RBNZ meeting coupled with Q3 GDP data from Canada and Switzerland as well as UK budget release will highlight this shortened trading week due to Thanksgiving holiday. Economic data from the US will be published but they will refer to the month of September.
USD
Fed Governor Waller stated that he is in favor of a 25bp rate cut in December and explained that weak labor market justifies rate cut. He added that data from private-service indicators (ADP) and from other surveys points to a stagnant labor market and he doubts that incoming data would change that picture for him. Inflation is not as big concern, he clarified, as slower growth and slower spending are keeping price increases contained. During last week we had some Fed voting members state that they are more in favor of holding rates in December so with Waller’s comments we can see divide growing with the Fed.
ADP employment index for the four week period ending November 1 saw economy lose 2500 jobs per week. Past week saw economy shedding 11.5k jobs per week so at least the pace of job losses is slowing down. September NFP data showed economy adding 119k jobs vs 50k jobs as expected. The unemployment rate, however, ticked up to 4.4% from 4.3% in August. Biggest job gains came from private education and healthcare services 59k followed by leisure and hospitality 47k and government 22k. This report is outdated and its validity is questionable. We will get November NFP data and part of October NFP data (without the unemployment rate) on December 16. As a reminder Fed meeting is on December 10 so they will go into it without latest jobs data.
President Trump stated that he thinks he already knows the choice for Fed chair and as a reminder five candidates are Fed Governors Christopher Waller. Fed Governor Michelle Bowman, National Economic Council Director Kevin Hassett, former Fed Governor Kevin Warsh and BlackRock executive Rick Rieder. Late on Friday US has proposed a 28-point peace plan to end Ukraine-Russia conflict. October CPI report is cancelled and November CPI will be released on December 18, after Fed meeting.
Nvidia has posted yet another stellar quarter as Q3 revenue came in at $57bn easily beating expectations of $54.6bn. The company has lifted its projections for Q4 revenues to $65bn which is much stronger than $62bn the markets expected. They also see around $500bn demand for their chips in 2026. Earnings call was oozing with bullishness as CFO talked about Nvidia remaining “superior choice” while CEO Jensen Huang stated that “Blackwell sales are off the charts” and “cloud GPUs are sold out.”
New York Fed President Williams, permanent voting member, stated that Fed can still cut in the near-term as monetary policy is moderately restrictive. He added that slowing economic growth and increasing risks to downside in labor market are reasons for concern. Additionally, he acknowledged that disinflation process slowed down but he still sees inflation dropping to 2% in 2027. Risk on mood was activated in markets after his comments with stock markets and bitcoin leading the way.
The yield on a 10y Treasury started the week at 4.15%, rose to 4.16% and finished the week at around 4.06%. The yield on 2y Treasury started the week at 3.61%, rose to 3.63% and finished the week at around 3.51%. Spread between 2y and 10y Treasuries started the week at 55bp and finished the week at 55bp. After Fed Williams’ speech FedWatchTool sees the probability of a 25bp rate cut at December meeting at 69% while probability of no change is at 31%. Bitcoin has dropped below $81k on Friday, then bounced back an hovered around $85k, with silver dropping below $50 and gold exploring below the $4000 level and then rebounding to finish the week above that level.
EUR
Preliminary November PMI data saw manufacturing dip back into contraction with a 49.7 print vs 50.2 as expected and down from 50 in October. Both German and French readings reversed course and moved deeper into contraction. Both domestic and external demand are declining as indicated by crumbling new orders and new export orders. Services managed to tick up to 53.1 from 53 the previous month with France recording first expansion print of the year. German services dipped but remained in expansion. Composite ticked down to 52.4 from 52.5 in October due to declines in Germany while French reading got dangerously close to returning into expansion with a 49.9 print. Final September CPI reading came in unchanged at 2.1% y/y fore headline and 2.4% y/y for core.
GBP
CPI report for the month of October saw headline number decline to 3.6% y/y as expected from 3.8% y/y where it was residing for the past three months. Core CPI continued its gradual decline as it printed 3.4% y/y, as expected, down from 3.5% y/y in September. Services CPI declined to 4.5% y/y from 4.7% y/y the previous month while markets were expecting a smaller decline to 4.6% y/y. Household services and housing made the largest downward contribution to the reading while food, rising to 4.9% y/y from 4.5% y/y, and non-alcoholic drinks saw highest price increases. These numbers show that disinflationary path continues and increase chances of a December cut. Additionally, BoE Chief Economist Pill stated that underlying inflation is even lower.
