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News & Analysis
Weekly Outlook

FOMC minutes and RBNZ ahead

Carolane de Palmas
November 21, 2024

●     On Monday 25th: German Ifo Business Climate

●     On Tuesday 26th: American FOMC Minutes

●     On Wednesday 27th: New Zealand Monetary Policy, Australian Monthly CPI Indicator, German GfK Consumer Confidence, American Core PCE Price Index MoM, American Durable Goods Orders MoM, American GDP Growth Rate QoQ 2nd Est, American Personal Income MoM and American Personal Spending MoM

●     On Thursday 28th: German Inflation Rate YoY Prel

●     On Friday 29th: Japanese Consumer Confidence, French Inflation Rate YoY Prel, European Inflation Rate YoY Flash, and Canadian GDP Growth Rate Annualized



Monday 25th of November

The Ifo Business Climate indicator for Germany saw a positive shift in October 2024. After a five-month decline, the index climbed to 86.5, surpassing the previous month's reading of 85.4, which was the lowest point since January. This uptick also exceeded market expectations of 85.6. As we move forward, market participants will be closely monitoring the release of the German Ifo Business Climate for November, scheduled for 09:00 AM GMT.

 

Major Earnings Release:

●     Zoom



Tuesday 26th of November

Federal Reserve Chairman Jerome Powell recently stated that strong U.S. economic growth allows policymakers the flexibility to take a measured approach when considering interest rate cuts. He underscored that the economy does not currently indicate an urgent need for rate reductions, noting that domestic growth remains the strongest among major economies.


Powell also highlighted the resilience of the labor market, despite a slowdown in job growth during October. He expressed optimism about inflation, which is steadily approaching the Federal Reserve's 2% target. Although recent data revealed slight increases in consumer and producer prices, Powell reaffirmed the Fed's dedication to achieving its inflation goal, acknowledging that progress may not always be smooth.


Additionally, the potential implications of Donald Trump’s election on the inflation trajectory were mentioned. Market participants are closely watching for insights from the Federal Open Market Committee (FOMC) Minutes, set to be released at 7:00 PM GMT.

 

Major Earnings Releases:

●     Dell

●     Hewlett Packard



Wednesday 27th of November

The Reserve Bank of New Zealand (RBNZ) has taken further steps to ease monetary policy. In its October 2024 meeting, the central bank decided to cut the official cash rate (OCR) by 50 basis points to 4.75%. This marks the second consecutive rate reduction and aligns with market expectations.

The decision comes as New Zealand's annual inflation rate has eased to 3.3% in the second quarter of 2024. This is a significant decline from the previous quarter's 4% and is below market expectations of 3.5%. Furthermore, it represents the lowest inflation rate since the second quarter of 2021, bringing inflation back within the RBNZ's target range of 1-3%.


The RBNZ's assessment is that the New Zealand economy is now experiencing excess capacity. This economic condition is leading to adjustments in pricing and wage-setting behaviors, which are conducive to a low-inflation environment. By easing monetary policy, the RBNZ aims to maintain price stability while minimizing disruptions to output, employment, interest rates, and the exchange rate.

Market participants will be closely watching the RBNZ's next monetary policy decision, scheduled for release at 1:00 AM GMT.

Australia's annual inflation rate, as measured by the Consumer Price Index (CPI), eased to 2.1% in September 2024. This figure fell short of market expectations of 2.4% and marked a decline from the previous month's 2.7%. This is the lowest inflation rate since July 2021, bringing inflation within the central bank's target range for the second consecutive month.

The ongoing impact of the Energy Bill Relief Fund rebate contributed significantly to this moderation. Excluding volatile items and travel, the CPI rose by 2.7% in September, a decrease from the previous month's 3.0%. Market participants will follow the Australian Monthly CPI Indicator for October when the data is released at 12:30 AM GMT.

Germany's GfK Consumer Climate Indicator showed a positive trend heading into November 2024. The index rose to -18.3, marking the highest reading since April 2022. This improvement, which exceeded market expectations, indicates a second consecutive month of rising consumer sentiment. Market participants expect German GfK Consumer Confidence for December to increase to -16 when the data is released at 07:00 AM GMT.

