Weekly Outlook, 26 Nov. – 3 Dec. 

Covid-19, NFP & Powell! 

Market analyst – IFC Markets

The week ahead will be a heavy data week from most developed economies, including US employment data and FED Chair Powell testimony. However, all these data and their reaction will be affected by Coronavirus news, as the latest variant in South Africa caused a free-fall across the markets. For the week ahead I will explain the main events and data, however, remember, that everything must be considered by the effect of virus news.

Fed Chair Powell Testimony – Monday

Federal Reserve Chair Jerome Powell will testify on the economic outlook and FED’s recent monetary policy actions before the Joint Economic Committee, in Washington DC. The testimony will have two parts. The first is reading a prepared statement, then he should answer the committee’s questions. During the Q&A, can see heavy market volatility. At the same time, Treasury Secretary Yellen and four FOMC members will speak. 

China’s PMIs – Tuesday

Given a renewed spread in COVID cases and the newest variant of Covid-19, the possibility of new restrictions, in line with recent regulatory changes, have weighed on both Manufacturing and None-Manufacturing activities. Both softened in October, and Now for November, the consensus forecasts also are to see weaker numbers, which will end with a slower economic outlook also in the fourth quarter in China.

Eurozone inflation – Tuesday

Same as other economies, inflation in Eurozone also increased in recent months. And now, ahead of the December meeting of the European Central bank, November inflation numbers will be important to watch, which will give us a clearer view of possible decisions. Euro area headline CPI jumped 4.1% in October, compared with a year ago. For November we are waiting to see even higher numbers. However, we do not expect any huge changes in the December announcement unless gradual tapering in the ECB’s overall bond purchases. This policy will hold the pressure on the euro against its crosses. 

ISM Manufacturing – Wednesday

Ongoing supply chain challenges are weighing on most manufacturing activities. However, the purchasing managers’ numbers are good evidence for strong demand, which can somehow cap the negative impacts of supply chain shortages. Philadelphia Fed and Empire Manufacturing survey both confirm that. Given these situations, we are waiting to see increasing numbers for November, and it must be positive for the US dollar index.

US Employment data – Friday

Recently released employment data from the United States confirms that we are on our way to normalization of economic conditions. The latest Initial jobless claims after an incredibly increase in October NFP number to 531K, had many reasons, including cutting off the unemployment benefits and higher wages. Average hourly earnings rose 0.4% in October, which is up by 4.9% over the past year, while the unemployment rate also eased to 4.6%. Coming Friday, we are waiting to see 600K new jobs created in November. These data can put more pressure on FED to increase the level of tightening policies and put a bit more pressure on stock markets. 

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