It was a turbulent week for markets last week, with investor concerns on stock valuations remaining high and estimates for Fed action at the next meeting swinging wildly.
Traders are expecting more volatility in the days ahead as more US delayed data comes through to the market and various geopolitical situations across the globe hit local markets, keeping uncertainty on where markets will close out the year at high levels.
It looks set to be a relatively disjointed week ahead, with the key US Thanksgiving holiday on Thursday and the subsequent ‘long-weekend’ day on Friday likely to lead to lower liquidity conditions towards the end of the week.
Here is our usual day-by-day breakdown of the major risk events this week:
It is a quiet start to the week on Monday, with little in the way of data releases scheduled. Japan is off, which should hit liquidity in the first session of the week, but markets are expected to start relatively positively given Wall Street’s rally on Friday. The London session does see the release of the German IFO Business Climate data, and we are scheduled to hear from ECB President Christine Lagarde later in the day, but overall traders are expecting relatively smooth trading conditions.
It’s a quiet start to the day on Tuesday with little on the calendar in both the Asian and London sessions; however, things should get lively once New York opens. We have delayed PPI and Retail Sales data out of the US, with both numbers coming out 40 days after they were originally scheduled. Later in the session, US Pending Home Sales data is also due for release alongside the Richmond Manufacturing Index, and there is the possibility that the CB Consumer Confidence numbers will also be released.
Wednesday also looks set to be a very busy day for traders. The Asian session will see a strong focus on antipodean markets, with the Australian CPI data due out just ahead of the latest interest rate decision from the Reserve Bank of New Zealand. The London session will see the release of the latest ECB Financial Stability Report as well as the UK’s Autumn Forecast Statement. The hits keep on coming once New York opens with more catch-up data from the government shutdown. Wednesday sees Weekly Unemployment Claims numbers, Durable Goods data, Quarterly GDP figures and the probable release of the Fed’s favoured inflation indicator, the Core PCE Price Index data – with traders expecting plenty of volatility around all releases given the fact that Thursday sees most US markets closed.
It is a case of feast to famine on Thursday as data releases slow down dramatically. The Asian session will see an initial focus on Kiwi markets with the Retail Sales data due out; however, there is very little due on the calendar to move markets for the rest of the day. The Thanksgiving Day holiday in the US usually leads to very quiet markets throughout the day, especially in the final session.
Friday has a touch more scheduled to close out the week. Japanese markets will be in focus early in the Asian session with Tokyo Core CPI numbers due out. The London session sees the release of German Preliminary CPI data across the day, and even though US markets are back open, most traders acknowledge that it’s usually a quiet final session to the week, with many taking the day off to make a long weekend. Canadian GDP data is due out, which should add some volatility to the Loonie, but expect quieter trading into the weekend overall.
