Weekly Market Outlook: Fed & ECB Minutes

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The week ahead will be a quiet one, with economic data taking a backseat. In terms of significant events, only the meeting minutes from the ECB and the Federal Reserve stand out.

Canada’s inflation data is due in the middle of the week after the Bank of Canada has just signaled a cautious outlook. While keeping rates steady, the BoC is on the lookout for any potential downside risks. BoC Governor Stephen Poloz will also be speaking.

The week ahead will see the ECB President, Christine Lagarde speaking at a banking event in Frankfurt. This comes as flash PMIs for the eurozone are also due in the coming days.

Here’s a brief look at the key economic events coming up.

Fed Minutes and Perhaps Trade Talks

Last week saw most of the markets reacting to the US-China trade talks.

As a result, this is likely to become the central theme this week. A lack of any major market-moving events will keep investors tuned into any developments on the trade front.

Fed to Release Meeting Minutes

The Federal Reserve will be releasing their meeting minutes this week.

The minutes cover the Fed’s recent monetary policy decision. The central bank cut rates by 25 basis points but signaled that it would pause future rate cuts for now.

Recent speeches by various Fed members including the Fed Chair Jerome Powell reiterated this view. The central bank is hoping that it has done enough by lowering rates.

It now expects the economy to start gaining momentum. But global headwinds will continue to pose a challenge to policymakers.

Housing Data from the US on the Cards

On the economic front, data over the week will focus on the housing markets.

The building permits are forecast to rise 1.39 million for October. This will mark the same pace of increase as the month before. Housing starts are set to rise by 1.32 million, slightly higher from 1.26 million previously.

Ahead of the report, the NAHB housing market index will give a glimpse into the homebuilder’s sentiment

ECB Speech and Flash PMI’s

Economic data from the eurozone is relatively quiet. The ECB President Christine Lagarde will be speaking at a banking event. Later in the week, the flash PMIs from Markit are due.

Amid the quiet week, the German GDP report for the third quarter will be coming out. No changes are forecast with the general estimates pointing to a 0.1% increase in the three months ending September 2019.

ECB Minutes and Lagarde

The European Central bank will also be releasing its monetary policy meeting minutes this week.

But investors are likely to brush aside the data. The minutes cover the ECB meeting which was also the last meeting under the leadership of Mario Draghi.

With the new ECB president at the helm, focus will shift more on Lagarde’s speech than the minutes. For the moment, the general consensus is that Lagarde will continue with the current policy toolkit she inherits from Draghi.

As the ECB recently restarted its QE program, the central bank is not expected to spring any major surprises.

Focus on November’s Flash PMIs

IHS Markit will be coming up with the monthly flash PMI reports covering the manufacturing and the services sector.

At an individual level, the reports might not create much of an impact. But for investors, the flash numbers will give an idea into how the economy fared during November.

Manufacturing activity is forecast to tick slightly higher, rising to 46.4 from 45.9 previously. Although, this will still signal a contraction in the sector. Services PMI is forecast to perform better.

Estimates on the services sector point to an increase to 52.4 from 52.2 previously.

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