The US core Personal Consumption Expenditure (PCE) price index, the Federal Reserve's preferred gauge to measure underlying inflation, increased by 0.3% in September 2024. This represents the highest monthly gain in five months, following an upwardly revised 0.2% increase in August. The September figure aligns with market expectations. Market participants anticipate that the October reading for the core PCE price index will remain unchanged at 0.3%, with the data scheduled for release at 01:30 PM GMT.

New orders for manufactured durable goods in the US declined by 0.8% in September 2024, falling to $284.8 billion. This marks a second consecutive month of decline and comes in slightly below market expectations of a 1% fall. While the overall trend is downward, it's worth noting that excluding the transportation sector, new orders actually increased. Market participants anticipate a modest uptick in October, with expectations for a 0.3% increase in month-over-month durable goods orders. The data for October is set to be released on October 25, 2024, at 1:30 PM GMT.

The US economy expanded at an annualized rate of 2.8% in the third quarter of 2024, according to the advance estimate released by the Bureau of Economic Analysis (BEA). This growth rate falls short of the 3% growth observed in the second quarter and also misses market expectations. While the US economy continues to grow, the slower pace suggests a potential cooling trend. The second estimate of GDP growth for the third quarter is scheduled to be released on December 20, 2024, at 1:30 PM GMT.

The US economy grew at a slower pace in the third quarter of 2024. The Bureau of Economic Analysis (BEA) reported an annualized growth rate of 2.8%, which is below the 3% growth seen in the previous quarter and market expectations. Although the US economy remains in expansionary territory, the deceleration suggests a potential cooling trend. The second estimate of GDP growth for the third quarter is expected on December 20, 2024, at 1:30 PM GMT.

US personal spending accelerated in September 2024, rising 0.5% from the previous month. This increase surpassed market expectations of a 0.4% rise and marked an uptick from the upwardly revised 0.3% growth in August. This suggests continued consumer resilience despite a prolonged period of tighter credit conditions. Market participants anticipate a slight slowdown in October, with expectations for a 0.4% month-over-month increase in personal spending. The October data is scheduled for release on November 27, 2024, at 1:30 PM GMT.


Major Earnings Releases:

 

●     Chocoladefabriken Lindt & Sprungli

●     DIAGEO

●     BAE SYSTEMS

●     ROLLS-ROYCE

●     Advanced Semiconductor Engineering



Thursday 28th of November

Germany's annual inflation rate accelerated to 2.0% in October 2024, confirming preliminary estimates and marking a significant increase from September's three-and-a-half-year low of 1.6%. This uptick was driven by rising prices in services and food, while goods prices also rebounded. On a monthly basis, the Consumer Price Index (CPI) increased by 0.4%, following a flat reading in the previous month. Market participants anticipate a slight deceleration in November, with expectations for a year-over-year inflation rate of 1.9%. The preliminary data for November is scheduled for release at 1:00 PM GMT.



Friday 29th of November

Japan's consumer confidence index took a downturn in October 2024. The index fell to 36.2, marking a decrease from September's five-month high of 36.9 and below market forecasts of 37. This decline represents the lowest consumer morale since May. Market participants will be closely monitoring the November consumer confidence index, which is scheduled to be released on November 21, 2024, at 05:00 AM GMT.

France's annual inflation rate edged up to 1.2% in October 2024, rising from the previous month's 3.5-year low of 1.1% and matching earlier estimates. This uptick was primarily driven by rising service prices, with food prices also increasing at a slightly faster pace. However, energy and manufactured product prices declined at a slower rate. Market participants will be watching the preliminary French inflation rate for November, which is scheduled to be released on November 21, 2024, at 07:45 AM GMT.

Eurozone annual inflation accelerated to 2% in October 2024, up from 1.7% in September. This increase aligns with preliminary estimates and is largely attributed to base effects, as the sharp decline in energy prices from last year is no longer factored into the annual rate. With this uptick, inflation has reached the European Central Bank's target. Market participants will be closely monitoring the flash estimate for Eurozone inflation in November, scheduled for release at 10:00 AM GMT.

Canada's economy gained momentum in the second quarter of 2024, expanding by 2.1% on an annualized basis. This represents the strongest growth rate since the first quarter of 2023 and surpasses both the upwardly revised 1.8% growth in the previous quarter and market expectations of 1.6%. Market participants anticipate further acceleration in the third quarter, with expectations for a 2.8% annualized growth rate. The data for the third quarter is scheduled for release at 01:

30 PM GMT

 

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