Economic Events Likely To Drive The Market

Last week, with a relatively few economic indicators from the US, the US Dollar Index (I.USDX) fell over 0.5%, giving up most of its gains registered in the previous week. Moreover, testimony from Fed Chair nominee, Janet Yellen, in front of the US senate banking committee was seen as supportive for continuing the Fed’s current monetary stimulus, weighing on the US Dollar.

The latest snapshots of retail sales, existing home sales and manufacturing data from the US economic calendar along with the FOMC Meeting Minutes could provide some clues for the market, struggling for a firm direction.

Retail Sales – In September, US retail sales declined by 0.1% versus the expectation of 0.2% growth, marking its first decline since March this year. For the month of October retail sales report, scheduled for release on Wednesday, is anticipated to be slightly higher, rising by 0.1%. Meanwhile, core retail sales that excludes auto sales is expected to register a slower growth of 0.2%.

Existing Home Sales – In September, existing home sales data showed some moderation, falling to an annualized rate of 5.29 million following a surge to 5.48 million units in August. For October, existing home sales, scheduled for release on Wednesday, is forecast to decline further to an annual pace of 5.21 million-units. Although, there might be some signs of moderation in the US housing market, the overall recovery in the housing sector seems to remain intact.

Inflation Data – US headline inflation number, measured by Consumer Price Index (CPI), has remained subdued throughout this year, running well below the Fed’s target of 2%. After a slight 0.2% rise in September, CPI, scheduled for release on Wednesday, is predicted to remain absolutely flat in October. Meanwhile, core CPI, which excludes food and energy, is expected to show a slight 0.1% rise in the month of October.

Also watch for Producer Price Index (PPI), scheduled for release on Thursday. Economists expect October PPI to register a 0.1% decline, while core PPI, that excludes food and energy, is expected to rise modestly by 0.2%.

Manufacturing Data – The Philly Fed Manufacturing Index released by the Federal Reserve banks of Philadelphia, reflecting manufacturing conditions in the Philadelphia region, is scheduled for release on Thursday and is projected to drop for the second straight month in November to 15.1 from 19.8 recorded in October.

Meanwhile, the FOMC minutes from the Federal Reserve’s last meeting in late October, scheduled for released on Wednesday, are unlikely to remove the uncertainty surrounding the withdrawal of the central bank’s $85 billion-a-month massive stimulus program. Most economists expect continuation of the Fed’s stimulus program through early 2014.

Apart from US economic events, market players will also be looking for some important economic events from other major economies.

This week’s key data from the Euro-zone economic calendar features the German ZEW Economic Sentiment, key manufacturing and services PMI figures and German Ifo Business Climate.

In October, the German Zew economic sentiment index soared to 52.8 from 49.6 in September and was well above consensus expectation of 49.2. For the month of November the index, scheduled for release on Tuesday, is expected to climb further to 54.6. Meanwhile, the German Ifo Business Climate is scheduled for release on Friday. After two consecutive months of lower than expected reading, the German Ifo business activity index, is forecasted to show a rise to 107.9 for the month of November.

PMI Data – The main highlight from this week’s Euro-zone economic calendar, that will be of particular interest for the market, are key manufacturing and services PMI readings from regions two largest economies, France and Germany, along with the overall Euro-zone PMI figures. The flash version of manufacturing and services PMI for the Euro-zone is scheduled for release on Thursday. In October, overall Euro-zone services PMI ticked down to 51.6 (revised higher from 50.9 reported in the preliminary reading), continued showing expansion, although, at a slightly slower pace as compared to September. The manufacturing sector, however, continued with its modest upturn with PMI improving slightly to 51.3 from 51.1 in September. The overall Euro-zone manufacturing PMI is expected to register a slight rise to 51.6 in November from October’s 51.3, while services PMI is also expected to rise to 51.9 from 51.6 recorded in the previous month. Meanwhile, German manufacturing PMI for the month of November is expected to reach 52.3 from 51.7 in October and the services PMI is predicted to rise to 53.1 from 52.9 in the previous month. Similarly, French PMI readings for November are expected to register a rise from October readings. The French manufacturing sector is expected to remain in contraction territory, with the index reading expected to come-in at 49.6 from 49.1 recorded in October. The French manufacturing PMI is forecast to rise to 51.3 from 50.9 in October.

The UK economic calendar for the upcoming week features the release of minutes from the latest MPC meeting. The BoE’s meeting minutes, scheduled for release on Wednesday, is always watched keenly by market participants for a breakdown of MPC votes on the size of Asset Purchase Facility and interest rate decision. Also read: GBPUSD – Fundamental Update

This week’s notable economic release also includes HSBC’s flash Chinese manufacturing PMI for the month of November and is scheduled for release on Thursday. The index is expected to continue holding in expansion territory with consensus estimate of the index coming-in at 50.9, unchanged from 50.9 recorded in the month of October. Chinese manufacturing PMI is closely watched to gauge the economic strength of the world’s second-largest economy and for any material impact on commodity currencies including the Australian Dollar, which remains very sensitive to economic data from China.

Also on Thursday, BoJ is scheduled to communicate its monetary policy decision, which will be followed by a press conference. Most economists expect a little in terms of any major policy action or fresh monetary easing measures from the central bank.

• Following a better-than-expected US third-quarter GDP and strong October US non-farm payrolls, discussion over the Fed tapering its monetary stimulus in December had resurfaced. However, a dovish testimony from Janet Yellen added to the uncertainty over the timing of Fed beginning to reduce its stimulus.
• With few important economic data lined-up for release, investors could possibly witness some choppiness in the upcoming week. Further, lack of any surprisingly positive economic data from the US could increase the probability of the US Dollar weakening further from current levels.
• Original Article: Admiral Markets and hyper link Admiral Markets with http://www.admiralmarkets.com/