Weekly Outlook: 2016, November 27 - December 04

The US dollar reached new highs against the euro and the yen, but some profit taking was seen amid the Thanksgiving vaction. We are not back to full business: GDP data in the US and Canada, US consumer confidence and a full buildup to the US Non-Farm Payrolls stand out.

1. Mario Draghi speaks: Monday, 14:00. European Central Bank President Mario Draghi is due to testify on economic and monetary developments following the Brexit vote before the European Parliament’s Economic Committee in Brussels. Draghi noted recently that the ECB will extend its €1.7 trillion bond-purchase program on December, warning that the Eurozone’s weak economy remains clouded by downside risks and heavily reliant on the ECB’s stimulus.
2. US GDP data: Tuesday, 13:30. After three unimpressive quarters, the US economy rebounded in Q3 and advanced at 2.9% according to the initial report, which came out slightly better than expected. The second release is expected to show a small upgrade to 3% annualized growth. Note that significant revisions are common in the US.
3. US CB Consumer Confidence: Tuesday, 15:00. Consumer morale declined in October to 98.6 compared to 103.5 posted in the prior month, suggesting households remained cautious amid weaker economic growth and pre-election uncertainty. Economists forecasted a decline to 101.5. Most analysts believe this decline was temporary reflecting the nervousness about the looming presidential election. Nevertheless, consumers continue to spend boosting growth. Analysts forecast a rise in consumer confidence to 101.3.
4. US ADP Non-Farm Employment Change: Wednesday, 13:15. The ADP jobs report for October continued to disappoint with a smaller than expected release of 147,000 new positions, the weakest figure since April 2013. Construction and education jobs dropped sharply as the overall trend of job gains continues to weaken. However, job growth remains strong but the pace of growth is slowing. ADP report is expected to show a jobs gain of 161,000 in November.
5. Canadian GDP data: Wednesday, 13:30. The November release showed the Canadian gross domestic product advanced at the slowest pace in three months, rising 0.2% in August compared to 0.4% in July and 0.6% in June. Between August of 2015 and August of 2016, the Canadian GDP has increased a mere 1.3%. Goods-producing industries, the main contributors to GDP, increased by 0.7% from July and fell 0.9% from a year ago. The service sector remained unchanged in August. GDP in Canada is forecasted to rise 0.1% in October.
6. US Crude Oil Inventories: Wednesday, 15:30. U.S. crude oil stocks declined in the week to Nov. 18 after three straight weeks of gains as imports dropped and refineries hiked output. Crude inventories declined 1.3 million barrels, compared after an increase of 671,000 barrels in the previous week.
7. US Unemployment Claims: Thursday, 13:30. The number of Americans filing initial claims for unemployment benefits edged up from a 43-year low last week, but remained positive, reflecting a tightening labor market. The number of new claims increased by18,000 to a seasonally adjusted 251,000 while economists expected a gain of 241,000. Claims remained below 300,000 for 90 straight weeks. The four-week moving average of claims fell 2,000 to 251,000 last week. The number of new claims is expected to reach 252,000 this week.
8. US ISM Manufacturing PMI: Thursday, 15:00. The US ISM manufacturing index gained momentum in October rising to 51.9 from 51.5 in the previous month. The reading was a bit lower than the expectations of 51.7. Production strengthened to 54.6 from 52.8, but orders declined to 52.1 from 55.1. The employment index returned to growth at 52.9 from 49.7 in the previous month and export orders remained in positive territory for the eighth successive month. The ISM manufacturing index is expected to rise further to 52.1 in November.
9. Canadian Employment data: Friday, 13:30. The Canadian employment market gained 44,000 jobs in October. The increase was entirely due to part-time employment offsetting a loss in full-time positions. The reading was further evidence that Canada is struggling to provide quality, high-paying jobs. The increase in employment was driven by 67,000 additional part-time positions, while full-time jobs plunged by 23,000. The unemployment rate remained steady at 7.0% as more people entered the labor market, looking for work. Analysts expected an overall job loss of 10,000. The Canadian employment market is expected to gain only 100 jobs in November and the unemployment rate is expected to remain at 7%.
10. US Non-Farm Employment Change and Unemployment rate: Friday, 13:30. The U.S. monthly jobs report showed a smaller than expected jobs gain of 161,000 in October. While the unemployment rate remained unchanged at 4.9%. However, hourly pay increased 10 cents reflecting a 2.8% annualized increase. Analysts believe this is a step in the right direction which will enable the Fed to proceed with their rate hike plans. US job market is expected to create 165,000 in November and the unemployment rate is forecasted to remain at 4.9%.

