Key Events In The Shortened Week

With Thanksgiving this Thursday, trading desks will be empty on Wednesday afternoon and remain so until next Monday. So even though it is a holiday shortened week, here are the main things to expect in the next 5 days:

The key events this week are the Bank of Japan meeting, the European Council meeting and the Eurogroup meeting. Key data releases include European and Chinese Flash PMIs.

The next Bank of Japan monetary policy meeting is scheduled for November 19-20. The BoJ has increased the size of its asset purchases at both the September and October meetings. At the November meeting the BoJ will want to wait and see the results of this easing rather than take further action. Beyond November, resurgent political pressure may induce further easing from the BoJ. However, under Governor Shirakawa we see little appetite for the BoJ to ease other than through further expansion of its Asset Purchase Program. Japanese trade data is released on Tuesday evening, and is expected to continue to show weakness stemming in part from tensions with China.

On Tuesday, the Eurogroup will again discuss Greece, including additional funding required by Greece as well as Greek debt sustainability. This follows last week's Eurogroup meeting, at which Euro area finance ministers approved new Greek fiscal targets and acknowledged the efforts made by the Greek government, including the latest reforms and budget. On Thursday and Friday, the European Council will meet to negotiate the EU budget with a particular focus on trying to avoid a UK veto as the British government tries to limit any budget increases. After GDP data last week continued to show a mild recession across the Euro area, the main data releases from Europe this week are the Euro area flash PMIs on Thursday.

In China, the HSBC Flash PMI is released on Thursday, an indicator that will be closely watched following a healthy increase in October.
In the US, the disruption caused to activity by Hurricane Sandy started to show up in data last week - Sandy was cited by Government agencies for the deterioration in both Initial Claims and the Philadelphia Fed Business Survey. Initial claims may take several weeks to normalise. US data releases are light this week, with US housing data including Existing Home Sales and Housing Starts the main points of interest. Our US team have pointed out that US housing data has improved recently, a sign that the housing sector has no longer contributes negatively to GDP growth.

On Tuesday the RBA releases the minutes of the November meeting and Governor Glenn Stevens gives a speech to the Committee for Economic Development of Australia. With both the market and consensus divided on the likelihood of a rate cut in December, these two communiqués will be watched for clues on the RBA's monetary policy outlook.

Week Ahead:

Mon 19th November

  • US Existing Home Sales (Oct). GS: -1.7%, Consensus: -0.1%, Previous: -1.7%
  • Also interesting: US Homebuilders’ Survey (Nov), Chile GDP (Q3)

Tue 20th November

  • BoJ MPC Meeting: The BoJ eased policy by increasing asset purchases at both the September and October meetings. The BoJ will likely want to wait to see the results of these measures at the November meeting.
  • Japan Trade Balance (Oct) - released 23:50 GMT. GS: JPY -280bn, Consensus: JPY -360bn, Previous: JPY -560bn
  • Eurogroup Meeting
  • US Housing Starts (Oct). GS: Flat, Consensus: -3.7%, Previous: +15.0%
  • Turkey MPC Meeting. GS: 5.75%, Consensus: 5.75%, Previous: 5.75%
  • Norway GDP (Q3). Consensus: 0.5%qoq, Previous: 1.0%yoy
  • RBA Minutes (Nov)
  • Also interesting: Fed Speeches (Bernanke, Lacker), Swiss Trade Balance (Nov), RBA Stevens Speech

Wed 21st November

  • US Initial Jobless Claims. Consensus: 400k , Previous: 439k
  • US Reuters/U. Mich Consumer Sentiment—Final (Nov). GS: 81.0, Consensus: 84.5, Previous: 84.9
  • UK MPC Minutes (Nov)
  • Also interesting: Malaysian CPI (Oct), UK Public Sector Net Borrowing, Spanish bond auction.

Thursday 22nd November (Thanksgiving in the US)

  • China HSBC Flash PMI (Nov). Previous: 49.5
  • European Council Meeting (Day 1)
  • Euro area Flash PMIs (Nov). Consensus expects 45.6 in Eurozone Manufacturing aggregate after 45.4 in October.
  • Euro area Consumer Confidence (Nov). Consensus: -25.7, Previous: -25.7
  • South Africa MPC. GS: 5.00%, Consensus: 5.00%, Previous: 5.00%
  • Also interesting: Canada Retail Sales, UK CBI Monthly Trends, Brazil Current Account Balance, Brazil IPCA-15 Inflation

Friday 23rd November

  • European Council Meeting (Day 2)
  • Germany IFO Business Survey (Nov). Consensus: 99.5, Previous: 100
  • Canada CPI (Oct). Consensus: 0.1%mom, Previous: 0.2%
  • Colombia MPC Meeting. GS: 4.75%, Previous: 4.75%
  • Also interesting: Italian Retail Sales, Germany GDP (revised), Mexico Current Account Balance, Speech by Mario Draghi

Source: Goldman Sachs