US Presidential Election, Crude Oil Inventories, Unemployment Claims, Prelim UoM Consumer Sentiment, Rate decision in New Zealand. These are the main highlights of this week. Join us as we explore these market movers.
The last payrolls report before the US presidential election was released last week showing a smaller than expected jobs gain in October. The employment market expanded by 161,000 new positions after a 191,000 increase in September falling short of the 174,000 forecast. While the unemployment rate remained unchanged at 4.9%. However, despite the slightly disappointing increase, the average hourly earnings jumped by 10 cents signifying a solid gain of 2.8% annualized increase, backing the Fed’s expected rate increase in December. Will we see a rate hike next month? Let’s start:Updates:
- US Presidential Election: Tuesday. US Presidential election attracts worldwide attention offering many surprises and uncertainties. The question is how the election would impact the economy and the markets. History suggests that the markets respond better to predictable outcomes than to uncertainties. The fact that Obama isn’t running may create a void badly affecting financial markets. Investors are not familiar with the candidates’ ability to “run the show”. Furthermore the party affiliation does not offer easy clues about which candidates might help or hurt investments. However, markets are expected to respond well to proposals from a front-runner to reduce U.S. corporate tax rates, which at the current 39% are the highest in the developed world. Moreover, analysts may look forward to a possible haven in 2017, after a new president takes over.
- US Crude Oil Inventories: Wednesday, 15:30. U.S. crude oil stock rose by more than 14 million barrels in the week to Oct. 28, the largest weekly gain on records, amid large imports and a decline in refining runs. The massive build in supply suggests a rebound after several weeks of sharp drawdowns in inventories. However, analysts do not expect imports will remain strong in the coming weeks.
- NZ rate decision: Wednesday, 20:00. The Reserve Bank of New Zealand maintained the Official Cash Rate at 2.00% in September, following the central bank’s rate cut in August. The Bank aims to bring inflation to the middle of the 1.0%-3.0% target range in the midst of heightened economic uncertainty and low commodity prices. The bank noted that the domestic economy expanded in line with market expectations. However, despite the bright outlook, the country is under pressure as dairy prices are volatile and high net immigration is suppressing wage growth.
- US Unemployment Claims: Thursday, 13:30. The number of new jobless claims filed last week rose to near a three-month high, but remained below the 300,000 level indicating a strong labor market. Initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 265,000. Analysts expected a reading of 257,000. It was the 87th consecutive week that claims remained below 300,000, the longest period since 1970, when the labor market was much smaller. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, increased 4,750 to 257,750 last week. The number of new claims are expected to register a 267,000 gain.
- US Prelim UoM Consumer Sentiment: Friday, 15:00. U.S. consumer confidence plunged to a two-year low in October amid rising concerns about the economy ahead of the coming presidential election. The University of Michigan’s consumer-sentiment index declined to 87.2 from 91.2 a month earlier. Economists expected sentiment to register at 88.5. Fifty percent of all consumers anticipated downturn in the next five years for the first time since October 2014. The main factor for this decline is the uncertainty generated by the presidential election. However, if the employment conditions and inflation continue to improve, the outlook may rebound in the coming months. U.S. consumer confidence is expected to rise to 87.4 this time.
- Stephen Poloz speaks: Friday 15:00. BOC Governor Stephen Poloz will speak in Santiago. In a recent talk, Poloz said risks from household debt and the housing market will be better addressed by macroprudential policies than by adjusting interest rates. Poloz further noted that “given all the work done to strengthen the global financial system over the past few years, it makes even more sense to separate monetary policy from efforts to stabilize the financial system”
That’s it for the major events this week. Stay tuned for coverage on specific currencies
*All times are GMT.
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- For the Australian dollar (Aussie), check out the AUD to USD forecast.
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