Weekly Outlook of Financial Markets for December 31- January 4

During the previous week, major commodities remained mostly unchanged as the markets slowed down due to the Holiday. Even the uncertainty around the fiscal cliff didn’t seem to affect the foreign exchange and commodities markets. Last week several U.S reports were published: U.S new home sales increased last month; U.S consumer confidence slipped in December; the U.S jobless claims decreased by 12k to reach 350k. These news items didn’t seem to affect commodities prices during the week. Next week is likely to also be characterized with low volatility in the markets, unless of course there will be a surprise from the debate between the White House and Congress in tackling the fiscal cliff. Several reports and events may affect the financial markets during the forthcoming week. These include: U.S core durable goods, ECB President will give a speech, Canada’s GDP, Japan’s trade balance, U.S non-farm payroll report, EU monetary development, U.S and China’s manufacturing PMI reports, Canada’s employment update, German retail sales, and U.S. jobless claims. Here is an economic news calendar projection for December 31st to January 4th regarding the U.S, EU, Canada, China and Great Britain.

(All times GMT):

Monday, December 31st

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02:00 – China Manufacturing PMI: According the latest report regarding November 2012 the Manufacturing PMI increased again to 50.6; this means that China’s manufacturing sectors expanded at a slightly faster pace; the recent flash manufacturing PMI rose to a 13 month high. If this upcoming report will also present an additional growth, it could signal an increase in China’s economy. If the index will rise again, this may also positively affect commodities prices;

Wednesday, January 2nd

08:15 – Spain and Italy’s Manufacturing PMI: This update will examine the monthly changes in manufacturing sector of Spain and Italy December 2012. During November 2012 the index reached 45.3% and 45.1%, respectively. These data suggest the manufacturing is still contracting in these economies;

09:30 – GB Manufacturing PMI: This report will pertain to Great Britain’s manufacturing sector in December 2012. In the previous report regarding November 2012 the index rose to 49.1%. This rate means the manufacturing sector is contracting at a moderately slower pace; this index might affect GB Pound;

15:00 – U.S. Manufacturing PMI: This update will refer to the monthly developments in the national manufacturing sector for December 2012. During November 2012 the index declined to 49.5%, which means the manufacturing is contracting; this index may affect foreign exchange rates, crude oil and natural gas markets;

Thursday, January 3rd

08:00 – KOF Economic Barometer: this report provides an outlook to the Swiss economy in the months to follow;

09:00 – Euro Area Monetary Development: This monthly update will refer to the development of the M3, M1 and loans to private sector in the Euro area during November 2012. In the previous October report, the annual growth rate for M3 hiked to 3.9%; M1 also rose to 6.4%. Finally, the annual growth rate of loans to private sector also rose to -0.7%. This news suggests the EU economy isn’t growing; if this trend will continue it adversely affects the Euro/USD and consequently commodities prices;

13:15 – ADP estimate of U.S. non-farm payroll: ADP will publish its estimate for the upcoming U.S non-farm payroll change for December 2012 in anticipation for the upcoming no-farm report to be published by the end of the week;

13:30 – U.S. Jobless Claims Weekly Report: this report will refer to the weekly changes in the initial jobless claims for the week ending on December 21st; in the previous report the jobless claims declined again by 12k to reach 350k; this upcoming weekly report may affect the U.S dollar and consequently commodities;

15:30 – EIA U.S. Natural Gas Storage Update: the EIA weekly update of the U.S. natural gas market will pertain to the recent developments in natural gas production, storage, consumption and rates as of December 21st; in recent weekly report, natural gas storage increased by 72 Bcf to 3,652 Bcf;

19:00 – Minutes of December’s FOMC Meeting: Following the December FOMC meeting, in which the Fed introduced its extension for QE3, the bullion market had only a very short term reaction to this news – gold and silver prices rose on the day of the announcement only to resume their downward trend since then. The minutes of the recent FOMC meeting might add some additional insight behind this decision and the potential future steps of the FOMC especially in relation to the potential ramifications of the U.S fiscal cliff and the future FOMC meetings in 2013;

Friday, January 4th

08:00 – German Retail Sales: This monthly report will present the changes in German retail sales during December. In November 2012, retail sales decreased by 2.8% – lower than many had anticipated; if this report will decline again then it might weaken the Euro;

10:00 – Euro Area Flash Estimate of Annual Inflation: the inflation in Euro Area slipped again to 2.2% during November. If the upcoming inflation rate estimate will decline again, it may raise the chances of ECB cutting its interest rate next week;

13:30 – Canada’s Employment Report: In the recent employment update for November 2012, unemployment slipped to 7.2%; the employment rose by 59k during the month. The upcoming report might affect the Canadian dollar and consequently the rates of commodities;

13:30 – U.S. Non-Farm Payroll Report: in the recent report for November 2012, the labor market expanded by a higher rate than expected: the number of non-farm payroll employment rose by 146k; the U.S unemployment rate slipped to 7.7%; if the upcoming report will continue to show growth of well above 120 thousand (in additional jobs), this may lower the odds of the Fed intervening again in the markets and reduce the risk around the future growth of the U.S economy; this report may affect not only the U.S dollar, but also commodities (see here my last review on the U.S employment report);

15:00 – U.S. ISM Non-Manufacturing PMI: This report will refer to the shifts in the non-manufacturing sector during December 2012. During November 2012 this index edged up to 54.7% – this means the non-manufacturing is growing and at a slightly faster rate than in the previous month; this index may affect forex and commodities trading;

15:00 – U.S Factory Orders: This report will present the changes in U.S. factory orders of manufactured durable goods during November; in the previous report factory orders rose by 0.8%; this report will offer some insight to the progress of the U.S economy and could affect the direction of the U.S dollar;

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 21st, stockpiles increased again by 3 ml bl to reach 1,794.4 ml bl.

Article Source: Tradingnrg


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