Weekly Fundamental Bulletin: Busy Start to the Week

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Last week’s highlights

US durable goods orders rise by 1.3% in October

The monthly durable goods orders report measuring the new orders for manufactured goods surged more than expected.

Data from the Commerce Department showed that durable goods orders rose by 1.3% in October. This comes on the back of a 2.1% increase in September.

October’s data also beat the general forecasts of a 0.9% increase. Excluding the transportation orders, durable goods orders also rose by 1.3% on the month.

Forecasts were for a 0.4% increase excluding transportation. Orders for non-defense capital goods and excluding aircraft rose by 0.7% during the month.

US third-quarter GDP co4nfirmed at 31.4%

The second revised GDP estimates for the United States did not show any major changes.

As per the initial estimates, data from the Commerce Department confirmed a 31.4% increase on an annual basis. This was for the three months ending September.

The second revised estimates showed a modest upside revision to nonresidential fixed investments.

A decline in state and local government spending was offset by an increase in exports. The data did not make much of an impact on the markets.

Eurozone economic confidence weakens

The latest measure of economic confidence in the Eurozone showed a slowing. This comes as most parts of Europe are dealing with new lockdown measures due to the second wave of the pandemic.

As a result, the Eurozone economic confidence fell to a four-month low in November. The index fell to 87.6 in November, compared to 91.1 in the previous month.

However, the declines were better than the forecasts of a drop to 86.5. Even the industrial sentiment index fell, from -9.2 to -10.1. The services sector confidence fell to -17.3 as businesses expect demand to continue falling.

ECB releases monetary policy meeting minutes

The European central bank released its monetary policy meeting minutes last week.

According to the report, policymakers saw continued risks to the downside. The minutes came from the ECB monetary policy meeting held in late October.

During the meeting, ECB President Lagarde said that the central bank was preparing new stimulus measures to be announced in December.

US personal income falls in October

The US Commerce department’s report on personal income and spending saw a decline in incomes during October. The report showed that personal income fell by 0.7% in October.

This follows a revised 0.7% reading in September. Economists forecast that personal incomes would remain unchanged after an initial estimate of 0.9% in September.

On the other hand, personal spending rose by a modest 0.5% during the period. It follows a 1.2% increase in September.

Upcoming Economic Events

Oil traders look to OPEC meetings this week

Oil markets will be looking to the semi-annual OPEC+ meeting due to be held in Vienna this week.

According to some sources, Russia and Saudi Arabia are likely to continue with the current production cuts. This could continue for about three months.

Oil prices have been rising over the past week, largely in response to the results of the coronavirus vaccine. A continuation of the oil production cuts could also help to boost prices higher.

As of last Friday, oil prices rose to the highest levels since March this year.

US unemployment rate to fall in November

The monthly payrolls report for November will be released on Friday this week.

The median estimates point to the average payrolls rising by 500k. This marks a slower pace of increase compared to October’s payrolls of 638k.

However, the unemployment rate is forecast to fall once again from 6.9% to 6.8%. The US unemployment rate has been steadily declining for six consecutive months.

The unemployment rate peaked at 14.7% in April this year. The trend comes as the weekly jobless claims continue to fall steadily.

Despite the positive headline print, the gains in the payrolls on average during the past six months remain well short of recovering the 21.5 million jobs lost in March this year.

Australia GDP to rebound in the third quarter

Australia will be releasing its third-quarter GDP results ending the month of September.

The overall view is that GDP recovered strongly in the third quarter after falling 7% in the second quarter this year. The estimates show an increase of about 2% – 3% during the three months ending September 2020.

Consumer spending is forecast to pick up, driving the GDP higher. This is followed by an increase in home building and real estate with business investment and public demand making up the tail end.

The gains in the third quarter come as the Covid-19 restrictions were rolled back. However, some parts continued to see restrictions in place.

Global PMI data on tap this week

A new trading month will see a lot of economic reports coming out.

One of these includes the global PMI numbers covering manufacturing and the services sector.

In the US the ISM manufacturing PMI is forecast to ease to 57.7 in November. This comes after an increase to 59.3 previously.

Elsewhere, China’s manufacturing PMI is set to rise only by 0.2 points from 51.4 to 51.6 during the month.

In the Eurozone, the final manufacturing PMI figures are forecast to ease from 54.8 in October to 53.6. Japan’s manufacturing PMI is unlikely to see any changes from the previous month.

Overall, the forecasts on the global PMI suggests that the manufacturing activity might have slowed during the month.

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