Forex Weekly Outlook Dec. 7-11 – Central Banks And GDP In Focus

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The major economies are showing better numbers in the third quarter, but COVID-19 is still hampering economic growth. This week, we’ll get a look at GDP reports in Japan and the UK, as well as central bank announcements from the ECB and Bank of England.

German GDP bounced back in the third quarter with a gain of 8.5%. This follows a decline of 9.7% in Q2. In France, GDP jumped 18.7% in Q3, beating the forecast of 18.2%. The RBA held the course at its policy meeting, as policymakers maintained interest rates at the ultra-low level of 0.10%. GDP showed a 3.3% gain in Q3, surpassing the consensus of 2.5%.

Canadian GDP, which is released monthly, slowed to 0.8% in September, as the economic recovery may have run out of steam. Job numbers for November sparkled. The economy created 62.1 thousand jobs, defying the consensus of 22.0 thousand. The unemployment rate fell to 8.5%, down from 9.0%

The US manufacturing sector continued to grow, as the ISM Manufacturing PMI came in at 57.9, although this was weaker than the previous release of 59.3 points. The ISM Services PMI fell to 55.9, down from 56.6 points. Still, this was a sixth straight month of expansion.

In testimony on Capitol Hill, Federal Reserve Chair Powell reiterated his message for further fiscal stimulus support from the federal government. Nonfarm payrolls dropped to 245 thousand, down sharply from 638 thousand. This missed the estimate of 480 thousand. Wage growth surprised with a gain of 0.3%, above the estimate of 0.1%.

  1. Japan GDP: Monday, 23:50. Japan’s GDP declined by 7.9%, as COVID-19 severely curtailed economic conditions. The economy is expected to bounce back in Q3, with an estimate of 5.0%.
  2. ECB Rate Decision: Thursday, 10:45. The ECB holds its policy meeting later this week. The central bank is projected to add further easing, with analysts expecting an increase in the Pandemic Emergency Purchase Program by 400-600 billion euros.
  3. French Final CPI: Friday, 7:45. The eurozone’s second-largest economy has not been able to generate any inflation, and CPI came in at 0.0% in October. We now await the November data.
  4. UK GDP: Thursday, 7:00. The monthly GDP has been pointing to slower growth and the indicator fell to 1.1% in September. The downtrend is expected to continue in October, with an estimate of 0.4%.
  5. BoC Rate Decision: Wednesday, 15:00. The Bank of Canada holds its monthly policy meeting, with policymakers expected to maintain rates at 0.25%. Canada has posted some solid data recently, and a positive tone from the rate statement could bolster the Canadian dollar.
  6. US CPI: Thursday, 13:30. Inflation remains at low levels, as the US recovery proceeds slowly. The headline and core readings are both expected in at 0.1%.

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