This Week
The working week will be slightly shorter than usual in the US and Japan thanks to bank/ market holidays. The Labour Thanksgiving Day holiday takes place in Japan on Monday, while Thanksgiving Day will be celebrated in the US on Thursday. There is also an early market close at some US exchanges on Friday.

On Monday there will be major news from the Eurozone and the US. At 09:00 the German Ifo Business Climate Index will be announced. The Index is expected to slip to 88.8 from 90.2 in the previous month.

High volatility will come from the US at 15:00 with Existing Home Sales. Traders are expecting the annualized number to fall to 5.02M for the month of October, down from 5.18M seen in September.

Later in the day, at a time yet to be specified, President-Elect Obama is set to hold a press conference to discuss his economic team appointments. Although this event isn’t expected to create high volatility a reaction is expected from traders. This will probably be more evident in the stock market as traders assess the qualifications and suitability of those appointed.

Tuesday will be fairly action packed beginning with quarterly Inflation Expectations from New Zealand. The Reserve Bank of New Zealand survey of business managers is due at 02:00 with a CPI prediction of 3.0% seen at the last release.

High volatility is also expected for the MPC Treasury Committee Hearings at 09:45 on Tuesday. MPC members will testify before the UK Parliament’s Treasury Committee on the latest Inflation Report.

At 13:30 we will see high volatility from the US and Canada. Preliminary US GDP is due with a -0.5% reading expected after -0.3% in the previous quarter.

Canada will be releasing Core Retail Sales with a MoM increase of 0.2% forecast after the -0.3% seen last month. Retail Sales are also due but the Core number is seen as more important.

Later in the day the Conference Board’s US Consumer Confidence Index will be released. High volatility is expected for the indicator which is likely to remain at 38.0 for the second month in succession.

Wednesday will produce the second bout of GDP data for the week. The UK will announce its revised GDP reading for the 3rd quarter. No revisions are anticipated for the final reading so it is likely that UK GDP contracted by 0.5% in Q3.

At 13:30 there will be a US double header with Core Durable Goods Orders and Initial Jobless Claims due for release. Core Durable Goods Orders probably fell by 1.4% on the month after a revised 1.0% decline seen in September. Initial Jobless Claims will be closely watched after the 542K 16-year high last week. A slightly lower number of 530K is anticipated this time around.

At 15:00 we will see US New Home Sales. If analyst expectations are correct the annualized pace of New Home Sales will fall to 443K from 464K in September.

Rounding off a busy Wednesday will be the New Zealand Trade Balance. Expectations are for a narrowing of the trade deficit to 1000M from 1183M New Zealand Dollars.

As we have already discussed, Thursday will be slightly quieter than usual with the US holiday but we will have several important releases. First up at 00:30 is Private New Capital Expenditure from Australia. Expectations are for a 0.5% quarterly growth in private business expenditure, down from growth of 5.7% in the previous quarter.

At 02:00 we will see the National Bank of New Zealand Business Outlook report. The survey of business confidence came in at -42.3 last month.

At 07:00 we will see the UK’s Nationwide House Price Index. Average home prices in the UK continue to decline with a monthly fall of 1.7% expected according to the high street mortgage lender. This comes after a 1.4% decline in September.

After a quiet afternoon session New Zealand’s Building Consents are due for release. A monthly increase of 8.4% was seen in September.

Friday will be a quiet end to the week with only one high volatility event scheduled. The Confederation of British Industry (CBI) Realised Sales index is expected to show further decline in sales volume throughout British Industry. The index is expected to read -35 after -27 seen last month.

The Bank of England’s Monetary Policy Committee voted unanimously to cut rates by one and a half percent in November, the BOE MPC Meeting Minutes revealed today.

The 9-stong committee also considered a larger 2.00% cut thanks to a deteriorating economic outlook and the prospect of falling inflation. The Bank’s Inflation Report revealed that inflation would likely fall to “well below” its 2.0% target in 2009 and the Committee would have been privy to this information prior to its release.

However, the prospect of a 2.00% cut was rejected in favour of a more measured approach to the easing of monetary policy. The MPC believes that consumer confidence will be supported if the bank eases rates gradually as and when more signs of economic weakness become apparent. The Bank also believed that drastic cuts could weaken the GBP to a level that might create upward inflationary pressure.

