"Next Week’s Headline Events (all times are GMT) 1. NFP (Friday 13:30); ADP (Wednesday 13:15) 2. GDP data: Sweden (Monday 08:30); Switzerland (Tuesday 06:45); Canada (Tuesday 13:30); Australia (Wednesday 00:30) 3. China Manufacturing PMI (Tuesday 01:00) 4. Central Banks: RBA (Tuesday 3:30); BOC (Wednesday 15:00); ECB (Thursday 12:45); 5. Fed’s Yellen Speaks to Economic Club of Washington (Wednesday 16:00).
In the US, the highlight of the week is likely to be NFP on Friday; the last print was very strong, which pushed up the likelihood of a December rate hike (see October Jobs Report Positive All Around, 6 November 2015). The October jobs report was broadly positive, as job gains rebounded strongly, the unemployment rate continued to trend lower, and average hourly earnings accelerated. The incoming data on labor markets in November point to a slower pace of job gains than the 271k total gain in October. On balance, we forecast total NFP will gain 180k jobs in November, with the unemployment rate remaining at 5.0%.
With ECB Draghi’s testimony before the European Parliament having intensified the dovish rhetoric, the ECB board has yet to push back against market expectations (in particular for a deposit rate cut), and we believe it will be difficult for the Governing Council to willingly “under-deliver” at a time when it remains concerned about inflation expectations and its credibility in meeting its mandate (see Dovish Draghi suggests broader package of measures on 3 December, 12 November 2015). Specifically, we expect the ECB to cut the deposit rate by 10bp to -0.30% and to extend QE until at least end of “June 2017 or beyond."
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