Key Events This Week: Nov 23rd – November 27th
Mon: EUR – EZ Manufacturing PMI, USD – Manufacturing PMI
Tue: JPY – Nikkei Manufacturing PMI, BOJ Meeting Minutes, EUR – German GDP, USD – GDP, Personal Consumption, PCE, Consumer Confidence,
Wed: USD – PCE Core, Durable Goods, Services PMI, NZD – Trade Balance
Thu: JPY – CPI
Fri: CNY – Industrial profits, GBP – GDP, Consumer Confidence
- USD Down off highs as rate softened amidst the risk-on response to the Hawkish FOMC minutes but regained ground into the weekend. With rate holding around post-October NFP highs, bullish outlook remains intact.
- EUR The single currency sustained a slight rebound last week with the latest CPI data showing EuroZone inflation managed to climb back into positive territory in October. However, price eventually turned lower once more as the policy divergence between the ECB and Fed which drove price action at the start of the year looks now to be firmly back in place as run-down the year. Draghi commented that the ECB remain on course to do whatever is necessary to “raise inflation as quickly as possible”.
- GBP Sterling delivered a second consecutive positive week last week as the latest CPI figures showed that although headline inflation was down again in October (printing only the second consecutive negative reading since the index’s creation in 1997) core inflation, which the Bank Of England favours, actually surpassed expectations by 0.1%. Retail sales missed however printing 3% against expectations of 5.9% followed by Public Sector Net Borrowing which decreased but less than expected, leading GBP lower against the Dollar. GDP data is key domestic focus this week 2.3% previous.
- JPY The BOJ maintained their current monetary base growth target at 80 trln Yen last week and despite noting some developing weakness in inflation expectations, recommitted to its current easing program stating that the program was having the intended effects. The BOJ’ refrain from further action saw a sudden appreciation in the Yen as the Nikkei too reacted higher. Data last week showed that once again Japan had slipped into a technical recession with 3Q GDP printing -0.8%. Key focus this week will be on CPI as traders monitor the state of Japan’s inflation and also BOJ meeting minutes.
- AUD The Australian Dollar printed a second consecutive positive week last week as the RBA meeting minutes revealed the Central Bank to be sounding more optimistic about domestic economic developments which fuelled further upside in the Antipodean currency, extending strength seen from last week’s surprise decline in domestic unemployment. Commodity prices remain weak with global growth concerns still present which should act to keep Aussie upside in check. Lack of key domestic data this week will leave Aussie’s trading outlook driven by risk and USD flows.
- CAD The Canadian Dollar was able to regain some of its recent losses last week as Oil managed to sustain a brief correction this week travelling north from a low of $40 to just shy of $43 per barrel on the week. Canadian CPI in October came in as expected though with a slight beat in core at 2.1% vs expectations of 2%.