The week just past was very significant for the forex market. The sterling rose more than 2.70% against the greenback and 1.30% against the euro, as the British High Court stated that the Parliament has the constitutional power to trigger Article 50, thus government’s plan for Brexit needs parliamentary approval. The Prime Minister Theresa May has already appealed the ruling to the Supreme Court that will be heard on December 7th.
Moreover, the U.S. economy added 161,000 jobs in October and the job positions created in August and September revised upwards. The unemployment rate edged lower to 4.9% from 5.0% before. The average hourly earnings improved as well as the wages grew 0.4% in October from a pace of growth of 0.2% in September.
This week started already with significant reaction ahead of the U.S. Presidential Elections, as last week’s U.S. NFP failed to change the market’s expectation. Most of the U.S. cross pairs opened with a gap on a sharp rise of the dollar. All eyes will be concentrated at political developments that will make history, downgrading the significance of all the economic news.
Usually, the politics do not trigger much volatility but this year the markets affected strongly, as market participants did not consider Trump’s victory realistic. However, as we are approaching the day of the elections, traders are a bit alerted for Trump’s ideas for the economy, rushing to protect their portfolios, in a case of an economic uncertainty thereafter.
Monday’s economic calendar is light with few notable macro updates. The ECB Vice President Vitor Constancio will speak at 8:15 GMT in Brussels, Belgium, though we wouldn’t expect his speech to drive the market. Later on, in the Eurozone, the Sentix investor confidence for November and the retail sales for September are coming out. In the U.S., the labor market condition index for October will be released as well as the consumer credit change for September.
On Tuesday, all the eyes will be on the U.S. Presidential elections and USD traders will hang on every new information coming from the media. In other news, UK’s industrial and manufacturing production for September are coming out while the Inflation report hearings will be published. The NIESR GDP estimate for the three months to October is also scheduled for release later in the day.
In U.S., the NFIB business optimism index for October is coming out and Fed’s Charles Evans has two press conferences scheduled. Traders will not pay attention in any of these, as the politics will completely overshadow the economics for the day. Overnight, Chinese inflation rate is coming out and is expected to grow at 2.1% in October compared to the year before. In contrast, the month-over-month figure is forecasted to show that consumer prices remained flat in October from a rise of 0.7% in September.
On Wednesday, the spotlights of the day are the economic growth forecasts which will be released by European Commission and the Reserve Bank of New Zealand’s policy meeting. Early in the morning, the British trade balance for September will be released and a while after, the U.S. wholesale inventories, also for September. The RBNZ is widely expected to cut its interest rate by 25 basis points to 1.75%. It’s worth mentioning, that New Zealand’s central bank cut its interest rate two times in this year, and four times last year, by a quarter basis point each time, in order to boost inflation. The interest rate decision will be accompanied by a monetary policy statement and a press conference.
The Bank of Japan will release the summary of opinions report and the Japanese Cabinet Office will release the machinery orders for September. During the night, the Australian consumer inflation expectations report for November is coming out and on Thursday at 1:00 GMT, the FOMC member John C. Williams has a speech.
On Thursday, we have a muted economic calendar in the Euro area during the morning, shifting our interest at U.S. session. Fed’s James Bullard has a speech at 13:15 GMT. The weekly jobless claims will be released as usual, while the U.S. monthly budget statement for October will be eyed considering that U.S. has now a new president with different ideas about the economy.
Friday is a public holiday in U.S., thus we would expect volatility to be thin. During the European session, the German consumer price index will be released, as well as the U.K. CB leading economic index for October. A while later, the Bank of Canada governor Stephen Poloz has a speech.