We head in the week before the catalyst Non-Farm Payrolls report – for Fed’s first rate hike over nearly a decade - thus any fundamental news from the US will be scrutinized. Fed Chairwoman Janet Yellen underlined that interest rates will rise if the economic data does not turn to worse. Additionally, it is the last week before the ECB policy meeting on Thursday, December 3rd when the policymakers plan to “do what they must to raise inflation rate as quickly as possible” as ECB president Draghi said at his speech on Friday. The ECB policymakers concern for low inflation and considering to expand the 1.1 trillion euro QE program that started eight months ago or take other measures such as cut deposit rate further below zero.
[B]Monday [/B]is a PMI day as November’s preliminary figures for US, Germany, France and Eurozone as a whole are coming out. In Germany, the performance of the services sector is forecasted to have deteriorated slightly as well as in Eurozone, while the no change is expected in the manufacturing sector.
In US, only the Markit manufacturing is scheduled for release and predicted to decline slightly, in November, to 54.0 from 54.1 before. The US existing home sales for October are predicted to have slowed down marginally to 5.44M from 5.55M before. Overnight, the RBA Governor Glenn Stevens has a speech which is likely to affect the Australian dollar.
On [B]Tuesday [/B]morning, the German the final GDP for Q3 will be released, expected to be stable at 1.8%. The German IFO Survey will be out as well, with all of its three indicators, Current Assessment, Business Climate and Expectations anticipated to decrease in November. US will post its second preliminary GDP number for the third quarter and the economy is anticipated to show a greater expansion of 2% qoq from 1.5% the first preliminary figure. If such a strong number comes out, the odds for December’s rate hike will increase by far!
The flash personal consumption expenditures prices growth for Q3 will also be printed. November’s consumer confidence is likely to rise to 99.5 from 97.6 before as Fed getting nearer to a rate hike. After the noon, Bank of Canada will publish its quarterly review that contains featuring articles the Canadian economy and the central bank. During the night, Bank of Japan will publish its monetary policy meeting minutes. A while later Japanese leading economic index for September will be out as well.
On [B]Wednesday[/B], no significant news from Europe are scheduled on Economic Calendar, therefore all eyes will turn to US. Out of Personal Spending and Personal Income that are expected to rise up to 0.3% from 0.1% and 0.4% from 0.1% respectively, October’s Durable Goods Orders will be watched closely. The Durable Goods Orders are monitored by investors as are sensitive to the US economic situation. For October, they are expected to have increased by 1.3% from a slowdown of -1.2% before. Going forward, the preliminary Markit Services PMI for November is predicted to advance up to 55.0 from 54.8 the previous month.
[B]Thursday [/B]is a bank holiday in US, thereby I would expect less volatility than usual. In Germany, the Gfk consumer confidence survey will be out. Later in the day, Japan will release the national consumer price index alongside with October’s unemployment rate. Overnight, the Gfk consumer sentiment also for UK will be out.
On [B]Friday[/B], the second estimate for Q3 UK GDP will be out. The market consensus wants GDP to advance by 0.5% as the first estimate.
In Eurozone, various indicators regarding confidence from consumers’, businesses’ and industries’ sides of views for November will be out, expected to trigger mixed emotions. The Consumer and the Industrial Confidence are forecasted to worse marginally while the Services Sentiment and the Business Climate are predicted to improve slightly. Meanwhile, the Economic Sentiment Indicator is expected to remain stable at 105.9.
[B]EUR/USD – Technical Outlook[/B]
The EUR/USD pair has found support at 1.0660 and amid the upcoming December’s Fed interest rate decision the dollar is likely to lose some of its strength because of risk aversion. The pair has not still tested the broken ascending support and we believe that in the next couple of weeks we will see a bullish reversal and a retracement towards the 1.1100 resistance. This scenario is backed up by overall dollar depreciation as the greenback is losing strength not only against the single currency but against all other majors from the G10 basket.
From a technical point of view, the pair is in a downtrend but we believe that the bulls will take the dominant side before the pair drops below the main support zone at 1.0520. Our expectations are for a rally towards the 1.1100 resistance. On the other hand, if we see the pair traded below 1.0500 this will be a clear sign that further declines will follow towards the zone of parity.
[B]AUD/USD – Technical Outlook[/B]
After very long series of declines, the AUD/USD pair seems to have found the main support zone and the prices are ready for a retracement. The pair has been in a consistent downtrend since September 2014 and we believe that this economic cycle is about to end. The levels around 0.7000 are strongly oversold even for a weekly basis and the price action suggests that the downtrend is stopped and now the pair enters a consolidation or even trend reversal stage.
From a technical point of view, the rally should continue towards the first main resistance at 0.7380 as a daily close above that level would indicate that the bulls are going to pressure even further towards the 0.7530 resistance. On the other hand, the level at 0.7000 is a main psychological support and a drop below would be a clear indication that the bears are going to push the last active support at 0.6900.