*Please note; The author is working from UTC +13 when determining the timeline of data releases.
Factory Orders from Germany for the Month of October is the first significant piece of data for the week. The market is expecting a 0.5% decline MoM, in factory orders. The EUR may come under pressure when this data reaches the market, especially when investors consider it in tandem with a recent German IFO Business Survey, indicating diminishing business confidence in the region and further noted “Supply chain bottlenecks are putting companies under real pressure, there is no sign of a let-up.”
Possibly adding to downward EUR pressure is the German ZEW Economic Sentiment Index DEC, due Tuesday. The index measures the level of optimism held by analysts concerning economic developments stretching out over the next six months. The ZEW index is anticipated to post a decline of ~5 points to 25.3, from November’s reading of 31.7.
The Bank of Canada’s (BoC) Interest Rate Decision and Rate Statement are released very early Thursday. It will be interesting to see if the BoC will action its bullish rhetoric sooner than next year. However, with oil prices currently under pressure, a hike by the Bank is looking unlikely before April. Importantly, Deputy Governor of the BoC, Toni Gravelle, will speak to the organisation’s Economic Progress Report the following day.
China’s Consumer Price Index (CPI) YoY data to November is due early Thursday afternoon. Last month, China’s CPI accelerated sharply from 0.7% to 1.5% as producers passed on rising costs. Producer costs have risen 13.5% since October 2020, the fastest pace in 26 years. As such, analysts are again expecting a steeper incline for November CPI data. Market forecasts have China CPI hitting 2.5%.
Mexican Inflation Rate data YoY to November will be posted just after the clock ticks over to Friday. Mexican inflation is anticipated to record its fourth month of increases and possibly pass the 7.00% threshold. The Central Bank of Mexico, while believing inflation to be transitory, might respond with another rate hike when it convenes the following week to dampen inflation expectations leading to persistent inflation. The Mexican Peso spent much of last week strengthening against the USD, so the market may have priced this in already.
The US gets the last word this week. Its Inflation Rate YoY to November is anticipated to follow Mexico’s, creeping up to ~7.00%, from 6.2% the previous month. This forecast proving true could strengthen the Federal Reserve’s resolve to speed up its bond-buying taper and possible move forward the schedule of interest rate hikes.
APAC should be hogging most traders’ attention in the first half of the coming week. China and New Zealand take the spotlight up to Wednesday. A sprinkling of US and European data helps to round out the offerings.
*Please note; Author is working from UTC +13 when determining the timeline of data releases.
China opens the week and reveals its 1Y Loan Prime Rate. The People’s Bank of China (PBoC) has kept the 1Y Loan Prime Rate at 3.85% for the past 18 months. No change in the rate is expected on Monday. However, looking to a long-term change, China’s Premier Li Keqiang noted on Friday that China is facing “many challenges” in managing the downward pressure on its economic growth and rising commodity prices.
New Zealand releases data on Retails Sales (Q3) in the lead up to the country’s Central Bank Interest Rate decision on Wednesday. Retail Sales in the last two quarters rose 3.3% and 2.8% respectively. A projected -0.5% is expected in Q3 as the country’s largest city has been in lockdown for the entire Q3 period.
European and Great Britain Markit PMI Composite data (NOV) is also released on Tuesday. Aggregating the data from the economies’ Manufacturing and Service sectors, the PMI is a broad indicator of economic expansion or retraction. Although still firmly within an expansionary range, a slight pullback in the PMI values is expected for both economies.
US Markit PMI Composite data (NOV) is up next. Unlike Tuesday’s PMI data, US PMI is expected to lift ever so slightly from 58.4 to 58.8.
As mentioned above, the Reserve Bank of New Zealand (RBNZ) will be updating the market as to its Interest Rate decision. A 25 basis point hike to 0.75% is all but guaranteed at this point. Speculation of a 50 basis point hike has emerged in reaction to Inflation Expectation in the country, reaching 2.96% in two years. Although, such a significant hike is unlikely and deviates from RBNZ precedence.
Thursday is all about the United States. For October, durable Goods Orders, New Home Sales, and Personal Spending data are released in quick succession. Any beat or miss in the slightly optimistic forecasts for these data points should be pounced upon by traders.
The FOMC minutes are then released later in the morning. Fed representatives have been vocal about their stance on inflation, employment, and the need to keep a loose monetary policy for the short term, all last week. These notes should be reflected in the FOMC minutes.
A quiet Friday closes the week. South Korea’s Interest Rate decision should be watched closely. A 25 basis point increase is possible, which would bump the Interest Rate to 1% from 0.75%. Analysts are split as to its likelihood as the South Korean Government has other tricks up its sleeve to curb rising prices (such as removing fuel taxes).