1Finance

The US dollar had an excellent week, mostly thanks to speculation about the next Chair of the Fed. What’s next? The upcoming week opens a new month and packs both a Fed decision and the Non-Farm Payrolls. Here are the highlights for the upcoming week.

1. US Core PCE: Monday, 12:30. A monthly rise of 0.1% is on the cards.
2. Japanese rate decision: Tuesday morning. The Bank of Japan has failed to lift inflation despite a massive QE program and a negative interest rate. The current policy is to hold 10-year bond yields at 0%, thus buying bonds whenever needed. After the Japanese elections, the BOJ may reconsider its policy measures, but most BOJ meetings do not yield a change.
3. Euro-zone inflation data: Tuesday, 10:00. A full repeat is predicted now: 1.5% in the headline CPI and 1.1% in core CPI.
4. Canadian GDP: Tuesday, 12:30. A growth rate of 0.1% m/m is predicted.
5. US CB Consumer Confidence: Tuesday, 14:00. The score for October is higher: 121.1 points.
6. New Zealand jobs report: Tuesday, 21:45. The level of employment is predicted to jump by 0.8% and the unemployment rate is estimted to tick down to 4.7%.
7. US ADP Non-Farm Payrolls: Wednesday, 12:15. A gain of 191K jobs is on the cards.
8. US ISM Manufacturing PMI: Wednesday, 14:00. A small slide to 59.4 is expected in the headline number.
9. US Fed decision: Wednesday, 18:00. This is a meeting that does not consist of a press conference nor new forecasts and thus is not expected to yield a change in policy. The focus is on the December meeting when the Fed is likely to deliver its third and last rate hike for the year. So far, Yellen and her colleagues are not deterred by lower inflation and intend to proceed as usual. This November meeting provides them with an opportunity to give a hint if they may change their minds. Any expressions of concern about inflation could send the dollar lower, while confidence could send it higher.
10. UK rate decision: Thursday, 12:00. The Bank of England will probably raise the interest rate from 0.25% to 0.50%, reversing the post-Brexit hike of August 2016. In the previous meeting and in consequent speeches, the Bank of England gave heavy hints that they are going to raise the rates due to higher inflation (reached 3% y/y) and also on worries about rapidly expanding credit. However, one member cast doubt about the timing of the hike while Governor Carney seemed unenthusiastic about further hikes. In case the BOE surprises with a no-change, the pound will crash, but the chances are low. In case they hike but hint it is only a one-off, the pound will likely wobble but no go anywhere fast. In case it is the beginning of a tightening cycle, the pound will leap. This is a “Super Thursday” meeting, that also consists of the Quarterly Inflation Report in addition to the rate decision and the meeting minutes. The QIR consists of inflation forecasts that could provide some prospects about the next moves while the meeting minutes could show if there were dissenters against the decision. The event will surely trigger high volatility.
11. US Non-Farm Payrolls: Friday, 12:30. The “king of forex indicators” will likely show a rebound in jobs after the extraordinary report for September. The impact of the hurricanes resulted in a loss of 33K jobs, the first drop since 2010. On the other hand, wages were up 0.5%, a big jump. The report for October will already be more “normal” with a gain in jobs to compensate for the loss. Wages may be more mysterious. If the report shows that the gain in salaries is persistent, it will certainly strengthen the case for a rate hike, given that higher paychecks impact core inflation. The unemployment rate stood at 4.2% in September and could tick up from here. Jobs are expected to jump by 311K in October and the unemployment rate to remain at 4.2%. Average hourly earnings carry expectations for a rise of 0.2%.
12. Canadian jobs report: Friday, 12:30. A gain of 13.6K jobs is on the cards and the unemployment rate is projected to remain unchanged at 6.2%.
13. US ISM Non-Manufacturing PMI: Friday, 14:00. A lower score of 58.3 is expected.

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