Thanksgiving and financial outlook!
With the Thanksgiving holidays on Thursday and Friday, we will have a short week and some economic data and events to watch, mostly on Wednesday. This light week can be a good pause for investors to review the recently published data and things that happened.
1- RBNZ meeting – Wednesday
Reserve Bank of New Zealand will hold its monetary policy meeting and the interest rate decision on Wednesday. Inflation is still at a 32-year high of around 7.2%, and the general economic condition is also good, therefore, it is expected that RBNZ to raise the interest rate by 75 basis points to 4.25%, after a lot of hawkish signals that policymakers had in October. This expected rate hike should help the Kiwi to gain some strength against its crosses.
2- Eurozone PMIs – Wednesday
While in the past few months both service and Manufacturing activities in the Eurozone have fallen further into contraction territory, it is expected that manufacturing and services readings to decline to 46 and 48, respectively, to conform to the emergency situation in the Eurozone economic growth. Recession fears and the backdrop of soaring energy prices while we can see a weak global economic outlook, can still hold pressure on the Eurozone stock markets and common currency.
3- US Durable Goods orders – Wednesday
While September Durable Goods orders increased by 0.4%, details of the report suggest new demands are fading, which means it is not likely to see the same 0.4% expected increase in the October orders. Especially if we exclude the 122 Boeing aircraft orders, we may see only a 0.1% increase in orders, and it means that the industrial sector is losing momentum. This report should not have a positive effect on the US stock markets.
4- FOMC Minutes – Wednesday
One of the main focuses of the week most probably will be the October Fed meeting minutes, which is due to be out this Wednesday. The FOMC Minutes report will provides more detail about the FOMC Members’ opinions regarding the US economic outlook and any views regarding future rate hikes. A hawkish report will be positive for the US dollar and vice-versa.
5- UK PMIs – Thursday
Last week’s published data confirmed the sharp increase in UK inflation to 11.1%. If we add the recent political uncertainties, and BoE rising interest rates, it will be logical to expect another decline in business and service activities in Great Britain. For both manufacturing and service PMIs, we expect a decline to 45.8 and 48, respectively. The estimated weakness should increase the pressure on Sterling!
6- German GDP – Friday
German Gross Domestic Product for Q3 is expected to increase by 0.3% quarterly and 1.1% annually. While we have a weak outlook for other Eurozone economies, it cannot help the EU stock markets or currency, at least in the short term.