FX News Today
EUR traders are positioning ahead of the ECB meeting on Thursday, with markets preparing for the Eurozone central bank to cut its deposit rate and hoping for an expansion of the QE program.
Today’s European calendar, on tap U.K. manufacturing PMI, German unemployment. The final EMU manufacturing PMI, likely to be confirmed at 52.8 (median same). German jobless numbers are seen down -7K (median -6K), which will leave the adjusted jobless rate unchanged at 6.4%. The calendar also has the U.K. Manufacturing PMI, which is seen falling back to 53.5 (med 53.6) from 55.5 in October. Switzerland releases Q3 GDP numbers as well as October retail sales.
The U.S. calendar heats up today, to be released out of the U.S. we have, Manufacturing ISM, Construction Spending, and Auto Sales, although traders are mostly waiting for Friday’s NFP report, as well as Fed Chair Yellen’s comments tomorrow. Fed-speak resumes today with remarks from dove Evans of the Chicago Fed, who will be addressing current economic conditions and monetary policy from 12:45 ET. Fed Governor Brainard will next tackle the “Lower Neutral Rate and its Implications for Monetary Policy” from Stanford in California after the close from 20 ET, while VC Fisher speaks at a Financial Stability conference.
RBA left cash rate unchanged at 2.00%; RBI also held policy steady as was widely expected. The board was constructive regarding the economic outlook, saying that “prospects for an improvement in economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate.” Of course, they maintained scope to ease if needed, saying the “outlook for inflation may afford scope for further easing of policy.” As for the currency, they noted the AUD is “adjusting to significant declines in key commodity prices.”
Asian stock markets are mostly higher, despite disappointing data out of China, with markets in Japan, Hong Kong and Australia rebounding after strong capex data out of Japan and as bargain hunters move in. U.K. and U.S. stock futures are also higher.
Main Macro Events Today
• EUR Eurozone manufacturing PMI: The overall EMU number is likely to be confirmed at 52.8 (median same). German labor market data will also attract some attention and analysts are looking for a drop in the seasonally adjusted jobless number of -7K (median -6K), which will leave the adjusted jobless rate unchanged at 6.4%.
• GBP U.K. Manufacturing PMI: which is seen falling back to 53.5 (med 53.6) from 55.5 in October.
• CAD Canada Gross Domestic Product: Real GDP is expected to grow 2.3% in Q3 (q/q,) following the 0.5% drop in Q2 and 0.8% pull-back in Q1. The expected gain would only slightly undershoot the Bank of Canada’s 2.5% estimate (median is for 2.3%) and perhaps more importantly leave an economy that is moving in the direction anticipated by the bank.
• U.S. Manufacturing ISM: November ISM should reveal a slight headline increase to 50.5 (median 50.4) from 50.1 in October and 50.2 in September.
• U.S. Construction Spending: October construction spending should reveal a 0.5% (median 0.5%) headline which follows a 0.6% headline in September and 0.7% in August.
• U.S. Auto Sales: November auto sales data will be released over the course of the day on Tuesday and should reveal an 18.1 mln pace for the month, this would make the third month that sales have held at 18.1 mln.
Janne Muta
Chief Market Analyst
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