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EUR/USD dipped to new lows but did not experience the magnitude of the previous weeks. Fresh inflation figures stand out as we enter the final month of 2016.

1. Monetary data: Monday, 9:00. According to the ECB, M3 Money Supply, or the amount of money in circulation, rose at an annual pace of 5%, and no change is expected. Private loans advanced at a rate of 1.8% and a rise to 1.9% is predicted. Both numbers have been stable of late.
2. Mario Draghi talks: Monday, 14:00. The President of the ECB testifies once again in Brussels. His previous comments were relatively dovish, and there is a good chance he repeats them now. Tension is growing towards the ECB’s decision in December.
3. German CPI: Tuesday: the German states release the data throughout the morning with the all-German figure at 13:00. Prices rose in Germany by 0.2% in October. We now get the preliminary numbers for November. The German numbers feed into the all-European figures and they will impact the ECB. A rise of 0.1% m/m is on the cards.
4. French Consumer Spending: Tuesday, 7:45. Back in September, the volume of sales in Europe’s second largest economy disappointed with a drop of 0.2% against expectations for a rise. A rise of 0.2% is predicted.
5. Spanish CPI: Tuesday, 8:00. Spain suffered from one of the deepest levels of deflation but managed to return to price rises. It saw an annual advance of 0.7% back in October. We now get the preliminary data for November. A rise of 0.5% is projected.
6. German Retail Sales: Wednesday, 7:00. The volume of retail sales disappointed with a big drop of 1.4% in September. For the month of October, an increase of 1% is expected.
7. French CPI: Wednesday, 7:45. Hours before the all-European release, we get figures from the second largest economy. Prices stalled back in October on a monthly basis. A slide of 0.1% is projected.
8. German Unemployment Change: Wednesday, 8:55. Germany enjoys a rather consistent drop in the level of unemployment. The month of September saw a drop of 13K in the number of unemployed. A drop of 6K is estimated.
9. CPI: Wednesday, 10:00. This is the first estimate of euro-zone inflation for November, data that will be closely watched by the ECB in Frankfurt. In October, headline inflation rose by 0.5%, an improvement led by the diminishing effect of the fall in oil prices. However, core inflation remained stuck at 0.8%. Another tick up is predicted in headline CPI, to 0.6%, while core inflation is projected to remain unchanged.
10. Mario Draghi talks: Wednesday, 12:30. The President of the ECB will make a second apperance this week, this time in Madrid, where the future of Europe is on the agenda. While monetary policy is officially off the cards, anything related to future moves could still slip.
11. Manufacturing PMIs: Thursday: Spain at 8:15, Italy at 8:45, final French figure at 8:50, final German data at 8:55 and the final euro-zone data at 9:00. Back in October, Spain had a score of 53.3 points, above the 50 point threshold separating expansion from contraction. A score of 53.7 is expected now.. Italy had a lower score of 50.9 points and 51.4 is forecast now. The initial number for France stood at 51.5 points in November. Germany had 54.4 and the whole euro-zone at 53.7 points. These numbers will probably be confirmed now.
12. Unemployment Rate: Thursday, 10:00. The unemployment rate in the Euro-zone had a few great months, sliding from the highs, but afterward, it stalled. In September it reached 10%. A repeat is estimated now.
13. Spanish Unemployment Change: Friday, 8:00. Spain still has a very high unemployment rate and the monthly release of the change in unemployment is eyed. Back in October, Spain saw a rise of 44.7K. A drop of 25.8K is predicted.
14. PPI: Friday, 10:00. The Producer Price Index ticked up by 0.1% in September. These figures eventually reach consumers. A rise of 0.4% is on the cards.

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