November consumer confidence showed the biggest drop since April as report states tax-rise speculation, cost pressures and weak spending intentions heading into Christmas as the main culprits. Preliminary November PMI saw manufacturing print first expansionary reading of the year with 50.2 while services declined to 50.5 from 52.3 in October. The report concludes with “The PMI data therefore suggest the policy debate will shift further away from inflation worries toward the need to support the struggling economy, hence adding to the chances of interest rates being cut in December.”
Important news for GBP:
Wednesday:
Budget release
AUD
Minutes from the November RBA meeting showed a hawkish message as firm jobs market reduces odds of a December cut. Members clarified that they are up for holding rates on hold, but if outlook for growth and labor deteriorates they are willing to cut. Inflation came in hotter than expected prompting members to admit that there are “a little more” underlying inflationary pressure than previously assessed.
NZD
October trade balance showed deficit widening as imports grew at a faster pace than exports. Kiwi had a slow week as all its attempts to gain some strength were squashed by the risk off mood in the markets.
This week we will have RBNZ meeting where another 25bp rate cut is expected. Kiwi could gain some strength if the bank states that they will pause with cuts and wait to see effects before deciding on next step.
Important news for NZD:
Wednesday:
RBNZ Interest Rate Decision
CAD
October CPI data saw headline number decline to 2.2% y/y from 2.4% y/y print in September while markets were expecting a drop to 2.1% y/y. Core measures also declined but are still at elevated levels with common at 2.7% y/y, median at 2.9% y/y and trim at 3% y/y. Inflation coming down, but slower than expected and still above 2% will vindicate BoC’s decision to pause for now and watch how things develop before deciding to act further on rates. Housing starts in October plunged to 232.8k from 279.2k in September, almost a 17% m/m drop.
This week we will have Q3 GDP reading.
Important news for CAD:
Friday:
GDP
JPY
First reading of Q3 GDP saw economy contract by 0.4% q/q vs contraction of 0.6% q/q as expected and dropping 1.8% annualized. This is the first quarterly negative print since Q1 of 2024. Private consumption managed to rise 0.1% after rising 0.4% in Q2. CAPEX showed stronger 1% growth compared to 0.8% in the previous quarter. Net external demand lowered GDP by 0.2pp as exports fell by 1.2% while imports declined by 0.1%. Tariffs have hit exporters and their usually positive contribution to GDP was missing. Talks about stimulus package to help stumbling economy are getting louder while talks about BoJ tightening are getting quieter. Core machinery orders, a good proxy for CAPEX in six to nine month period ahead, rose in September by 4.2% m/m and huge 11.6% y/y thus giving some boost to the economy.
JPY has been sliding entire week, reaching the lows of 157.75 for USDJPY as talks about new large stimulus package funded by an extra budget grow louder. Japan’s Cabinet approved the package in the tune of JPY21.3tn ($153bn). The package includes JPY17.7tn in general spending and JPY2.7tn in tax cuts. It will be financed with a significant increase in government bond issuance. As the USDJPY moves higher risks of intervention are growing, but the pair could easily reach the 160 level before BoJ acts. Additionally, there is a possibility that they are waiting next week’s Thanksgiving when liquidity will be thin so that their intervention could have bigger impact. Finally, with such large fiscal stimulus that will weigh heavily on JGBs and JPY it is questionable how successful intervention will be. Japan government bonds are surging with 10y JGB reaching 1.82% while 30y reached 3.37%.
October CPI saw inflation tick up across all measures with headline and ex energy components rising to 3% y/y, as expected, from 2.9% y/y in September while ex fresh food, energy ticked up to 3.1% y/y, also as expected, from 3% y/y the previous month. Inflation keeps rising and authorities are fighting it with fiscal stimulus instead of raising rates. Preliminary November PMI saw manufacturing improve to 48.8 from 48.2 in October as output rose to a four-month high. New orders continued to decline but the pace slowed down while new export orders fell at a faster pace as external demand weakens further. Service were unchanged at 53.1 and composite was lifted to 52 from 51.5 the previous month. The report emphasizes inflation as the main concern with input costs continuing to surge higher.
CHF
SNB total sight deposits for the week ending November 14 came in at CHF456.5bn vs CHF460bn the previous week. Another week and another move down in sight deposits as they are on their way to the lows of the well-established range. Preliminary Q3 GDP dropped unexpectedly and saw economy contracting by 0.5% q/q vs 0.3% q/q expansion that was expected and down from 0.1% q/q reading in Q2. Economy contracted for the first time since Q2 of 2023. Main culprit for contraction are high tariffs imposed by the US, but with them being lowered last week we should see Swiss economy rebounding in the coming quarters.
This week we will have final Q3 GDP reading.
Important news for CHF:
Friday:
GDP
