CIBfx Weekly Markets Forecast 21.11.2016
The post-election week continues the optimism of the US market over the new presidency. Major stock markets like NASDAQ, Dow, and S&P closed well, compared to last week. The move from bonds to stocks was due to fiscal policies that were promised, such as tax rate cuts, which would take effect anytime soon. Retail reports show positive figures. US Federal Reserve Chair Janet Yellen quoted a “relatively soon” federal rate hike, while the US dollar is trading better in the currency market. Another important factor to consider is how the price of oil would fare over the course of reach-out agreements between OPEC and non-OPEC members. This is to curb and cut oil production. Saudi and Iraq are still at a stand-off with each other, with the hopes that they might reach an agreement.
Here is a take on what is coming next week:
- November 24 would be Thanksgiving Day in the US, that is why market would be closed on that date.
- Release of US FOMC Minutes of Meeting – November 23, Wednesday. This report would signify a clue on whether a federal rate hike would push through in December of this year. During the past meetings, though, the Federal Reserve was still on a rising rate. But it seems clear in the upcoming report that following the events and economic development in the country, the case to such a goal could be positively implemented.
- Crude Oil Inventory Report for US – November 23, crude oil inventories are still rising after the country increased its import and building of storage hubs for those imported commodities. The report this week has predicted an increase of 1.5 million barrels for three consecutive weeks, from a 5.3 million base. By the end of the month, an agreement is expected to be settled in order to impose a cut on the oil production.
- Unemployment Claim Report for US – November 23. The record is expected at a figure of 241,000 claiming unemployment. This is a record for the statistics as shown in a 43-year pattern where the claims never exceeded 300,000.
- Durable Goods Order Reports for US – November 23. An increase in the trend is expected for the figure report for durable goods order of 1.2% and 0.2% for core goods. September reported a decline in orders, dropping by 0.1%, which is why analysts are confident to predict an increase due to a further increase in orders.
- UK GDP Report – November 25, the UK GDP report is expected to show a 0.5% increase.
- Mario Draghi on European Parliament – Mario Draghi, President of the Europe Central Bank, would stand before the European Parliament in relation to clearing the issue on bond-buying program plans of 1.7 trillion euros. Draghi has been supportive of its monetary policies despite economic financial pressure from Europe. The aim for the bond-buying is to lower the interest charges caused by deviating inflation charges not being met. ECB is doing everything to ease the weakening Eurozone economy.
- Germany’s Reports – Business confidence reached a two-and a-half year high of 110.50 due to an optimistic outlook on the country regarding its future growth and improvement. The Q3 report for their domestic GDP would be released on November 24.
- Currency and Other Forecasts – The US dollar is seen to continue its good performance next week after surprisingly doing well, despite pessimism during the election campaign. On the other hand, the Japanese yen and Chinese yuan would still continue to plummet down as the US dollar continues to rise. Other currencies such as the AUD and New Zealand dollar, the Canadian dollar and the British pound would likely continue their fallout against the US dollar. Likewise, gold commodity prices would still likely fall next week due to an immense sell-off for metal products, in turn bringing the price down.