Weekly Market Outlook (25-29 November)

UPCOMING
EVENTS:

• Monday: PBoC MLF, German IFO.
• Tuesday: US Consumer Confidence, FOMC Minutes.
• Wednesday: Australia Monthly CPI, RBNZ Policy Decision, US
  Q3 GDP 2nd Estimate, US PCE, US Durable Goods, US Jobless
  Claims.
• Thursday: German CPI. (US Holiday)
• Friday: Tokyo CPI, Japan Unemployment Rate, France CPI,
  Switzerland Q3 GDP, Eurozone CPI, Canada GDP.

Tuesday

The US Consumer
Confidence is expected at 111.6 vs. 108.7 prior. Last month, consumer
confidence bounced back strongly from 99.2 in September to 108.7 in October.

Dana M. Peterson,
Chief Economist at The Conference Board said: “Consumer confidence recorded the
strongest monthly gain since March 2021, but still did not break free of the
narrow range that has prevailed over the past two years.”

“Consumers’
assessments of current business conditions turned positive. Views on the
current availability of jobs rebounded after several months of weakness,
potentially reflecting better labour market data.”

“Compared to last
month, consumers were substantially more optimistic about future business
conditions and remained positive about future income. Also, for the first time
since July 2023, they showed some cautious optimism about future job
availability.”

Wednesday

The Australian
Monthly CPI Y/Y is expected at 2.3% vs. 2.1% prior. The focus will be on the
Trimmed Mean Y/Y measure though which came out at 3.2% in the prior month. Inflation is slowly falling back to the
RBA’s target band of 2-3% and the market expects the first cut in February 2025.

The RBNZ is
expected to cut the Official Cash Rate (OCR) by 50 bps bringing the policy rate
to 4.25%. Inflation is back in the RBNZ’s target range, so the central bank can
focus on growth now especially with the unemployment rate continuing to climb.

The US PCE Y/Y is
expected at 2.3% vs. 2.1% prior, while the M/M measure is seen at 0.2% vs. 0.2%
prior. The Core PCE Y/Y is expected at 2.8% vs. 2.7% prior, while the M/M
figure is seen at 0.3% vs. 0.3% prior.

Forecasters can
reliably estimate the PCE once the CPI and PPI are out, so the market already
knows what to expect. Therefore, unless we see a deviation from the
expected numbers, it shouldn’t affect the current market’s pricing.

The US Jobless
Claims continues to be one of the most important releases to follow every week
as it’s a timelier indicator on the state of the labour market.

Initial Claims
remain inside the 200K-260K range created since 2022, while Continuing Claims remain
around the cycle highs.

This week Initial
Claims are expected at 217K vs. 213K prior, while Continuing Claims are seen at
1909K vs. 1908K prior.

Friday

The Tokyo Core CPI
Y/Y is expected at 2.1% vs. 1.8% prior. Inflation in Japan is basically at
target but the BoJ remains cautious on hiking rates too fast. The commentary
remains elusive, but Governor Ueda highlighted once again the impact a weak yen
has on economic and price outlook. As a reminder, the weak yen was one of the
key factors that led the BoJ to raise interest rates in July.

The Eurozone CPI
Y/Y is expected at 2.4% vs. 2.0% prior, while the Core CPI Y/Y is seen at 2.9%
vs. 2.7% prior. The weak Eurozone PMIs on Friday led the market to raise the
chances of a 50 bps cut in December from 20% before the data to 60% after. We
will likely need an upside surprise to strengthen the case for a 25 bps move,
otherwise we could get to the meeting with a 50/50 chance.

This article was written by Giuseppe Dellamotta at www.forexlive.com.