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U.S holiday-shortened week and economic calendar

USD

The week starts with the Flash PMI index providing important mid-quarter insights into the U.S economy. The index will capture how business conditions have changed in the aftermath of the Presidential elections. In the minutes of the Federal Open Market Committee (FOMC) from the November 4th and 5th meeting, which are due to be released on Wednesday, Fed chair Powell emphasized the importance of fiscal, as well as a monetary stimulus. Subsequently, market participants will look for ways in which the Fed can shift its parameters of asset purchases, and if Fed’s members have any views on how, the now terminated emergency loan programs will affect Fed policy. The second estimate of Q3 GDP on Wednesday will also add some further coloring to the rebound picture, but it is expected to have a muted impact on the FX market. Key figures coming up:

  • On Monday (11/23): IHS Markit Flash US Composite PMI
  • On Wednesday (11/25): New Home Sales | FOMC minutes | Personal income and spending (Oct) | Personal consumption expenditure price index (Oct) | GDP (2nd Est, Q3)
  • On Thursday (11/26): Holiday - Thanksgiving Day
  • On Friday (11/27): Holiday - Thanksgiving Day

EUR

Positive news from Covid-19 vaccine developments last week offset the surge in Covid-19 cases and tighter economic restrictions across the bloc, nonetheless, its availability in the near term has capped the EUR’s gains. The Eurozone PMIs on Monday are eagerly awaited as fears remain of a renewed downturn in Q4. Political conflicts are also in focus with the European Union having problems getting its recovery plan and long-term budget on track with Poland and Hungary obstructing approval. Talks will continue over the coming week. Key figures coming up:

  • On Monday (11/23): IHS Markit Flash Eurozone Composite PMI | IHS Markit Flash Germany Composite PMI | IHS Markit Flash France Composite PMI
  • On Tuesday (11/24): Germany GDP (Final, Q3) | France business confidence (Nov)
  • On Thursday (11/26): German Business Expectations | GfK German Consumer Climate | German Ifo Business Climate Index
  • On Friday (11/27): Euro area consumer confidence (Final, Nov), Economic sentiment (Nov)

GBP

Last week brought guidance that a Post-Brexit deal might be reached in the upcoming weeks, however, France and Belgium want the EU to step up preparations for the possibility of a no-deal. Meanwhile, negotiations are set to continue remotely after Covid-19 cases have disrupted discussions in person. The PMI index on Monday should show that the economy is losing steam heading into the final quarter of the year. Aside from PMIs surveys, the upcoming week should be mainly driven by Brexit talks and Covid-19 vaccine developments. Key figures coming up:

  • On Monday (11/23): IHS Markit / CIPS Flash UK Composite PMI
  • On Friday (11/27): Housing prices (Nov)

JPY

The pair USD/JPY has been following a clear downtrend channel since the beginning of the Covid-19 pandemic, with investors buying the safe-haven JPY amid risk-off sentiment. This trend prevailed last week after the JPY hardly reacted to recent vaccine developments as persistent concerns over global growth due to the onset of the second Covid-19 wave remain. This week, market participants will monitor a slew of October economic data releases, including retail sales, industrial production, and housing starts for signs of a stronger recovery in Q4. Key figures coming up:

  • On Monday (11/23): Holiday - Workers Day
  • On Friday (11/27): Japan retail sales (Oct)
  • On Sunday (11/29): Housing starts, construction orders (Oct) | Industrial output (Prelim, Oct)

CAD

Two Bank of Canada (BoC) officials speak this week,  Deputy Governor Gravelle (Monday) and Senior Deputy Governor Wilkins (Tuesday). They will be addressing the risks to the stability of the Canadian financial system, including risks stemming from Covid-19. Aside from the BoC line-up, market participants will closely watch provincial leader’s talks on whether to further constrain activity in the face of a large second wave of Covid-19 which is facing most of the country. Moreover, this week will be relatively quiet on the data front, with market participants waiting for ADP payroll data on Thursday, and since they lag so far behind the household survey measure of employment, they don’t tend to be market movers. Key figures coming up:

  • On Monday (11/23): Bank of Canada's Deputy Governor Gravelle gives Speech
  • On Tuesday (11/24): Bank of Canada's Deputy Governor Wilkins gives Speech
  • On Thursday (11/26): Payroll employment, earnings, and hours

MXN

After a week of positive gains with external market movers prevailing as price action, investors and traders are now set to assess domestic data over the week, amid prospects of a vaccine-fueled recovery. The key economic data to watch include Mexican economic activity on Wednesday, following the final estimate of Q3 GDP, Retail Sales on Thursday, and Unemployment rate and Trade Balance at the end of the week. Elsewhere, with the Mexico/US interest rate differential standing at 4.0%, this will also help to support FX flows. Key figures coming up:

  • On Wednesday (11/25): Economic Activity (Sep)
  • On Thursday (11/26): Retail Sales (Sep) | Monetary Policy Meeting Minutes | GDP (Q3)
  • On Friday (11/27): Unemployment Rate (Oct) | Trade Balance (Oct)

CNY

The Chinese yuan sits at its strongest level in more than two years, owing to the faster Chinese economic recovery and the recent weakness of the USD against its main peers. Also, as China opens its capital markets to the world, the demand for Chinese assets will help to strengthen FX flows. In a quiet week of economic data, China’s industrial profits will be watched for fresh insights into the strength of the economic recovery. Key figures coming up:

  • On Thursday (11/26): Chinese Industrial Profit (Oct)

BRL

The BRL strengthened 1.41% against the USD, touching its lower level in two months over the past week. The BRL’s appreciation was catalyzed by data showing the stronger-than-expected economic activity recovery, positive news from vaccine candidates and its availability, as well as warmer foreign trade (boosted by China). On the other hand, with the household income transfers set to end in the next month and government spending already set to reach the legal limit stipulated by the “fiscal spending ceiling” in 2021, temptation to change the law to accommodate greater spending has increased, resulting in frequent efforts to weaken the fiscal framework. Against this backdrop, the BRL should remain poorly supported by the economic data throughout the upcoming week. Key figures coming up:

  • On Tuesday (11/24): Fundação Getúlio Vargas (FGV) Consumer confidence
  • On Wednesday (11/25): Foreign Exchange Flows
  • On Thursday (11/26): Product Price Index (Oct)
  • On Friday (11/27): Unemployment rate (Sep) | Bank lending (Oct)

Quick Insights

USD: The second estimate of Q3 GDP on Wednesday will also add some further coloring to the rebound picture

USD: The second estimate of Q3 GDP on Wednesday will also add some further coloring to the rebound picture

EUR: Political conflicts are also in focus

EUR: Political conflicts are also in focus

GBP: The PMI index on Monday should show that the economy is losing steam heading into the final quarter of the year

GBP: The PMI index on Monday should show that the economy is losing steam heading into the final quarter of the year

JPY: The pair USD/JPY has been following a clear downtrend channel since the beginning of the Covid-19 pandemic

JPY: The pair USD/JPY has been following a clear downtrend channel since the beginning of the Covid-19 pandemic

CAD: This week will be relatively quiet on the data front

CAD: This week will be relatively quiet on the data front

MXN: The key economic data to watch include Mexican economic activity on Wednesday

MXN: The key economic data to watch include Mexican economic activity on Wednesday

CNY: The Chinese yuan sits at its strongest level in more than two years

CNY: The Chinese yuan sits at its strongest level in more than two years

BRL: The BRL should remain poorly supported by the economic data

BRL: The BRL should remain poorly supported by the economic data

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