Free Market Analysis

Hello and welcome to our weekly podcast series, today we are going to talk about the most important economic events of the coming week but, first let’s have a look at the last week and what happened. As we discussed in the previous podcast, the most important events of the week were about the Mr. Powell's speech and also the NFP statistics release. As you might know Mr. Powell confirmed the minutes of the Federal Reserve meeting, and said that the future plan of the Federal Reserve is to slow down the pace of interest rate increases, and this was important for the market so as a result you could see a large drop in the dollar index, almost around two points as we emphasized this already in our last week podcast. After that, the NFP statistics were published and these statistics were very favourable to the American economy. In terms of the new jobs creation, the forecasts were two hundred thousand jobs, but two hundred and sixty thousand new jobs were created. This favourable news for USD caused a powerful upward candle in the dollar index but very soon market returned to its downward move because as we mentioned earlier even if the NFP statistics show the US economy is strong, the Federal Reserve policy is decided to be less hawkish in the coming months as we saw this in the Fed minutes as well as Powell’s speech. The Fed believes we passed the inflation peak, as a result, their hawkishness will be lower than it has been in the last couple of months and the dollar index cannot rise much more for a long time. In this situation a strong NFP can not hold the bullish momentum for USD. In fact, USD may grow with a series of news, but the federal reserve policies are the most important driver for the dollar index. Don’t forget the most important goal of the Federal Reserve in the last few months has been fought against inflation and, if we say they have been successful in that, then there is no need to more hawkish decisions and strengthening the USD. For this reason, creating good amounts of new jobs on its own is not a powerful reason to drive the USD higher. With this summary about last week, Let's go to the first working day of our coming week, on December the 5th, we will have a speech from Mrs. Lagarde, the head of the ECB. And for us, both the tone of her speech and the statements she will make regarding inflation are of the great importance. After that, the service PMI statistics for most European countries including Spain, Italy, France, Germany, and the service PMI for the whole Eurozone will be announced. The forecasts are mostly below 50 for all of them, except for Spain, which is 50.6. If this number comes higher than 50, and in general, if it comes better than the forecasts, then it shows the better economic situation of that country and naturally the strengthening of that country's currency. In the UK, the final service PMI will be published on this day, which is forecasted to be 48.8, if it is higher than this number, it can strengthen the pound, especially on these days when the dollar is weak. Let's go to the last important news of Monday which is Service PMI statistics for the US. Forecasts are 53.5 and again if it will be announced higher than this it can reverse the bearish trend of the dollar at least in the short term. Having said that this can not impact the main Fed policy which we discussed earlier. On 6 of December, in Australia, we will have the interest rate statistics announcement and the meeting of the Royal Bank of Australia members. We need to see what the annual interest rate will be compared to the expected 3.1%. If the same figure is published, it may not be a special surprise for the market. After that in Canada, we will have the trade balance statistics announcement, and we also have this statistic for the US. The forecast for Canada is 0.9 billion, while America’s forecast is -8.79 billion which is normal for the US. Let's go to the 7th of December, for Australia the GDP statistics, and for China, the trade balance will be announced, then we will have important news for the Canadian dollar including the interest rate announcement and the meeting of the members of the Central Bank of Canada. The forecasts for the annual interest rate in Canada is 4%, and we have to see what will be announced. However the overall situation of Canadian dollar is almost clear and we can say that we won't have many special surprises on this day, but we have to wait for the release of the data. In the meantime, there will be a series of other low-impact announcements, like France's trade balance statistics and retail sale statistics for Italy, which they cannot have an immediate impact on the market. We just follow them to have a better whole picture of the EU situation. So let’s quickly go to the December the 8th, we will have Japan's final GDP, Australia's trade balance, America's unemployment insurance claim, Swiss National Bank members' speech, Canada's PMI statistics, and Ms. Lagarde's speech, which can be among the most important news on this day. After that on Friday 9th of December the US monthly PPI and monthly core PPI statistics will be published, which will be very important for the market. PPI is producers price index and it has a significant impact on CPI. If the PPI will come lower than the forecasts it automatically sends this signal to the market that the US inflation is decreasing, and Fed can continue its new policy about slowing down the rate of interest rate increase which causes the dollar index getting weaker. On the other hand, if the PPI statistic will come above the forecasts, then it can reverse the trend and make USD stronger at least in the short time. After the PPI statistics, we will have University of Michigan consumer sentiment announcement, which is a good indicator about how do consumers feel about the general economy and plan for their spending. It can be used to see if there is strong demand in the market or not specially as we are getting closer to the end of the year shopping season it will be very important to see how people feel about their spending and if they will be cautious about how much they gonna spend, then that will have its impact on the US stock market as the companies revenue will drop and as a result their earning, EPS and share price will drop consequently in the coming months. Well, This was from this week's podcast; I hope it will be useful for you. Don’t forget to like and share this and feel free to leave us your opinion in the comment section. Have a great time and bye for now