Weekly Outlook of Financial Markets for December 17-21

During last week, major commodities continued their downward trend including oil, natural gas, silver and gold. The recent decision of the FOMC to expand QE3 by purchasing $45 billion of long term treasuries on a monthly basis starting January 2013 didn’t seem to have positively affected commodities prices even though the USD did depreciate against major currencies including the Euro and Aussie dollar. Last week several U.S reports were published: U.S CPI and the PPI declined in November; retail sales edged up in November;  jobless claims fell again last week. Alas, these reports seem to have only slightly affected commodities markets. As the year is winding down the markets are likely to further slow down. Several publications and events may affect the financial markets during the week. These include: U.S core durable goods, ECB President will give a speech, Canada’s GDP, Japan’s trade balance, U.S housing starts, existing home sales, Bank of Japan’s monetary meeting, Philly Fed index, and U.S. jobless claims. Here is an economic news calendar projection for December 17th to December 21st regarding the U.S, EU, Canada, Japan, Australia, and Great Britain.   

(All times GMT):

Monday, December 17th

14:00 – U.S. TIC Long Term Purchases: The Treasury International Capital monthly report will show the developments in the purchases and sales of US long term treasuries for October 2012. In the recent report regarding September 2012, the net foreign sales of U.S Treasuries longer-term notes reached only $3.3 billion;

14:30 – ECB President Speaks: Mario Draghi will testify at the Committee on Economic and Monetary Affairs, in Brussels about the progress of the EU economy during the recent quarter.  If the ECB President will refer to ECB’s monetary policy this might affect the Euro to US dollar currency pair;

Tuesday, December 18th

09:30 – Great Britain CPI: this report will refer to the yearly rate of GB’s consumer price index as of November 2012; in the recent report regarding October the annual CPI increased from 2.2% to 2.7%; if this trend will continue, it could lower the odds of the MPC expanding its asset purchase program; this news might affect the British pound;

Tentative – BOE Inflation Estimate: this report will show the yearly rate of GB’s inflation according to Bank of England;  it will be published as a letter only if the inflation is exceed 3% or below 1%;

23:50 – Japanese Trade balance: The Japanese trade balance deficit for October 2012 fell by 34.9% compared to September, and reach 624 billion YEN (roughly $7.9 billion) deficit (seasonally adjusted figures). This fall is due to the sharp drop in imports by 7.8%, and a modest fall in exports by 2.8%. Japan is among the leading importing countries of commodities, including crude oil and gold; its trade balance could provide some insight about Japan’s developments in demand goods and services;

Wednesday, December 19th

09:00 – German Business Climate Survey: This survey analyzes the shifts (on a monthly basis) of the business climate of Germany. In the recent report for November 2012, the business climate index rose from 100 in October to 101.4 in November; if this trend will continue, it might positively affect the Euro;

09:30 – Minutes of MPC Meeting: in the previous MPC meeting, the Bank left the rate unchanged at 0.5% and the asset purchase program at £375 billion; the MPC still has concerns regarding GB’s inflation. The minutes of the recent meeting might offer some insight behind this decision;

13:30 – U.S. Housing Starts: the U.S Census Bureau will publish its U.S housing starts report for November 2012; this report was historically correlated with gold price – as housing starts rise, gold prices tended to decline the next day (even when controlling to the U.S dollar effect); in the previous monthly report, the adjusted annual rate reached 894,000 in October 2012, which was 3.6% above September’s rate;

13:30 – U.S. Building Permits: in the recent report, building permits declined during October by 2.7% (M-o-M) in the adjusted annual rate of building permits and reached 866,000. If this report will continue to fall in the building permits rate, it may indicate that the U.S housing market (from this aspect) is pulling down (the recent U.S building permits update);

15:30 – U.S Crude Oil Stockpiles Report: the EIA (Energy Information Administration) will be publish its weekly report on the U.S oil and petroleum stockpiles for the week ending on December 14th; in the recent weekly update for December 7th, stockpiles increased again by 5.9 ml bl to reach 1,793.4 ml bl;

