Weekly Outlook of Financial Markets for January 6-10

Last week’s slow pace in the financial markets due to the holiday season won’t resemble this week’s pace. This upcoming week will be packed with many news items, decisions, reports and events that could stir up the financial markets again. These include: Minutes of FOMC meeting, U.S non-farm payroll report, ECB and BOE rate decisions, U.S, Canada, Australia and China’s trade balance reports, U.S ISM non-manufacturing PMI, the vote to approve Yellen as FOMC chairman, Canada’s employment report, EU and Australia retail sales updates,, and China’s new loans.  Here is an economic forecast for the week of January 6th to January 10th regarding the U.S, Australia, Canada, Euro Area, China, and Great Britain.

(All times GMT):

Monday, January 6th

08:15 – Spanish Services PMI: This report will refer to Spain’s services sector in December 2013. In the last update regarding November 2013 the index rose to 51.5. This rate gain means the manufacturing sector is growing;

09:30 – GB Services PMI: In the last report, this index decreased to 60; this index may affect the British Pound’s direction;

15:00 – U.S. ISM Non-Manufacturing PMI: This monthly report will pertain to December 2013. In the recent report, this index declined to 53.9% – the non-manufacturing sector is growing at a slower rate compared to the previous month; this index may affect the US dollar;

15:00 – U.S Factory Orders: This report will refer to the developments in U.S. factory orders of manufactured durable goods during December; in the latest report factory orders decreased by 0.9%; this report will offer some insight regarding the progress of the U.S economy;

20:30 – Fed Chairman Nomination Vote: The U.S Senate will vote on approving the President’s nomination for the Federal Reserve Chairman’s seat – Yellen. This vote is most likely to pass;

Tuesday, January 7th

02:30 – Australian Trade Balance: The forthcoming report will refer to November. In the previous update, for October, the seasonally adjusted balance of goods and services reached a $529 million deficit. The export of non-monetary gold rose by $146 million; if gold exports continue to rally, it might suggest a rise in demand for non-monetary gold (see here latest update);

10:00 – EU CPI Flash Estimate: This index calculates the annual consumer price index of the Euro Area. Based on the recent estimate, the annual CPI rose to 0.9%, which is still well below the ECB’s target inflation of 2%. If the inflation rate continues to rise, this could indicate the EU economy is progressing. These developments could influence the ECB members with respect to ECB’s cash rate decision later this week;

13:30 – Canadian Trade Balance: In the previous update regarding October 2013, exports slipped by 0.3% and imports fell by 1.2%; as a result, the trade balance moved from $1.1 billion deficit in September to $75 million surplus in October; this report may affect the Canadian dollar, which tends to be linked with commodities;

13:30 –American Trade Balance: This monthly update for November will present the changes in imports and exports of goods and services to and from the U.S, such as commodities such as oil and gas; based on the last American trade balance update regarding October the goods and services deficit narrowed to $40.6 billion;

Wednesday, January 8th

10:00 – EU Retail Sales: This monthly report will refer to November 2013. In the recent report, the volume of retail trade fell by 0.2% during October;

10:00 – EU Unemployment Rate: Last month’s report presented that the rate of unemployment inched down to 12.1%. The rate remained high and around 12% for the past year. If the rate of unemployment remains elevated, it could adversely affect the Euro;

13:15 – ADP estimate of U.S. non-farm payroll: ADP will publish its estimate for the next U.S non-farm payroll changes for December 2013 that will be released on Friday;

Tentative – U.S 10 Year Bond Auction: The U.S government will issue its monthly bond auction; in the last auction, which was held during the second week of December, the average rate reached 2.82% – the highest rate since September 2013;

15:30 – U.S Crude Oil Stockpiles Weekly Report: The Energy Information Administration will publish its weekly report on the U.S oil and petroleum stockpiles for the week ending on January 3rd;

19:00 – Minutes of the last FOMC Meeting: Back in December, the FOMC meeting ended with a mini-taper of $10 billion from the asset purchase program of $85 billion a month. This news seems to have had short term adverse effect on the prices of gold and silver. The US dollar also rallied against major currencies mainly the Japanese yen and the Aussie dollar. Nonetheless, the FOMC also talked about maintaining the low interest rate until the end of 2015. This news may have softened the blow of this tapering. The upcoming minutes might shed some light on this decision, which could stir up the markets again;

Thursday, January 9th

02:30 – Australian Retail Sales: This monthly update will refer to November 2013. In the recent report, the seasonally adjusted retail sales rose by 0.5% during October; this news may affect the Aussie dollar, which tends to be correlated with oil and gold prices;

Tentative – China’s CPI: Last month, China’s inflation rate slightly fell to an annual rate of 3%, which is still below Bank of China’s target inflation. The lower than targeted inflation indicates lack of growth in China’s economy. If the inflation continues to fall, this may indicate China’s economy isn’t progressing;

12:00 – BOE Rate Decision & Asset Purchase Plan: Bank of England will announce its basic rate for January 2014; the MPC will also state of any changes to its asset purchase pogrom; as of December, BOE kept its interest rates at 0.5% and the asset purchase plan at £375 billion;

12:45 – ECB Rate Decision: ECB will announce its monetary policy and economic outlook as of January. The current expectations are that ECB will keep its cash rate flat, but ECB President Mario Draghi may hint of future plans to cut the cash deposit rate to become negative. This kind of hint might pull back down the Euro from its current high;

13:30 – U.S. Jobless Claims Weekly Report:  This weekly report will refer to the changes in the initial jobless claims for the week ending on January 3rd; in the recent report the jobless claims declined by 2k to reach 339k; the next weekly report may affect the U.S dollar and consequently commodities and equities markets;

15:30 – EIA U.S. Natural Gas Storage: The EIA weekly update of the U.S. natural gas market will refer to the latest changes in natural gas production, storage, consumption and prices as of January 3rd;

Tentative – China’s Trade Balance: Based on the recent monthly update, China’s trade balance rose to a $33.8 billion surplus; if the surplus further increases, it could indicate China’s economy is improving and thus may positively affect commodities rates;

Friday, January 10th

08:15 – Switzerland’s CPI: In the last update, the consumer price index remained flat; if the CPI moves, this may influence the Swiss National Bank’s monetary policy;

09:30 – Great Britain Manufacturing Production: This report will show the annual rate of GB’s manufacturing production as of November; in the last report regarding October 2013 the index rose by 0.4% (M-2-M); this news may affect the British Pound;

13:30 – Canada’s Employment Report: In the previous employment update for November 2013, unemployment remained flat at 6.9%; the employment grew by 21.6k during last month. The next report might affect the Canadian dollar and consequently commodities;

13:30 – U.S. Non-Farm Payroll Report: In the last employment report regarding November 2013, the labor market improved: The number of non-farm payroll employment increased by 203k – close to the number many had expected; the U.S unemployment rate fell to 7%; the upcoming employment report could show additional rise in jobs. If the employment exceed 150 thousand (in additional jobs), this may drag further down gold and silver and positively affect the U.S dollar and U.S stock markets;

Tentative – China New Loans: This report will pertain to the recent changes in China’s new loans. According to the recent update, the total loans rose; this report is another indicator for China’s economic development;

For further reading: