Danske Research Team
Danske Bank A/S
Market movers ahead
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In the US a lot of attention next week will be on the first estimate of Q3 GDP growth. Overall, we expect GDP growth was around 2.0% q/q AR in Q3. This is not strong taking into account the disappointing growth rates in the three previous quarters and it is much lower than previously expected. Preliminary Markit PMIs for October are also due out.
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The main data release in the euro area next week is the PMI figures for October. We expect stronger manufacturing PMI in October. The service PMI on the other hand has trended down during 2016, but a recent stabilisation in the future business expectations index suggests it will remain around the current level.
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In the UK, the main data release next week is the first estimate of GDP growth in Q3. Economic data in Q3 have been much better than we feared and expected. We look for GDP growth in the range of 0.25-0.50% q/q with 0.4% being our point estimate (2.2% y/y).
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In Sweden the focus next week will be on the Riksbank's monetary policy meeting on Thursday. In addition, the SNDO will release its new forecast on Wednesday for the net borrowing requirements for the remainder of 2016 and 2017. We foresee quite a dramatic cut in net issuance, which may eventually also be an issue for the Riksbank as the supply of assets to purchase in its QE programme will probably decrease further.
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The focus next week in Norway will be on Norges Bank's monetary policy meeting on Thursday. We do not expect Norges Bank to touch interest rates.
Global macro and market themes
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The ECB is likely to extend QE in December and avoid stimulus, which would hurt the European banking sector.
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We expect EUR/USD to fall near term on relative monetary policy expectations and politics.
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We see EUR/GBP heading towards 0.92 on 3-6M. USD/CNY uptrend to continue.
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Short term, we see equities as a ‘buy-on-dips'.
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