Forex Signals Brief December 4: FED Blackout Period Before the FOMC Meeting
Last week we had the services and manufacturing reports which showed mixed results around the globe. There was an improvement in the Eurozone and the UK during November, while in China and the US the activity softened further. Although the US Q3 GDP report was revised higher, as was the GDP Price Index. But that’s not the favourite inflation measure of the FED. The PCE price index is and it showed another slowdown for last month, which kept the USD soft throughout the week.
We heard some hawkish comments by FED members, but markets focused more on the dovish remarks, and the USD continued to decline all week, apart from Thursday when buyers attempted a reversal higher but failed and on Friday the selloff resumed again. The Eurozone CPI inflation figures also showed a slowdown, that’s the reason the Euro was the second weakest currency last week.
Elsewhere, the Reserve Bank of New Zealand kept interest rates unchanged at 5.50%, while inflation in Australia slowed. But, commodity currencies remained bullish on talk of more Chinese stimulus, including the Canadian Dollar, despite the increase in the unemployment rate in Canada, as the employment report released on Friday showed.
This Week’s Market Expectations
The FOMC meeting is scheduled for next week, which means that we won’t get any more comments by FED members until then, although most traders know the FED is very unlikely to raise interest rates again from the 5.50% which is currently. This week the Reserve Bank of Australia will hold the monthly meeting, but they’re also expected to keep rates unchanged at 5.50%. Although markets will be concentrated mostly on the US employment numbers to see how strong the labour market is.
UPCOMING EVENTS:
- Monday: Switzerland CPI inflation
- Tuesday: China Caixin Services PMI, RBA Policy Meeting, Eurozone PPI producer inflation, Canada Services PMI, US ISM Services PMI, US Job Openings
- Wednesday: Australia GDP, Eurozone Retail Sales, US ADP, BoC Policy Meeting
- Thursday: China Trade data, Switzerland Unemployment Rate, US Challenger Job Cuts, US Jobless Claims
- Friday: Japan Wage data, US NFP, University of Michigan Consumer Sentiment
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