Last week saw the release of two main pieces of high-tier data (UK retail sales and the FOMC minutes), markets also continued to watch for any central bank hints from the two diverging monetary policies of the Fed and ECB. Data wise, UK retail sales was at the forefront after the previous bullish figures (1.9%) was boosted by the rugby world cup sales. Last week’s reading however, was a major disappointment, not only did it fall to -0.6% but last month’s reading was also revised lower to 1.7%.
The FOMC minutes were also released last week. The minutes reaction were slightly muted as the Fed reiterated the previous week’s key points. Their slightly hawkish stance remained as they repeated that an interest rate increase would be considered at their “next meeting”, which is scheduled for December the 15th and 16th. The Fed also stated that the decision remains data dependant.
Markets were further prepared for more policy easing from the ECB last week. ECB’s President Mario Draghi emphasised his “whatever it takes” commitment again, that it has the necessary measures to boost inflation back to the Central Bank’s target. The ECB are forecast to extend the current stimulus program and cut the deposit rate by 10 basis points in December.
Today, we have a raft of Eurozone manufacturing and services PMI’s, we also have a Fed announcement today, no news on this and the timing is tentative so keep eyes on the US trading session because we could have a statement from the FOMC during those hours.
US’s preliminary reading will be the main focus of the day. The second reading is forecast to post 2% tomorrow afternoon. We also have US consumer confidence where we will gain an insight into the financial confidence of the average US household. In the morning, the German Ifo business climate is released and forecast to increase slightly to 108.3.
Big day Wednesday as we have the release of the Autumn forecast statement from the Bank of England, expect a lot of volatility around this annual event, where we will get an updated economic outlook and a preview of the government’s budget for the coming year. US core durable goods will also be released, forecast at 0.5%. Core durable goods excludes the volatile aircraft orders which can severely distort the underlying trend.
A quiet day Thursday as the world’s largest economy is closed in observance of Thanksgiving Day. Due to the US banks being closed, this could lead to high unexpected currency fluctuations as liquidity will be low throughout the day.
The US markets have returned and therefore so has a high amount of liquidity. Data wise it is quiet with the only notable piece of data released from the UK in the form of the second reading GDP figure.