Week Ahead: Central Banks meetings, U.S. NFP, more earnings

31 October, 2016

After the U.S. and U.K. economies showed better than expected growth in the third quarter, investors turn their attention to monetary policy actions. Four major central banks will meet the coming week (Fed, BoE, BoJ, and RBA), and while most of them remaining accommodative or planning to ease further, only the Federal Reserve is set to swim against the tide. Here’s what to watch the week ahead:

The Fed to send a clear message

With 9 days remaining to the U.S. presidential election, the Fed is expected to keep markets calm and stand pat on rates when they announce policy on Wednesday. The two-day meeting will most likely set the tone for December where markets are pricing more than 70% chance for a hike.

Latest round of economic releases supports the idea of tightening policy with growth bouncing back from a weak first half in 2016, jobs added to the economy averaging at 191,000 in the last three months, and more Americans buying new homes. The improvement in data will likely keep the dissenters from October’s decision in favor of hiking, but I think it’s very unlikely for other members to join.

I believe the statement that follows the meeting will indicate a clear signal that a rate hike in December is coming, similarly to what we saw in October 2015 when the Fed stated “In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress both realized and expected toward its objectives of maximum employment and 2 percent inflation.”

Another strong jobs report to support Fed’s view

Several U.S. economic reports are due next week including personal consumption expenditure, ISM manufacturing and non-manufacturing, factory orders and trade balance, but Friday’s jobs report will have the most significant impact on markets. The economy is expected to add 175,000 jobs in October versus 156,000 in September, and unemployment to tick down to 4.9% from 5%. Wages are no less important with average hourly earnings expected to climb to 2.6% from a year ago suggesting that inflation will return sooner than later.

Earning season remains in full swing

Earnings season will continue with heavyweight companies to announce results including Facebook, Alibaba, Starbucks, Pfizer, Time Warner, Qualcomm, and Warren Buffett’s Berkshire Hathaway. So far 74% of S&P 500 companies managed to beat profit estimates while 58% beat on revenues, and it became clear that U.S. companies are out of profit recession which lasted 5 quarters with earning growth for S&P now standing at 1.6% according to Factset.  


Source link  
Oil takes the spotlight

For oil bulls they've not been this high since 2015 and it's seeming like we may continue to see further highs in the long run. So far oil has pushed through resistance at 62.12 and is now...

FOMC give some life back to dollar bulls

The latest FOMC minutes have given the bulls something to be happy about, as the FED once again looked to keep the pace of rate hikes in the near future.

USD stages comeback on CPI and retail data

It's been a positive day for US economic data as retail sales surprised analysts lifting to 0.2% (0.0% exp). This shows a strong build up in the period...


Currencies bound ahead of Fed decision

It is a quiet Wednesday in the currency markets. Traders are favoring to remain on the sidelines ahead of multiple key risk events...

Asian equities flat

Equities across the Asian markets were trading in a tight narrow range on Thursday, ignoring solid Chinese data and the new records on Wall Street, where the Dow Jones Industrial...

Inflation continues to worry FED

FOMC minutes were released today and painted some interesting pictures on the state of the US economy. So far FED members are calling for...


Pound struggles on uncertanity

Conviction in the pound seems to have fallen off the way side after the most recent days of trading with the pound taking further hits as it slides...

Geopolitical risks return to the front seat

Demand for safe havens returned on Monday as war of words between North Korea and the U.S. triggered flight to safety amongst investors...

RBA minutes offer guidance on economy

The Australian economy has hit the spotlights as the Reserve Bank of Australia meeting minutes are out. As usual it's quick to point the finger...

  


Share: