Weekly Outlook December 7-11, 2015

Last week:

  • RBA (Reserve Bank of Australia) and BOC (Bank of Canada) holds their rates at 2.0% and 0.5%.
  • ECB (European Central Bank) also holds their interest rate at 0.05%, but cut their deposit rate 10 bps to -0.3%. ECB also extend their quantitative easing program by six months until March 2017, but the amount doesn’t change. The statement sending EUR/USD around 400 pips higher, in the middle of big expectations from the market about further easing in the Eurozone.
  • In the US, the non-farm job market printed a solid 211k figure. Weaker than the previous month (298k), but beating market expectations.

This week: 

For this week, there were 3 rate decisions from the central bank in Switzerland, New Zealand and the UK. Market forecast that there would be a rate cut in New Zealand and no change in Switzerland and UK. Another event that should consider comes from employment data in Australia, retail sales, producer price and consumer sentiment in the US.

I’m still bullish on US dollar since the door seems still opened for the rate hike in December, with the solid job market figure and statement from Janet Yellen last week.

*All time are GMT

Wednesday: 

  • 8.00 pm New Zealand Cash Rate: market expected that the RBNZ (Reserve Bank of New Zealand) will cut the cash rate from 2.75% to 2.50%. New Zealand still struggling to reach the inflation near the 1-3% target. Annual CPI is expected to be better in early 2016, since the last quarter CPI rising only 0.4% (year on year). The exchange rate has been moving higher since September and potentially harms the trade sector and medium-term inflation. This would require a lower interest rate.

Thursday: 

  • 00.30 am Australia employment data (m/m): this month, the labor market predicted will lose 10k jobs after added extraordinary 58.6k jobs last month. While the unemployment expected to rise from 5.9% last month to 6.0%. The trend on unemployment rate still shows an uptrend.
  • 08.30 am Switzerland interest rate: the SNB (Swiss National Bank) predicted will keep the rate at -0.75%, continuing the January’s policy. The decision to cut their rates on early 2015 still produce an unexpected result. Inflation rates remain at the lowest since 1959. The last figure on November shows that the inflation rate decreased by 1.4% year-on-year, the same figure that stand still since August 2015. The economy shows no growth in Q3 2015.
  • 12.00 pm UK interest rate: the BOE (Bank of England) predict will hold it rate at 0.50% and likely to keep steady until the end of 2016. Inflation rate still below 2% target and the growth rate has weakened with the last quarter shows 0.5% growth, slower than Q2 2015 (0.7%). Annual growth declined since early 2015.
  • 1.30 pm US unemployment claims (w/w): the unemployment data is expected to reach 266k, or slightly better than the previous week (269k).

Friday: 

  • 01.30 pm US retail sales (m/m): the core retail sales (excluding automobiles) is predicted will increase from 0.2% to be 0.3%, while the retail sales also predicted will go up from 0.1% to be 0.2%.
  • 01.30 pm US PPI (Producer Price Index) (m/m): after posted negative growth in the last 2 month, producer price index is predicted to remain flat this month (0.0%).
  • 03.00 pm US Prelim UoM Consumer Sentiment (m/m): the final figure on consumer sentiment in November is revised down to 91.3, lower than the first figure at 93.1, but still higher than the 90.0 in October. This month consumer sentiment is expected to reach 92.3 or better than the figure in November (91.3).
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