Market Outlook for the Week of November 27 – December 1

<p dir="ltr"><span>Following Thanksgiving in the U.S., this week is expected to start slow, with a relatively quiet economic calendar for the FX market.</span></p><br><p dir="ltr"><span>On Monday, attention will turn to the United States for the release of New Home Sales data.</span></p><br><p dir="ltr"><span>On Tuesday, we'll get the release of BoJ's Core CPI y/y data for Japan and the CB Consumer Confidence and Richmond Manufacturing Index data in the U.S. Several FOMC members are also expected to deliver their remarks.</span></p><br><p dir="ltr"><span>Wednesday will shift the focus Down Under with the release of Australia's CPI data. The highlight of the day will be the RBNZ monetary policy announcement. Other notable releases include several eurozone CPI prints, the Preliminary GDP quarter-on-quarter for the U.S. and a speech by BoE Governor Bailey at an event commemorating the 50th anniversary of the London Foreign Exchange Joint Standing Committee in the U.K.</span></p><br><p dir="ltr"><span>Thursday will bring the KOF Economic Barometer for Switzerland, the OPEC-JMMC Meetings, the GDP month-on-month for Canada, and a series of U.S. releases, including the Core PCE Price Index m/m, the Unemployment Claims, the Personal Income m/m, the Personal Spending m/m and Pending Home Sales m/m.</span></p><br><p dir="ltr"><span>The week will conclude Friday with the Employment Change and Unemployment Rate data for Canada, while in the U.S., the market will get the ISM Manufacturing PMI, the ISM Manufacturing Prices and a fireside chat titled "Navigating Pathways to Economic Mobility" featuring Fed Chair Powell at the Spelman College in Atlanta.</span></p><br><p dir="ltr"><span>Another aspect that could impact the market this week is the month-end rebalancing.</span></p><br><p dir="ltr"><span>The U.S. new home sales are likely to drop from 759K to 724K. Higher mortgage rates are putting pressure on the housing market and further decline is expected in the near future.</span></p><br><p dir="ltr"><span>Tuesday RBA Gov Bullock will speak in a panel discussion titled “Inflation, Financial Stability and Employment” at the Hong Kong Monetary Authority and Bank for International Settlement High-Level Conference. No market moving revelations are expected from her speech, but it's worth watching in case she provides hints about future rate hikes. The focus of this talk will likely be the recently observed unusually weak productivity in Australia. The RBA remains focused on returning inflation back to target and current wage growth could help with that, but only if productivity recovers soon. However, without very clear reasons for the drop it's hard to say if the trend will continue or if it's temporary.</span></p><br><p dir="ltr"><span>In Japan, the Core CPI y/y is expected to remain unchanged at 3.4%. This means that inflation is a bit higher than what the bank would want, but despite the elevated numbers, production and consumption for last month are expected to print above expectations due to the tight labor market conditions, according to ING.</span></p><br><p dir="ltr"><span>The Australian CPI y/y is expected to drop from 5.6% to 5.2%. Last week we got hawkish inflation comments from Gov Michelle Bullock where she pointed out that inflation is kept high by strong domestic demand. She stressed that inflation numbers for Australia might remain above target for a while.</span></p><br><p dir="ltr"><span>The RBNZ's official cash rate is expected to remain unchanged at 5.50%. The focus at this week's meeting will be mainly on the Bank's updated projections and its likely goal of discouraging the market from pricing in rate cuts too early. Many analysts believe that the current rates are high enough to bring inflation into the desired target of 2-3% and the economic data released recently seems to back that up, but there is still a possibility for another hike in February next year before a pause until 2025, according to analysts at Westpac. New Zealand has seen weakness in retail sales and several PMIs, while the labor cost index for Q3 also printed softer than anticipated. Despite market anticipation for cuts, rates are likely to remain at current levels for the time being.</span></p><br><p dir="ltr"><span>Over the past two months we’ve seen inflation data dropping more than expected in the eurozone and the market wants to see if the trend will continue. However, the fight against inflation is not over yet and there is still some inflation pressure on the horizon. Expectations for core inflation are 4% while for headline inflation are 2.7%.</span></p><br><p dir="ltr"><span>The consensus for the KOF Economic Barometer is to rise from 95.8 to 96.2.&nbsp;</span></p><br><p dir="ltr"><span>Analysts at ING anticipate that the Core PCE Price Index, the Fed's favorite measure of inflation, will see a 0.2% increase m/m. This is in line with what the central bank expects and they argue that if repeated over time, it will help bring inflation to the 2% target.</span></p><br><p dir="ltr"><span>The employment change data for Canada is expected to rise from 17.5K to 18.5K and the unemployment rate is likely to remain unchanged at 5.7%. This means that the labor market conditions for Canada remain tight as wages are also elevated.</span></p><br><p dir="ltr"><span>The ISM Manufacturing PMI in the U.S. is expected to rise from 46.7 to 47.7, a slight improvement, but still in contractionary territory without clear signs of a rebound in the near future.</span></p><br><p dir="ltr"><span>This article was written by Gina Constantin.</span></p>

This article was written by FL Contributors at www.forexlive.com.