider’s employment report for the private-sector shapes expectations for the government’s jobs report – and moves markets. Back in October, ADP reported a net gain of 125K jobs, exactly as expected. A similar increase is likely in November’s publication – 135K.
- Canadian rate decision: Wednesday, 15:00. Stephen Poloz, Governor of the Bank of Canada, seemed to dismiss speculation of a rate cut. Most economic indicators are upbeat, and while oil prices have failed to rise, they remain at satisfactory levels. The BOC last changed the Overnight Rate back in October 2018 and has been on the sidelines ever since. This time will likely be similar – with the rate remaining at 1.75%.
- ISM Non-Manufacturing PMI: Wednesday, 15:00. ISM’s forward-looking survey for the services sector surprised in October with a substantial jump to 54.7, reflecting healthy growth. The industry has been doing well, with consumers buying at full speed. This report for November encompassed Black Friday and will likely continue to show upbeat expansion. A score of 54.5 is on the cards. The employment component serves as a hint toward the NFP.
- US Non-Farm Payrolls: Friday, 13:30. The US economy gained 128,000 jobs in October, below the long-running averages but above low expectations, stemming from the strike at General Motors. Moreover, revisions for previous months showed that job growth was considerably better than initially reported, as upward revisions added 95,000 to the count of the US workforce. While monthly wage growth came out at only 0.2%, earnings rose by 3% yearly, an encouraging outcome. Headline NFP is set to rise by 183K, monthly wage growth by 0.3% and annual salary increase by 3%.
- Canadian jobs report: Friday, 13:30. After benefiting from blockbuster labor market figures during most months in 2019, Canada lost 1,800 positions in October, worse than expected. The nation likely returned to net gains in November, with a projected gain of 15.9K The unemployment rate remained at 5.5% and carries expectations for a rise to 5.6%.
- US Consumer Sentiment: Friday, 15:00. The dust will not have settled from the NFP when the preliminary Consumer Sentiment figures from the University of Michigan are released. The forward-looking gauge is released early in December, ahead of the Christmas holiday. After falling in September, confidence recovered and topped 95 points in November. A marginal decrease to 96.5 is on the cards.
*All times are GMT
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