Weekly Market Outlook 2018-12-03

The markets head into the final trading month of the year. With the U.S. equity markets now erasing most of the gains for 2018, the U.S. Dollar is likely to emerge on the top as the best performing currency pair.

Still, the economic data which covers the month of November will provide enough fodder to speculate on the nature of the future interest rate hike paths.

The week ahead will be busy for the USD which will see essential data such as the ISM’s manufacturing and non-manufacturing PMI along with both the ADP’s private payrolls and the U.S. official payrolls data.

Australia will be releasing its third quarter GDP numbers this week, and on the monetary policy front, the Bank of Canada will be holding its meeting this week, which is later followed by the Canadian unemployment data.

Here’s a quick recap of the leading economic events due this week.

CAD: BoC Meeting and Canada unemployment data

On Wednesday, December 5, the Bank of Canada will be holding its monetary policy meeting. There is speculation that the Bank of Canada will be keeping interest rates steady at the meeting this week. The last rate hike from the Bank of Canada came in October.

The Central Bank, in its previous monetary policy statement, signaled that interest rates would continue to rise. Recent economic data that the BoC officials will have to include the inflation and retail sales numbers, both of which managed to show an advancing economy. Last week’s GDP numbers showed that the Canadian economy slowed to a pace of 2.0% in the third quarter of the year.

Following the Bank of Canada’s interest rate decision, the monthly unemployment figures will be coming out. This will provide further clues on how the Canadian labor market has been faring. The data will be crucial for the BoC officials as they weigh their options on inflationary pressures.

USD: ISM PMI’s and Payrolls

The week ahead for the U.S. Dollar is rather busy. Economic events over the week include the monthly manufacturing, and non-manufacturing PMI reports from the Institute of Supply Management.

In October, ISM’s manufacturing PMI gauge fell for the second month in a row after peaking at 61.3 in August. The manufacturing sector, which is still a significant contributor to the U.S economy is expected to stabilize. On a yearly basis, the U.S. manufacturing activity is likely to end with a bang.

The ISM’s non-manufacturing PMI is due later in the week.

The services sector PMI has been on a steady increase in August and September. Despite a weaker than expected print last month, services sector PMI close above the 60.0 handle, which indicators strong expansion in the sector.

Later in the week, the ADP/Moody’s private payroll numbers will be coming out followed by Friday’s nonfarm payrolls report. The U.S. unemployment rate is expected to remain steady at 3.7%. Economists polled expect the U.S. economy to add an average of 200k jobs during November.

Wage growth, an essential factor amid the Fed’s rate hike plan is forecast to rise by 0.3%. In October, wages posted a sharp increase.

AUD: RBA to remain on the sidelines. GDP numbers coming up

The Reserve Bank of Australia will be holding its monetary policy meeting this week, kicking off a rather busy week. No changes are expected to interest rates as the Central Bank is widely expected to maintain the status quo.

Following the RBA’s meeting, the quarterly GDP figures from Australia will be coming out on Wednesday. The data covers the third quarter of the year. Economists polled, expect the quarterly GDP to rise 0.6%. This would mark a slower pace of increase compared to the 0.9% increase in the second quarter.

The retail sales figures later follow this. Retail spending is forecast to rise by 0.3%.