Week Ahead: PMIs, Central Bank Releases, CPI, Employment, Retail Sales, and GDP Reports

European and US PMIs to Provide Insight on Economic Health

Purchasing Manager’s Indices (PMIs) are surveys to business executives who evaluate economic conditions. Readings above 50.0 indicate expansion while numbers below it point at contraction.

On Monday, a roster of PMI reports from Europe and the US for November are due. French manufacturing and services sectors showed growth in October with the reports printing at 52.2 and 51.7. Meanwhile, Germany’s manufacturing was in contraction at 44.1 while its services sector grew at 51.7. Weakness in the euro zone’s manufacturing sector was also seen with the PMI printing at 46.9. It’s manufacturing PMI, on the other hand, grew at 51.9.

In the UK, both services and manufacturing were in contraction at 48.9 and 49.3, respectively. Across the Atlantic, the US manufacturing PMI printed at 52.6 while its services PMI was at 51.6.

Central Bank Statements Due Next Week

The Reserve Bank of Australia (RBA) will release the minutes of its meeting last December 3 on Tuesday. Interest rates were held steady at 0.75% after three rate cuts from the central bank. Market participants will be looking at the details closely for any hints of when the RBA will cut rates next. Some analysts say that a 50 basis point-cut could happen in April 2020 or if quantitative easing is considered as an option to stimulate the economy.

The Bank of Japan (BOJ) is scheduled to make its interest rate decision on Thursday. Prior to their last meeting on October 31, there were speculations that the central bank may announce further rate cuts. While the BOJ did not bring rates any lower from -0.10%, policymakers have warned that they may ease even further if they deem necessary.

The Bank of England (BOE) Monetary Policy Committee (MPC) kept rates steady at 0.75% last November as the general elections posed an uncertainty. Now that Boris Johnson and the Conservatives have secured a majority in Parliament, will they have enough leeway to ease?

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Employment Reports from the UK and Australia

The UK is also set to release its claimant count change report for November along with its unemployment rate. On Tuesday, readings lower than the October figures at 33,000 and 3.8%, respectively, will probably have a bullish effect on the pound as they would hint at improving labor conditions.

Last month, Australia surprised market participants when it showed a decline of 19,000 jobs in October and a 0.1% uptick in the unemployment rate to 5.3%. Positive data will be crucial for the RBA to feel more optimistic about economic conditions when it is released on Thursday.

Inflation Data on Deck from the UK and Canada

Inflation data from the UK and Canada are also on tap on Wednesday. Last month, the headline UK CPI figure came in at 1.5% while the core reading was slightly higher at 1.7%. Meanwhile, for Canada the headline reading was at 0.3% while the core reading was at 0.4%.

Have Consumers Been Spending in the UK and Canada?

On Thursday, retail sales for the UK will be on tap to be followed by Canada on Friday. Readings higher than October figures which were both at -0.1% may be bullish for the pound and the Loonie.

GDP Reports Due from New Zealand and the US

New Zealand’s third quarter GDP report is scheduled on Wednesday. The reading for the second quarter was at 0.5%. A higher reading could be bullish enough for the Kiwi to break past resistance at the falling trend line on the weekly chart against the dollar.

Then on Friday, the final version of the US’ third quarter GDP will be on tap. It will be expected that there were no revisions made to the earlier reading of 2.1%.

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