The decision to measure interest rate cuts was key as the MPC wanted the opportunity to explain its position in the November Inflation Report. It seems that the Bank is well aware of the importance of keeping the British consumer informed. If the UK economy is to recover, or at least minimise recession, consumer confidence and spending will be key.

Last Week
Last week was characterised by further weakness in Sterling as BOE Governor King confirmed that more rate cuts are coming “if that proves to be necessary”. The BOE Inflation Report also confirmed that inflation will fall to “well below” the Bank’s target 2.0% in two years time. At the present time the market is expecting the UK Official Bank Rate to hit 2.00% by mid 2009.

On the other hand, Yen and the US Dollar were firm against the major currencies as economic data proved that the global economy is entering a recession. The GBP USD dove from an early week high of 1.5884 by over 1000 pips to a low of 1.4557. Based on closing prices this represents a weekly fall of 6.09%.

The GBP JPY was also very weak, falling by 7.43% on the week. This time last week one GBP would have bought you over 153 Yen, however the exchange rate currently stands at 143.02.

Other than the UK Inflation Report last week’s major news announcements were Initial Jobless Claims which hit a 7-year high of 516K and US Retail Sales which managed all-time YoY lows. Headline Retail Sales were down 2.8% YoY in October while Core Retail Sales were down by 2.2%. These numbers are even worse than 2001’s post September 11th data.

This Week
Once again the world’s major economies will be active this week with plenty to keep traders occupied. We begin at 23:50 on Sunday with Japanese preliminary GDP QoQ. The data is expected to show that the Japanese economy grew by 0.1% in the 3rd quarter after a 0.7% contraction in the previous period.

On Monday we have Real Retail Sales from Australia at 00:30. This indicator strips out the effects of inflation on Retail Sales. On a quarterly basis traders are expecting a 0.4% increase. In the last quarter Real Retail Sales fell by 0.6%.

Tuesday will be a busy day with Australian, UK, US and New Zealand data due. We begin at 00:30 with the RBA Monetary Policy Meeting Minutes which will offer an insight into the 0.75% rate cut on November 4th.

At 09:30 the UK’s YoY CPI is due. Economists are expecting inflation to fall from the 5.2% seen last month to 4.8%.

High volatility from the US begins with the Producer Price Index at 13:30. PPI is expected to post a -1.9% MoM for October after the 0.4% decline seen in September. This is followed by TIC Net Long-Term Transactions at 14:00. Foreign purchases of US securities have been in decline in recent months with a surplus of $18.0B expected in October.

At 14:30 Fed Chairman and US Treasury Secretary Paulson will testify before the US House of Representatives Financial Services Committee on the Troubled Asset Relief Program (TARP). High volatility is expected while the pair are making their remarks.

The data from New Zealand will be in the form of PPI Input. This data measures the rate of inflation experienced by manufacturers when purchasing goods and raw materials. The index came in at 5.6% in September.

Wednesday continues where a busy Tuesday left off. RBA Governor Stevens will speak in Melbourne. His remarks are expected to generate high volatility.

At 09:30 the BOE’s MPC Meeting Minutes will be released. Traders are expecting the vote count to be unanimous in favour of November 6th’s 1.50% interest rate cut.

At 13:30 we will see two high volatility events from the US. Core CPI is expected to show a 0.1% MoM increase in October. This is in-line with September’s number. Building Permits are expected to show a slight decline in the annualized number of residential permits issued. A number of 770K is anticipated for October.

At 19:00 we will have yet more insight into recent central bank rate cuts with the FOMC Meeting Minutes. This release corresponds to the 0.50% rate cut seen on October 29th.

A busy week for the UK continues on Thursday with October’s Retail Sales number due. A MoM decline of 0.9% is expected, steeper than September’s 0.4% fall.

Particular interest will be paid to this week’s Initial Jobless Claims report from the US at 13:30. As we have already mentioned, claims hit a 7-year high last week at 516K with a slightly lower number of 508K likely this week.

On Friday morning the BOJ Interest Rate Statement will be released. Rates are expected to remain on hold at 0.30% with the BOJ Press Conference likely to be the high volatility event.

The final high volatility event of the week will come from Canada with the Core CPI release. September saw a 0.4% increase with October expected to be completely flat at 0.0%.

For further information and updates be sure to visit our economic calendar. This week US PPI, BOE MPC Meeting Minutes, US Core CPI and Canadian Core CPI will all be supported by our visual analysis and historical data tool.

