Forex Weekly Outlook December 5-9

The US dollar consolidated its gains and even retreated against some currencies as data was OK. US Non-Manufacturing PMI, Crude Oil Inventories, Unemployment Claims and Consumer Sentiment, Rate decision in Australia, Canada and the Eurozone. These are the top events on our calendar for this week. Join us as we explore these market-movers.

U.S. monthly employment figures showed steady gains in hiring during November while the unemployment rate declined to the lowest level in nine years, pointing to a strong labor market. Nonfarm payrolls gained 178,000 in November from the previous month. The unemployment rate declined to 4.6% compared to 4.9% in October amid stronger hiring as well as a decline in the workforce participation rate. Economists had expected 177,000 new jobs and a jobless rate of 4.9% in November. will we see a rate hike this month? Let’s start,

1. US ISM Non-Manufacturing PMI: Monday, 15:00. The ISM non-manufacturing index declined to 54.8 in October from 57.1 in the previous month, missing forecasts for a decline to 56.2. 13 of 18 industries recorded expansion in October while the business activity index declined to 57.7 from 60.3 and the new orders index also slowed slightly to 57.7 from 60.0 in the prior month, but remained strong in historic terms. The employment index declined to 53.1 from 57.2 and the inflation index increased to 56.6. Analysts say the excellent figures viewed in the previous month were only temporary and a pull-back in October was no surprise. The ISM non-manufacturing index  is expected to rise further to 55.3.
2. Australian rate decision: Tuesday, 3:30. The Reserve Bank of Australia kept interest rates unchanged at 1.5% in November in line with market forecast. Policy officials did not mention a rate cut or monetary easing in the near future, saying the data was consistent with sustainable growth in the economy. The members were also optimistic regarding the rate of inflation saying it would meet their target over time. The central bank expects the economy to grow mildly, before gradually strengthening and inflation is expected to rise gradually over the next two years.
3. Australian GDP data: Wednesday, 0:30. Australian growth rate rose by 0.5% in the second quarter, slightly missing expectations for an increase of 0.6%. The yearly growth rate accelerated to 3.3%, the fastest in four years. The first quarter GDP growth rate showed 1.0% expansion while on a yearly basis, the economy grew by 2.9% during the 2015/16 financial year. Growth in the second quarter was driven by a 0.6% rise in domestic demand. Investment was flat in the quarter, with the continued slump in the mining sector. Australian GDP is expected to show a 0.2% growth in the third quarter.
4. Canadian rate decision: Wednesday, 15:00. The Bank of Canada maintained its target for the overnight rate at 0.5%. The Central bank expects the global economy to regain momentum in the second half of 2016 and through 2017 and 2018. Consumption accelerates due to strong employment growth and robust consumer confidence. However, US business investment was weaker than expected. Residential investment was also lower amid the federal government’s measures to promote stability in Canada’s housing market. Exports are expected to weaken over 2017 and 2018 due to lower estimates of global demand.
5. US Crude Oil Inventories: Wednesday, 15:30. U.S. crude oil stocks fell unexpectedly 884,000 barrels in the week to Nov. 25. Economists expected an increase of 636,000 barrels. The unexpected decline was led by a big drop in crude inventories on the East coast amid lower imports. However, this had very little impact on oil prices.
6. ECB rate decision: Thursday, 12:45. The European Central Bank kept rates unchanged but kept the door open to further stimulus in December. ECB President Mario Draghi raised a wide range of options to boost the economy and avoid deflation. The ECB has provided exceptional stimulus measures such as cutting rates into negative territory, buying 80 billion euros worth of bonds each month and has offered banks free loans in order to boost inflation back to the ECB’s 2% target. However, there are no signs that these measures are working. Economists expect the ECB would extend its QE by nine months in December. Draghi reiterated before the euro zone governments his plea to support ECB policy with pro-growth fiscal measures to stimulate productivity and improve the business environment.
7. US Unemployment Claims: Thursday, 13:30. The number of jobless claims filed last week edged up to 268,000, hitting the highest level in five months. Economists expected claims to inch up to 252,000. The number of initial claims increased 17,000 from the prior week. However, despite this rise, the number of claims remains at low levels consistent with strong labor market conditions. The four-week moving average of claims edged up 500 to 251,500 last week. US unemployment claims are expected to rise 272,000 this week.
8. US Prelim UoM Consumer Sentiment: Friday, 15:00. University of Michigan’s consumer sentiment index strengthened in November, rising to 91.6 from 87.9 posted in the previous month. The reading was better than the 87.4 points forecasted by analysts. The rise in sentiment may be attributed to the “presidential honeymoon” after the victory of Republican Donald Trump as consumers showed more optimism regarding their financial prospects. However this rise could take a turn for the worse unless real improvements in economic conditions occur. Consumer confidence is forecasted to rise again to 94.3.

That’s it for the major events this week. Stay tuned for coverage on specific currencies

*All times are GMT.