Weekly Outlook of Financial Markets for December 10-14

During last week, major commodities were traded mostly down including oil, natural gas, silver and gold. Will commodities change direction and rally this week? The highly anticipated FOMC meeting will be held next week and could sharply affect commodities prices and USD assuming the FOMC will decide to expand its monetary policy. Last week several U.S reports were published: According to the recent non-farm payroll report, employment grew by 146k, while manufacturing PMI declined to 49.5%. Nonetheless, these reports seem to have had little effect on commodities and foreign exchange markets.  Several publications, speeches and events may affect the financial markets during this week. These include: FOMC meeting, EU Summit, BOE Governor’s speech, U.S trade balance report, China’s new loans, U.S retail sales, SNB rate decision, Britain’s rate of unemployment, Japan’s GDP for Q3, OPEC report, U.S CPI and PPI, Canada’s trade balance report, and U.S. jobless claims. Here is an economic news calendar projection for December 10th to December 14th regarding the U.S, EU, Canada, Japan, China, Australia, and Great Britain.   

(All times GMT):

Monday, December 10th

01:50 – Japan GDP: this report will show the final estimate of the growth rate of the Japan’s GDP for the third quarter of 2012. In the first estimate Japan’s GDP contracted by 0.9% compared to the previous quarter. In the second quarter the GDP grew by only 0.3%; this news may affect the strength of the Japanese Yen;

Tentative –China’s Trade Balance: as of the recent monthly update, China’s trade balance rose to a $32 billion surplus; if the surplus will further rise, it could indicate that China’s economic growth is rising and thus may positively affect prices of commodities.

17:15 –Governor King speaks: Bank of England’s Governor will give a speech about England’s inflation and employment conditions; he might also offer some refer to the recent MPC monetary policy meeting, in which the MPC left the policy unchanged; this speech may influence British Pound traders;

Tentative – China New Loans: This report will refer to the recent changes in China’s new loans given during last month. According to the latest report, the total loans declined again; this report is another indicator to the economic progress of China;

Tuesday, December 11th

10:00 –German ZEW economic sentiment: The upcoming publication will pertain to the ZEW indicator of economic sentiment for Germany for December. For November the ZEW indicator for Germany declined by 4.2 points to -15.7 points; if Germany’s economic sentiment will further dwindle, the Euro will plausibly remain weak against other currencies including the USD;

Tentative –OPEC Monthly Report: this monthly report will pertain to the changes in crude oil and natural gas’s supply and demand worldwide as of November; the report will also refer to the shifts in the production of OPEC countries last month; this news may affect oil prices (See here a summary of the previous report);

13:30 –Canadian Trade Balance: In the previous report regarding September 2012, exports rose by 1.9% and imports were unchanged as a result, the trade deficit contracted from a $1.5 billion deficit in August to $0.8 billion deficit in September; this report may affect the Canadian dollar which tends to be strongly correlated with prices of commodities;

13:30 –American Trade Balance: This monthly report for October will show the recent changes in imports and exports of goods and services to and from the U.S, including commodities such as oil and natural gas; according to the previous American trade balance report regarding September the goods and services deficit declined during the month to $41.5 billion;

Wednesday, December 12th

04:30 –Bank of Australia Governor Stevens speaks: Following the recent rate decision, in which the RBA left the rate unchanged, Governor Stevens of Bank of Australia will speak; if the speech will reveal the future plans of the Bank vis-à-vis its monetary policy this could affect the Aussie, which is strongly correlated with commodities prices;

09:30 – Claimant Count Change: This report will present the developments in the number of unemployed in GB; as of last month’s report this figure had increased by 10.1k;

09:30 – Britain’s unemployment Change: the rate of unemployment of the Britain edged down to 7.8%. This mean, the employment situation in Britain only slightly improved. If in the upcoming report this trend will continue, it may positively affect the British Pound;

Tentative –IEA Monthly Oil Report: the forthcoming monthly update will offer an updated (as of November) outlook and analysis for the global crude oil and natural gas market for 2012 and 2013 (see here a summary of last month’s 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 November 30th; in the recent weekly update for November 30th, stockpiles rose by 5.9 ml bl to reach 1,787.5 ml bl;

