All quiet for sterling, for now…
An update from Charles Purdy, director of Smart Currency Exchange.
This week, in theory, should be a quiet one for sterling with only one major data release and that is on Friday. Last week sterling ended on a pretty flat note against the euro, close to recent highs, but lost ground against the US dollar, against which it continues to move in a fairly narrow range.
However the quiet week could be disrupted by the chancellors Autumn Statement and forecast which takes place on Wednesday, which is expected to be contentious given all the cuts in public expenditure the chancellor is hoping to drive through. The main data release is not until the end of the week when the second estimate of Gross Domestic Product for the third quarter is released. Expectations are for no change from the first release.
A busier week for Eurozone data which could affect the euro:
It was a mixed end to the week for the euro, as the single currency strengthened very slightly against sterling, but weakened against the US dollar. Most of this was down to the European Central Bank (ECB) President Mario Draghi reiterating that the central bank will do “what is necessary to ensure that inflation returns rapidly towards its goal of just under 2%.” It was also a mixed result for data last week, with Producer Price Index (PPI) data coming out a little worse than expected for Germany at -0.4%, while consumer confidence figures vastly exceeded expectation and ticked up to -6, an impressive figure, bearing in mind the forecast was -7.5.
We expect a whole raft of preliminary November Purchasing Managers Indices (PMI) to be released from the Eurozone. Expectations are for the figures to hold steady when compared to the previous month, while Friday will also be an important day for European data, with the release of Consumer Confidence figures for the Eurozone.
More surprises in store for the US?
With a surprise US Federal Reserve statement due to be released today, markets will be very cautious in anticipation. With no indication of what the statement will include, investors will be wary if any change in US interest rates is announced. A series of important data releases are due to follow. The very next day will see the release of Gross Domestic Product (GDP) for the third quarter, which is expected to post another strong figure. Following this will be the release of Consumer Confidence data for the US, which is also expected to show positive growth.
Durable goods orders and unemployment claims data due to be released on Thursday are expected to show stable figures in the US, along with Personal Income and Personal Spending data releases. If all signs show positivity, it will back up the Federal Reserve’s statement that the interest rate decision will be data driven, leading to more speculation regarding a December rate hike.
A busy week for Australia and Japan
The Australians are the busiest nation in terms of data releases this week, with important announcements expected tomorrow and Thursday. Tomorrow morning, governor Stevens is set to speak, an event that usually inspires market fluctuations. Thursday’s publishing of the Private Capital Expenditure data is expected to be 1.2% better than last quarter, although this particular release has failed to reach expectations all year.
Japan also releases its key data on Tuesday and Thursday, including Tokyo CPI data. It is expected to be at -0.1%, slightly better than last month’s results.