 

Last Week
The BOE surprised traders last week when its Monetary Policy Committee (MPC) decided to cut interest rates by 150 basis points to 3.00%. The market had been expecting a much less aggressive cut to 4.00%. This move fuelled speculation that the BOE will need to cut rates at a faster pace than other central banks and heightened the likelihood that the Official Bank Rate will eventually reach 0.00%.

As you might expect, the GBP closed lower on the week against all other major currencies on the back of this speculation. Although the existing Sterling bearish trends remain in consolidation there are absolutely no signs of a reversal in the medium to long term. The Pound’s value over the coming months will depend on the pace at which the ECB, Federal Reserve and others slash rates. However, the ECB has demonstrated much more measured cuts and the Federal Funds Rate already sits at 1.00% with very little room to the downside.

In the US, Barack Obama became the first African-American President of the United States with 53% of the popular vote. One thing is for certain, he is unlikely to experience any honeymoon period when he is sworn in come January. He will be more than aware of the disappointing economic data coming out of the United States last week.

US Non-Farm Employment Change came in worse than expected at -240K compared to the -200K expected. To make matters worse, September’s data was revised down 125K to -284K. September and October’s data together make the worst two-month series since 2001. Unemployment also surged to the highest level since 1994. It now stands at 6.5%, much worse than the 6.3% expected and 6.1% seen in September.

This Week
The high volatility begins in the early hours of Monday morning this week with Australian Home Loans and the RBA Monetary Policy Statement. September’s Home Loans came in at -2.2% and a further MoM drop of 2.7% is expected to have occurred in October.

Also on Monday we have PPI Input from the UK. This data measures inflation in the prices paid by manufacturers for goods and raw materials. PPI Input is expected to come in at -2.6% MoM for October, compared to -1.2% the month previous.

High volatility from North America is also expected with Canadian Housing Starts expected at 13:15. In September construction on 218K new residential buildings began (annualized) with this number expected to fall to 202K in October.

Monday evening will play host to PPI Input from New Zealand. Prices in September increased by 5.6%.

Tuesday will be fairly quiet this week with French, US and Canadian bank holidays. Although some stock exchanges will remain open large banks will not. Low volatility is likely throughout the Forex market.

At 10:00 we will see high volatility from the German ZEW Economic Sentiment reading. A reading of -62.5 is expected, slightly higher than the -63.0 seen the month before but the index is fixed firmly in pessimistic territory.

At 20:00 the Reserve Bank of New Zealand will release its Financial Stability Report. The report is released twice per year and a press conference is usually held at the release time.

On Wednesday we will see employment data from the UK with Claimant Count Change regarded as most important. It is expected that 40K more UK workers are out of employment, and consequently claiming unemployment benefit when compared to a month earlier.

More high volatility will come from the UK at 10:30 with the BOE Inflation Report due for release. Of course traders will be watching this report closely because it explains the Bank’s view of inflation over the coming two years. However, further interest cuts in the UK may already be set in stone despite these inflation projections.

At 21:45 we will see Core Retail Sales and Retail Sales from New Zealand. The core number is expected to fall by 0.1% MoM compared to a 0.8% increase in September, while the headline number should grow by 0.1% on the month. Growth of 0.4% was seen in the month of September.

Thursday will see Germany deliver its second high volatility release of the week with preliminary quarterly GDP. The German economy is expected to have contracted by 0.2% over the last quarter.

At 13:30 we will see Trade Balance data from the US and Canada. The US trade deficit probably shrunk slightly in October from $59.1B to 56.5B. In Canada, trade surplus is expected to have fallen by CAD 700M to 5.1B.

After a fairly quiet week the US will finish with a flurry of high volatility with no less than 4 such events on Friday, although it does share one of these with the Eurozone.

At 13:30 we will see Core Retail Sales and Retail Sales releases. The core number likely fell by 1.1% on October when compared to -0.6% in September. Headline Retail Sales are expected to have fallen by 2.0% over the same period.

Also at 13:30 we have Fed Chairman Bernanke and ECB President Trichet taking part in a panel discussion at the 5th ECB Banking Conference in Frankfurt. The discussion will be on the topic of "International Interdependencies and Monetary Policy - a Policy Maker's View".

To round up the week we will see preliminary University of Michigan Consumer Sentiment with a reading of 56.0 expected.