16:30 – U.S 10 Year Bond Auction: the U.S government will issue another bond auction; in the previous bond auction, which was held at the first week of November, the average rate reached 1.68%; if the rate will continue to dwindle, it could suggest that more traders become more bearish;

19:15 – FOMC Meeting: The FOMC will convene for the last time this year and decide at the end of two day of session on updates in its monetary policy and interest rate; in September ‘s FOMC meeting, the FOMC announced of the launch of QE3. Since then the FOMC didn’t update its monetary policy. The operation twist in which the Fed extends the maturity of its assets will end. This could suggest an update to this plan will unfold. Moreover, in light of the fiscal cliff, the low expectations of Congress reaching an agreement about the multi budget cuts, and the slow progress of the U.S economy, the Fed might decide to expand its current QE3 and include the purchase of other securities and not just mortgage backed securities. Such a decision might pull up commodities prices. I’m still skeptic that the Fed will expand its QE3 in this meeting, and think the FOMC may decide to make this decision in 2013. Nonetheless, I guess that even if the FOMC won’t announce of additional monetary steps, but will allude to the fact in the near future, this news is likely to pull up commodities prices;

Thursday, December 13th

All Day – EU Economic Summit (two days meetings): EU ministers of finance will convene again in Brussels. Following Greek bailout decision, it lowers the chances that of any big decisions coming out of this meeting; in this Summits the EU ministers will discuss the proposal of European council president, Van Rompuy, on the “Genuine Economic and Monetary Union” and the multi-year EU budget;

08:30 – Libor Rate of Swiss National Bank: the Swiss National Bank will announce its updated Libor rate; this decision could affect not only foreign exchange markets but also commodities markets if there will be a news in the currently low Libor rate;

08:30 – SNB Press Conference: soon after the announcement of the rate decision and monetary policy statement the Swiss National Bank Chairman will hold a press conference;

9:00 – ECB Monthly Bulletin: This monthly update for November examines the economic changes of the Euro Area including price stability, interest rate decisions and governments’ debt; this report might provide some insight into the updated expectations of the EU growth;

13:30 – U.S. Jobless Claims Weekly Report:  this report will pertain to the weekly changes in the initial jobless claims for the week ending on December 7th; in the previous report the jobless claims declined again by 25k to reach 370k; this upcoming weekly update may affect the U.S dollar and consequently commodities;

13:30 – U.S. Producer Price Index: This report will present the changes in the PPI during November 2012, i.e. the inflation rate from the producers’ stand point. In the latest report regarding October this index for finished goods edged down by 0.2% compared with September’s rate but rose by 2.3% in the last 12 months; this news might affect commodities prices;

13:30 –U.S. Retail Sales Report: this report will presents the monthly changes in the retail sales and food services for November; in the recent report regarding October, the retail sales declined by 0.3% from the previous month; gasoline stations sales rose by 1.4% in October compared to September; this report could signal the developments in U.S’s gasoline demand and thus may affect oil prices;

15:30 – EIA U.S. Natural Gas Storage Update: the EIA weekly update of the U.S. natural gas market will refer to the recent changes in natural gas production, storage, consumption and rates as of December 7th; in recent weekly update, natural gas storage declined by 73 Bcf to 3,804 Bcf;

02:45– China flash Manufacturing PMI: this index will cover 800 companies in 20 industries in China; based on the HSBC Manufacturing PMI report regarding November 2012 the Manufacturing PMI rose to 50.4; this index indicates the changes in China’s manufacturing sectors growth rate; if the index will further rise, this may positively affect commodities prices;

Friday, December 14th

08:30 – German flash Manufacturing PMI: This survey examines the changes (on a monthly basis) of Germany’s manufacturing sectors. In the recent report for October 2012, the manufacturing PMI edged up from 45.7 in September to 46.8 in October; this means, the manufacturing is still contracting only slightly slower;

10:00 – Euro Area CPI: according to the recent report the annual CPI edged down to 2.5%, which is slightly higher than ECB’s target inflation; if the inflation will decline again, it could raise the odds of ECB cutting its cash rate in the future;

13:30 –U.S Core Consumer Price Index: This monthly report will refer to the main developments in the core consumer price index for November 2012. According to the U.S Bureau of Labor statistics during October, the CPI edged up by 0.1% (M-o-M); the core CPI also edged up by 0.2%; the core index rose over the last twelve months by 2%.

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