Upcoming week November 20-25, 2022
The coming week isn’t promising to be the most exciting week of the year, but there are still things that could affect the currency and financial markets to keep an eye on.
Due to the US Thanksgiving holiday on Thursday, markets may slow down towards the end of the week. Friday is also half a day for US markets. However, this also means that if there is a surprise in the markets, the situation can become unstable. For the most part, the events of the upcoming week will focus on Wednesday, when the RBNZ meeting on interest rates, European PMI and FOMC minutes will take place. And don’t forget that Friday is Black Friday, the unofficial start of the holiday shopping season. Plus, there are still some names to keep an eye on this week when it comes to earnings, like Zoom and Dell.
Reserve Bank of New Zealand
The Reserve Bank of New Zealand (RBNZ) will meet on Wednesday this week to set interest rate policy. At the previous meeting on October 5, the RBNZ raised rates by 50 basis points to bring the OCR down to 3.5%. One of the highlights of the minutes of the meeting showed that a 75 basis point rate hike was discussed. In the end, however, the Committee decided to raise rates by only 50 basis points. A week after the last meeting of the RBNZ, New Zealand published data on the consumer price index for the third quarter. Shares rose 7.2% against expectations of 6.6% and a reading in the second quarter of 7.3%. While expectations for a Q3 publication were much lower, the actual data was largely unchanged from the previous quarter. Food inflation in October also increased from 8.3% y/y to 10.1% y/y. This would likely give the Committee grounds for a 75 basis point increase at the next meeting, bringing the official exchange rate to 4.25%.
The day after Thanksgiving in the United States, the holiday shopping season unofficially begins, with companies offering big discounts on many items. The sales data is used to estimate the next month’s holiday expenses. With interest rates rising over the past year, one has to consider how willing people will be to take on additional debt (credit card spending) at higher rates.
The most recent US retail sales data for October rose 1.3% from 0% in September. Will high spending continue into the holiday season? Walmart beat earnings estimates last week and gave an upbeat outlook for the holiday shopping season. Meanwhile, a rival target missed profits and said it expects demand to slow quickly as borrowing opportunities for consumers run out.
Amazon has also given a less favorable outlook and is gearing up for a difficult holiday season. Amazon recently announced that it is also laying off 10,000 employees. However, one thing most retailers notice is that they still have an inventory backlog. Therefore, investors will keep an eye on the number of “sales” offered and the number of discounted items.
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The third quarter results may sum it up, but there are still a few big names to keep an eye on this week. Some of these names are Zoom, Dell and Baidu. Other big hits this week: ZM, DELL, SNEX, BBY, BIDU, DLTR, HPQ, DE.
As we approach the end of the month, the economic calendar is short. The schedule will resume when we reach the end of November and the first week of December. But this week, PMI reports and FOMC minutes will highlight the week. European PMI will tell the markets if the EU is heading for a recession. The FOMC minutes will provide more clarity by the Nov. 2 meeting. Other important economic data due this week include:
Sunday – November 20, 2022
Speech by ECB President Lagarde
China: base rate on annual loans
China: prime rate on 5-year loans (November)
Monday – November 21, 2022
Germany: producer price index (October)
USA: Chicago Fed National Activity Index (OCT)
New Zealand: Balance of Trade (OCT)
Tuesday – November 22, 2022
Australia: Speech by RBA Gov. Lowe
Canada: Retail Sales (SEP)
Canada: New Home Price Index (OCT)
EU: Consumer Confidence Data (November)
USA: Richmond Fed Manufacturing Index (NOV)
New Zealand: RBNZ decision on interest rate
Wednesday – November 23, 2022
Global Flash Memory Manufacturing and Services PMI (NOV)
USA: Final Building Permits (OCT)
USA: Orders for Durable Goods (OCT)
US: New Home Sales (OCT)
USA: Michigan Consumer Sentiment Survey Final (November)
USA: FOMC Protocol
Crude oil reserves
Japan: PMI in flash memory manufacturing and services (November)
Thursday – November 24, 2022
Sweden: Riksbank interest rate decision
Germany: Ifo business climate (November)
UK: CBI Commissions on Industrial Trends (November)
Mexico: mid-month inflation rate (November)
South Africa: Interest Rate Decision
New Zealand: ANZ Roy Morgan Consumer Confidence (NOV)
New Zealand: retail sales (Q3)
Friday – November 25, 2022
Germany: GfK Consumer Confidence Ranking (DEC)
Germany: Final GDP Growth Rate (Q3)
See » Economic calendar
Chart of the week: WTI crude oil (USOIL) for the week
Source: TradingView, StoneX.
WTI crude fell nearly 10.5% last week to around $79.50, the biggest weekly drop since the week of March 28. Fearing a wider spread of Covid in China and a possible recession in other parts of the world, OPEC cut its global demand forecast by 500 bpd. Concerns about demand helped push prices down. USOIL was able to hold support for the Sep 26th week at 76.28, but if concerns persist, the price could break through support and drop to a 50% retracement from April 2020 lows to highs. 64.71. Horizontal support is slightly lower at 62.46. However, OPEC+ meets again in early December. If they update their forecast to see an increase in demand, the price should rise. The first resistance is at last week’s high of 89.82. Above, the price could reach a November 7 week high at 93.73. Additional resistance crosses the June 20 week lows at 100.73.
The upcoming forex week isn’t going to be the most exciting week of the year, but there are still things that could affect the markets that you need to keep an eye on. The RBNZ meets on Wednesday and is expected to raise rates by 75 basis points. Could they climb them higher? In addition, business activity indexes will tell us which countries, if any, are likely to face a recession. And don’t forget Black Friday! Will consumers spend this Friday or will they hold back on their funds?
Joe Perry, CMT, FOREX.com » Official site
Disclaimer: The information and opinions contained in this report are for general information only and do not constitute an offer or solicitation to buy or sell any currency contracts or CFDs. Although the information contained herein has been obtained from sources believed to be reliable, the author does not warrant its accuracy or completeness and shall not be liable for any direct, indirect or consequential damages that may result from anyone relying on such information.