USD: Will a positive Q3 GDP and jobs report keep the good times rolling?
The US dollar continued to hit fresh 14-year highs last week largely thanks to US durable goods orders rising three times faster in October than analysts had anticipated (4.8% versus 1.5% expected). Investors also remained optimistic for increased federal spending and market-friendly tax reforms that could come under a Trump presidency and Republican Congress.
But this week could be different as investors decide whether to take some of their profits on the high-value dollar or wait for more potentially upbeat economic data to come. Tuesday morning brings revised Q3 GDP and personal spending data along with the latest home prices, consumer confidence readings, and a speech from the Federal Reserve’s William Dudley. We’ll see October’s ADP jobs report, personal income/spending data, and pending home sale numbers on Wednesday morning. Thursday morning will host the weekly jobless claims, November’s manufacturing activity, and October’s construction spending data. The coveted non-farm payrolls and wage data for November will finish out the week on Friday morning.
EUR: Will heavy data help the euro outshine the dollar this week?
The euro fell to 20-month-lows against the US dollar last week as the Eurozone’s economic resilience continued to be outshined by the bullish future prospects for the US economy. The latest Eurozone confidence and business activity readings came in slightly ahead of expectations while Germany’s Q3 GDP results and consumer confidence readings also came in line with forecasts.
As the case has been over the past several weeks, perhaps only an especially strong result out of the Eurozone (or a poor US result) this week could reverse the euro’s multi-week slide against the US dollar. Tuesday morning brings Germany’s most recent inflation data, Italy’s consumer spending and Q3 GDP readings, and the latest consumer confidence surveys out of Italy, Portugal, and the broader Eurozone. On Wednesday morning, we’ll see Germany’s latest retail sales and unemployment rates, Italy and the broader Eurozone’s inflation readings, and a speech from European Central Bank President Draghi. Thursday morning will showcase the latest manufacturing activity readings from Portugal, Italy, France, Germany, and the Eurozone region as a whole. Friday morning will end the week with Portugal’s unemployment rate and the Eurozone’s producer inflation results for October.
GBP: Could face more 2017 Brexit headwinds amidst light data week
The pound traded choppy last week against the rising US dollar as politics clashed with positive economic data. Investor worries about the lack of details behind next year’s official Brexit kickoff put pressure on the pound, while better-than-expected public sector borrowing, mortgage approval volumes, and business investment growth helped keep the currency from suffering significant losses.
We could see more of the same this week, with politics to fill the voids between the scarce new data set to come out. Tuesday morning will present the lion’s share of new UK data with October’s individual borrowing, consumer credit, and mortgage approval volumes followed by a consumer confidence survey to come out late that evening. After that it’s a financial stability report on Wednesday morning, November’s manufacturing activity results on Thursday morning, and November’s construction sector activity report out on Friday morning. If investors focus more on the uncertainty around 2017 Brexit plans instead of on the hard data (as they did last week), the pound may continue its slide against the dollar this week.
CAD and AUD: Will the focus move away from commodity prices and toward economic data this week?
The Canadian dollar tumbled to its March lows last week largely as oil prices receded close to $46 per barrel (from a recent high of $48), though September’s unexpected contraction in wholesale sales and flat retail sales (excluding auto sales) didn’t help the currency either. This week should be busier for the normally oil-dependent currency, starting with a speech from Bank of Canada Governor Poloz on Monday evening and a Q3 current account (trade related) reading out on Tuesday morning. Wednesday morning we’ll see October’s raw and industrial good inflation readings, while Thursday morning brings November’s manufacturing activity readings. Friday morning’s labor market data will finish out the week.
The Australian dollar rebounded from its June-lows last week largely as iron ore prices surged to 26-month highs at nearly $80 per tonne. This week the commodity-tied currency may continue to ride coal and iron ore prices higher, though it may also feel the effects from a heavier data week too. Tuesday evening brings the latest new home sales, building permits, and private sector credit results. Wednesday night will showcase the latest manufacturing sector survey along with China’s business activity readings for November (China is Australia’s largest trading partner). Thursday evening’s retail sales data for October will largely finish out the week data wise for the Aussie dollar.