The US dollar had a mixed week amid all-important inflation numbers. The upcoming week features US durable goods orders, housing data, speeches from Yellen and Draghi, and the FOMC minutes as we head into Thanksgiving. Here are the highlights for the upcoming week.
US inflation finally moved higher, to 1.8% y/y on the core numbers. Retail sales also came out slightly better than expected. However, US tax reform remained high on the agenda and political issues such as new developments in the Mueller investigation also weighed. The euro enjoyed upbeat German growth but unimpressive inflation. The pound suffered from politics, both internal and external, while the data was actually OK. The Aussie had mixed jobs figures that did not help it too much. Japan’s GDP fell short of expectations, but this only triggered further safe-haven flows.Updates:
- Mario Draghi testifies Monday, 14:00. The president of the ECB faces European MPs in Brussels and may lay out an updated view of the euro-zone economies and the inflation situation. The next meeting of the ECB is only in mid-December, so Draghi will not be constrained by a “quiet period”.
- US Existing Home Sales: Tuesday, 15:00. Most of the transactions in the housing market are of second-hand, existing homes. Back in September, annualized sales beat expectations with 5.39 million. We now get the data for October. An annual level of 5.42 million is on the cards.
- Janet Yellen talks, Tuesday, 23:00. The Chair of the Federal Reserve will speak in New York and may provide some interesting insights about the upcoming Fed meeting in December. Given she will be out of her job in February, Yellen may be freer to speak out.
- US Durable Goods Orders: Wednesday, 13:30. Sales of durable goods reflect investment and feed into GDP data. The revised data for September showed a gain of 2% in headline sales. The Fed focuses on core durable orders which increased by 0.7%, an upbeat figure. We now get the figures for October, the first report for the fourth quarter. Both headline and core orders are expected to rise by 0.4%.
- US FOMC Meeting Minutes: Wednesday, 19:00. These are the minutes from the November meeting, which did not consist of new forecasts nor a press conference. While the Fed hinted that they are on course to raise rates in December, they changed their wording about inflation, describing it as “soft”. We will now get an insight into the discussion among the members. How worried are they about inflation? How pleased are they with job growth? It is unlikely that the minutes will change expectations about the December meeting, but the dollar will likely move.
- UK GDP (second release): Thursday, 9:30. According to the first estimate for Q3, the British economy grew at a rate of 0.4%, higher than the previous two quarters of 2017. Nevertheless, this is a slower rate than its peers in the euro-zone and the US. In addition, it is weaker than in 2016. The second release will likely confirm this growth rate.
- ECB Meeting Minutes: Thursday, 12:30. The European Central Bank made a big announcement at its October meeting, laying out the plan to decrease the bond-buying scheme: 30 billion euros per month beginning in January through September. The dovish tilt came from the fact that they left the door open to more buys after September 2018. We know that this wasn’t a unanimous decision and the minutes will provide further evidence. How much support did the hawkish view get in that meeting? How worried are the various members about inflation?
- Thomas Jordan speaks Thursday, 16:30. The Governor of the Swiss National Bank will give a speech in Basel and will discuss the high current account surplus. The SNB continues intervening in the franc from time to time maintaining the surplus, keeping inflation from falling too much and helping Swiss exports.
*All times are GMT
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