It’s going to be a busy week ahead with important data points expected
in several countries, especially in the U.S.
The week will kick off with a few
Fed members delivering their remarks Monday, followed by the U.S. CB Consumer
Confidence print on Tuesday.
Wednesday, we’ll get the preliminary GDP q/q; JOLTS Job Openings and
pending home sales m/m for the U.S. and the CPI for the eurozone.
Thursday will
bring the CPI m/m in Switzerland and the U.S. core PCE price index m/m,
unemployment claims and ISM manufacturing PMI.
Friday will include the average hourly earnings m/m, non-farm employment
change and the unemployment rate for the U.S. and employment change and the
unemployment rate for Canada.
The month-end rebalancing will also occur this week and might cause some
volatility in the market, so it’s worth keeping an eye on.
The eurozone CPI y/y is expected to show signs of cooling down from
10.6% to 10.4% with the decline likely due to the drop in energy inflation,
according to Citi.
The data should be closely watched as it can provide clues
about the next rate hike at the December meeting.
Many analysts now expect a
50bps rate hike following comments from ECB policymakers who suggested a step
down from 75bps is on the table.
In the U.S., Fed Chair Jerome Powell is expected to deliver his remarks
Wednesday and might focus on inflation and the labour market. He could
emphasize that the inflation target can’t be achieved with current labour
market conditions.
The Fed blackout period starts on December 3rd.
Analyst consensus for ISM manufacturing is 50.0, under last month’s
50.2, reflecting a contraction.
According to Citi we’ll see a weakening in hard
manufacturing data, like production and durable goods orders over the coming
months.
The U.S. PCE which is the Fed’s preferred measure for inflation is
likely to decelerate.
The non-farm employment change is likely to show signs of
cooling down but is expected to remain solid.
The consensus is for a 200K gain
in jobs (prior 261K).
The average hourly earnings m/m are expected to drop from
0.4% to 0.3%, while the unemployment rate will likely remain unchanged.
There
is also a possibility that the data will print better than expected.
In Canada, all eyes this week will be on labour market data. Citi
analysts expect a 15K decline in Canadian jobs and the unemployment rate to
rise to 5.4% due to a return to strong immigration.
USD/CAD expectations
On the H1 chart the pair closed the week near the 1.3390 level of
resistance which didn’t hold.
The next target is 1.3490 and from there a
correction is expected until 1.3360. In the short term the pair looks good for
buying opportunities.
With plenty of data for the pair this week take caution
as the bigger picture might be negative for USD/CAD.
There’s a strong
resistance at 1.3560 and if it holds, the next target could be 1.3245.
This article was written by Gina
Constantin.