Monetary policy choices, future direction, and the economic schedule will keep the markets occupied prior to the crucial US Jobs Report on Friday.
Factory orders will initiate the week for the US dollar. However, unless there is a sharp decline in orders, investors may opt to wait for more impactful reports on Tuesday.
The significant ISM Non-Manufacturing PMI and JOLTs Job Openings will be under scrutiny on Tuesday. An increase in service sector activity could challenge the idea of a less aggressive Fed rate path. However, labor market data may have a more substantial impact on the demand for the US dollar.
A decrease in job openings and a modest rise in ADP nonfarm payrolls (Wed) could indicate early signs of strain in the US labor market.
On Thursday, attention must be given to jobless claims, unit labor costs, and nonfarm productivity numbers.
Nevertheless, the main focus will be on the US Jobs Report. If there is slower wage growth and looser labor market conditions, it could increase expectations of a Fed rate cut in the first half of 2024. Deteriorating labor market conditions and a decline in consumer confidence would indicate a significant reduction in consumer spending. A decrease in spending would alleviate demand-driven inflation and impact the economy.
The German economy will be in the spotlight on Monday. Trade data for October will reveal any changes in global trade terms. A decrease in exports would support expectations of a prolonged German recession and affect the appetite for the EUR/USD.
On Tuesday, investor attention is needed for service sector PMIs. With the services sector contributing over 60% to the Eurozone economy, weaker activity in this sector would alleviate inflationary pressures and support a less assertive ECB rate trajectory.
German factory orders and industrial production numbers on Wednesday and Thursday, respectively, will capture investor interest. Better-than-expected numbers could raise hopes of a mild recession. Additionally, Eurozone GDP numbers on Thursday will require investor attention.
Finalized German inflation numbers will conclude the week, influencing expectations of an ECB rate cut in the first half of 2024.
Besides the figures, ECB commentary could also impact the market.
UK retail sales and service sector PMI numbers will provide early guidance for the Pound. While retail sales numbers will influence the GBP/USD, revisions to the services PMI could have a more significant impact. The UK services sector contributes over 70% to the UK economy.
On Thursday, US house prices will also need to be considered. Deterioration in housing sector conditions could impact consumer confidence and indicate a weak consumption outlook.
Apart from the figures, the Bank of England Financial Stability Report on Wednesday and Bank of England Governor Bailey's speech on Wednesday will draw investor interest.
The Bank of Canada will be in focus on Wednesday. Recent speeches signaled the end of the rate hike cycle, leaving the Rate Statement to influence the Loonie. Ivey PMI, labor productivity, and trade data will likely play a second fiddle to the BoC policy decision.
Bank of Canada Governor Tiff Macklem will conclude the week with a speech on Thursday.
On Monday, finalized retail sales, company gross operating profits, and home loans will impact the appetite for the Aussie dollar. A downward revision to retail sales and a larger-than-expected fall in company gross profits would weigh on the Aussie dollar. Weaker profits and a decline in consumer spending would paint a gloomier picture of the Australian economy.
The RBA will be in the spotlight on Tuesday. Softer inflation numbers and a decline in consumer spending raised bets on the RBA hitting pause. However, the RBA Rate Statement requires consideration. Inflation remains elevated and could leave rate hikes on the table.
Q3 GDP numbers on Wednesday and October trade figures on Thursday will also impact market sentiment. A stronger Australian economy and rising exports could reignite bets on an RBA move in the New Year.
There are no economic indicators from New Zealand for investors to consider. The lack of stats will leave the Kiwi dollar at the mercy of market risk sentiment and economic indicators from China.
On Tuesday, inflation figures for Tokyo will influence investor appetite for the Japanese Yen. Higher-than-expected inflation numbers would pressure the Bank of Japan to exit negative rates.
However, service sector PMI numbers also need consideration on Tuesday. Weaker activity in this sector could delay the timing of a BoJ pivot from ultra-loose monetary policy.
On Friday, household spending and Q3 GDP numbers will be critical. A decrease in household spending could give the BoJ reason to delay a pivot from negative rates. However, Q3 GDP numbers on Friday will set the bar for the BoJ. The economy may need to improve before the BoJ is willing to exit negative rates.
Service sector PMI numbers on Tuesday will influence market risk sentiment. A pickup in service sector activity would provide more evidence of Beijing's stimulus measures taking effect.
However, trade data on Thursday could have more impact. Weak exports would signal a weak global demand environment and may limit the effectiveness of stimulus measures.
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