Major market moving events for 50th week of 2015

Author Haresh Menghani Category Fundamental Analysis 07 Dec 2015 Updated at 12:11 CET
Last week, it was not the release of the US monthly jobs report (NFP), but the European Central Bank (ECB) that drove the Forex market. ECB cut its deposit rate by 10 basis point to -0.3% and extended its QE program till March 2017. ECB decision failed to deliver the measure Euro bears had expected and sparked a short-covering rally for the common currency, which before the announcement was steadily heading lower. Even Friday's solid US labor market report failed to assist the US Dollar to recover from the collateral damage against other major currencies. Although, the US economic conditions already seems to have laid groundwork for the first rate-hike in December, but the near-term USD moves might now be determined on expectations over the pace of monetary tightening by the Fed. Nevertheless, the overall US Dollar Index [I.USDX] fell over 1.7% for the week.
 
Going forward, with the Fed scheduled to announce its monetary policy decision on Dec. 16, the Forex market is less likely to be driven by this week's relatively thin economic calendar. Having said that, that are number of important events that investors will keep a close eye on, including monetary policy decision announcements from RBNZ, SNB and BoE.
 
Three major central banks, namely Reserve Bank of New-Zealand (RBNZ), Swiss National Bank (SNB) and Bank of England (BoE) are scheduled to announce their monetary policy decisions on Thursday. Beginning with RBNZ, the central bank held its key benchmark rates during the October meeting, but given a sharp fall in dairy incomes the central bank is expected to announce a further 25 bps cut to its interest rates in order to support the economy and ensure that inflations gets closer to its target range. A rate cut accompanied with dovish comments at the subsequent press conference would indicate further room for rate cuts, thus opening room for resumption of the downward trajectory for the nation's currency, NZD aka Kiwi.
 
Meanwhile, both SNB and BoE are not expected to change their monetary policy stance. However, what would of key interest for the investors would be BoE's commentary that will be scrutinized closely for indications and timing for start of the rate-hike cycle by the central bank.
 
Apart from BoE monetary policy decision economic release that could influence GBP pairs includes the release of manufacturing production and trade balance data for the month of October, scheduled for release on Tuesday and Thursday respectively. The latest reading for UK manufacturing production data, which makes up for around 80% of total industrial production in UK, is estimated to show a 0.2% decline in manufacturing production. Meanwhile, the trade balance data is expected to show a trade deficit of 9.8 billion Pounds as compared to 9.4 billion Pounds of deficit recorded in September.
 
From the US, market participants will particularly be focusing on retail sales data and preliminary University of Michigan's consumer sentiment index, both scheduled for release on Friday. Although retail sales for October edged higher by 0.%, it was still short of consensus estimates of 0.3% rise. For the month of November, economists are expecting retail sales to register a growth of 0.2% while core retail sales (which excludes automobile sales) are expected to exceed October growth by printing 0.3% rise. Along with the US retail sales data, preliminary University of Michigan's consumer sentiment index reading is expected to improve from a revised 91.3 reading in November to 92.3 for December.
 
Economic data that could materially impact the currency market during the week, especially the Australian Dollar (AUD), includes Australian employment data along with trade balance, inflation and industrial production data from China. Australian employment data is scheduled for release on Thursday and following an unexpected sharp uptick in the number of employed people during October, market participants are expecting the reports to show a loss of 10.0k jobs in November. Meanwhile, the unemployment rate for November is expected to rise back to 6.0% following a drop to sub-6.0% in October, the lowest level recorded since May 2014.
 
Chinese economic data will also attract some attention during the week with the release of trade balance data on Tuesday, inflation data on Wednesday and industrial production data for the month of November on Saturday. Being the largest consumer of commodities, economic data from China is always scrutinized closely for any material effect on commodity currencies and to gauge economic strength of the world's second-largest economy. Moreover, being the biggest trading partner of Australia, weaker Chinese economic data often translates into weaker AUD.
 
Ahead of the much anticipated FOMC meeting next week coupled with relatively empty US economic calendar, Forex traders are unlikely to witness the kind of volatility prevalent recently and would also be reluctant in taking any directional call for the near-term. However, economic releases / events from other major economies might continue providing trading opportunities during the current week.
 
 
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