What Happened in The Market the Week Nov 28 – Dec 02 and What is Coming Up

U.S. NFP coming out later in the day and OPEC meeting on Wednesday were the main driving forces of the market. Moreover, the looming Italian referendum adds pressure to the euro and traders avoiding to open positions, as Monday market opening may enclose surprises.

[B]OPEC and Russia[/B] decided to cut production for the first time since 2008 surging the [B]WTI Crude Oil[/B] to Record high levels for this year at $52.20 a barrel. This decision aims the well-being and health of the world economy and was started to be discussed at the last OPEC meeting in September.

We are a few hours away from the [B]non-farm payrolls[/B] [B]report[/B] which is expected to set the tone for U.S. dollar the week ahead. The market expects U.S. economy to add 174K non-farm jobs in November. If this number surpassed, as all the previous indicators, ADP, jobless claims and ISM manufacturing PMI show, U.S. dollar will soar on the prospect that Fed will raise rates for sure in December’s policy meeting. Though, this will add pressure to the U.S. stocks. Each indicator on this report and especially the headline non-farm payroll number will be under the microscope of investors and FOMC members.

On Sunday, the [B]Italian referendum[/B] will take place and a “no” vote in combination with a series of other decision from Italian citizens are threaten the Eurozone’s financial and political stability. Italy will vote for amending the Italian Constitution to reform the appointment and power up the Parliament of Italy as proposed by Italian Prime Minister Matteo Renzi. If the Prime Minister loses the vote, this may lead for the opposite Italian party to take over and drive the country out of the euro as they have been already running a campaign for a referendum for Italy to exit the euro.

During the week, the quarterly outlook of U.K.’s financial stability has been also published revealing that the outlook for the domestic financial stability, after the Brexit vote, “remains challenging”, troubling GBP/USD from its quiet period has been the last two weeks. U.K. Supreme Court will start hearing of Article 50 on Monday, and sterling started to pick up in the prospect of a “softer” exit.

[B]U.S. Dollar – United States[/B]
· [B]Gross Domestic Product (GDP):[/B] The U.S. GDP for Q3 revised up to +3.2% qoq annualized versus +3.0% the previous forecast, taking out a possible obstacle for Fed prospect to raise the borrowing rates in the next policy meeting.
· [B]Consumer confidence:[/B] The consumer confidence surprisingly lifted to up to 107.1 in November, on the back on the newly elected president Donald Trump, from 100.8 before.
· [B]ADP Employment Change:[/B] The ADP survey showed that the pace of hiring in the private sector accelerated at 216K in November beating market expectations of 165K.
· [B]Fed’s Beige Book: [/B]The Fed’s Beige Book economic report was generally optimistic about the economy which stated that the “outlook was mainly positive” with six of the twelve districts “expecting moderate growth”.
· [B]Personal Consumption:[/B] The personal consumption expenditures (PCE) price index rose by 1.4% yoy in October from 1.2% the prior month. Core PCE price index kept its growth stable at 1.7% yoy, showing that the pick-up is not coming from food and energy sector.
· [B]Pending Home Sales: [/B]The indicator slowed down to 0.1% mom from 1.4% the previous month, whilst compared to the year before, also slowed down to 1.8% versus 2.4% before.
· [B]Non-Farm Payrolls Report:[/B] The NFP number forecast shows that U.S. economy added more jobs in November than in October, 174K versus 161K in October. A stronger figure than 174K will have a bullish effect on the dollar, as it is another confirmation sign that Fed will raise rates at December’s meeting, as the market is widely expected. On the other hand, if we see a surprisingly low number, the greenback will have a sharp to the downside. The average hourly earnings are expected to rise by 0.3% mom, instead of the previous month from an increase of 0.4% in October, while the unemployment rate is estimated to remain unchanged at 4.9%.

[B]Euro – Eurozone[/B]
· [B]Unemployment Rate:[/B] The unemployment rate declined to the lowest in more than seven years in October, falling at 9.8% in October from a revised 9.9% in September.
· [B]Consumer Price Index: [/B]The Consumer Price Index (CPI) flash tick up to 0.6% yoy from 0.5% yoy the month prior while the core flash CPI for November remained unchanged at 0.8%.
· [B]Markit PMIs:[/B] Factory activity expanded at 53.7 in November, confirming market’s prediction from 54.1 the previous month. Though, the stronger Markit PMI failed to stimulate the euro.
· [B]Confidence:[/B] Business climate indicator recorded the lowest in three months and fell to 0.42 for November from a revision to 0.56 the month before while industrial confidence failed to reach market expectations for improving further, as it slowed down to -1.1 in November from -0.6 before. The consumer and services confidence remained on the same pace in November with the previous month.

[B]British Pound – United Kingdom[/B]
· [B]Markit PMIs:[/B] The manufacturing sector expanded at a slower than expected pace in November, according to the flash Markit index that ticked down at 53.4 from 54.2 before while the market expects the services sector to keep the pace of growth at 54.5 – figures above 50.0 indicate expansion while below 50.0 indicate contraction.
· [B]Gfk consumer confidence: [/B]The consumer confidence dropped to -8 from -3 and according to Gfk, the deterioration is largely attributed to concerns about Brexit implementation.
· [B]Consumer credit: [/B]The indicator increased last month by £1.618B up from a revised £1.484B in September taking the annual growth rate to 10.5% the strongest since October 2005.
· [B]Mortgage approvals: [/B]The mortgage approvals for house purchases increased to 67,518K in October from 63,594 in September. The forecast was at 65,000K mortgage approvals for October.