Tentative – Bank of Japan – Rate Decision and Monetary Policy Statement: Bank of Japan will announce its interest rate and monetary policy for January. In the previous meeting, BOJ kept the interest rate unchanged at 0 to 0.1 percent, and hasn’t expanded its stimulus plan. If the BOJ will introduce a new monetary stimulus plan it could affect the Yen, other currencies and commodities;

Thursday, December 20th

09:30 –Retails Sales GB (November 2012): This report will present the shifts in the retails sales in Great Britain during November 2012. It may affect the direction of the British Pound currency. In the previous report regarding October 2012, retails sales fell by 0.8%;

13:30 –Retails Sales Canada (October 2012): This report will refer to the retails sales in Canada as of October. It may affect the path of USD/CAD currency pair, which is strongly linked with commodities prices. In the previous report regarding September 2012, retails sales edged up by 0.1%;

13:30 – Final U.S GDP 3Q 2012 Estimate: This update will be the third and final estimate of U.S third quarter 2012 real GDP growth. In the second estimate, the U.S GDP during the third quarter expanded by 2.7%, which was close to the figure anticipated; in the second quarter, the GDP growth rate was only 1.3% (annual rate). This shows a modest gain in the growth rate for the US’s GDP. If there will be a sharp change in the growth rate from second to third estimate, this could affect not only the US dollar but also commodities rates;

13:30 – U.S. Jobless Claims Weekly Report:  this update will refer to the weekly changes in the initial jobless claims for the week ending on December 14th; in the previous report the jobless claims declined again by 29k to reach 343k; this upcoming weekly update may affect the U.S dollar and consequently commodities;

15:00 – U.S. Existing Home Sales: This report will pertain to the developments in U.S. existing home sales for November 2012; in the previous report regarding October 2012 the number of homes sold edged up: the seasonally adjusted annual rate rose to 4.79 million home sales; if this trend will continue it may pull back the U.S dollar.

15:00 – Philly Fed Manufacturing Index: This monthly survey presents an estimate for the progress of the US manufacturing conditions. In the recent November survey, the growth rate declined from +5.3 in October to -10.7 in November. If the index will continue to fall it may adversely affect not only U.S Dollar but also American stock indexes, and commodities prices (the previous Philly Fed review);

15:30 – EIA U.S. Natural Gas Storage Update: the EIA weekly report of the U.S. natural gas market will refer to the recent changes in natural gas production, storage, consumption and rates as of December 14th; in recent weekly report, natural gas storage rose by 2 Bcf to 3,806 Bcf;

Friday, December 21st

09:30 – Great Britain Current Account: This will report will present  recent shift in the balance of payment of Great Britain; in the previous report the current account balance reached -20.8 billion pound; this report may affect the GBP/USD currency pair;

09:30 – Great Britain Net borrowing: this report will refer to the monthly changes in the public sector net borrowing for October 2012; as of September 2012, the net borrowing reached £6.5 billion;

09:30 – GB revised GDP Q3 2012: This will the final projection for the quarterly growth rate of the British economy during the third quarter of 2012; according to the previous estimate the third quarter grew by 1% (yearly scale);

13:00 – Canada’s CPI: This report will refer to the CPI and core consumer price index (controlling the volatile components such as energy, fruit and vegetables) for November 2012. According to the Canadian CPI report for October 2012, the core CPI rose by 0.3% during the month – this is a slightly higher rate than in September. This report might affect the Canadian dollar, which is also strongly linked with commodities rates;

13:30 – Canada’s GDP by Industry: the upcoming report will show the developments in major industrial sectors during October 2012. In the recent report regarding September 2012, the real gross domestic product edged up again by 0.1%. This report may affect the strength of the Canadian dollar currency, which is strongly correlated with major commodities;

13:30 – U.S Core Durable Goods: This report will refer to the developments in U.S. orders of durable goods in the manufacturing sector for November 2012. This report may indirectly indicate the developments in U.S. demand for commodities such as oil. As of October 2012, new orders of manufactured durable goods rose to $216.9 billion; if this report will show a gain in new orders then it could pull up not only the US dollar but also commodities prices;

13:30 – U.S Personal Spending: this monthly update refers to the changes in income and outlays in the U.S during November; in the last report regarding October the personal income fell by 0.2%.

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