- ECB policymakers expected to offer further generous stimulus package.
- UK GDP data could offer some cause for cheer
- US job openings report could highlight slowing labour market
Due to be published on Tuesday, The Eurozone ZEW Sentiment Index for December stands to be one of the more interesting macroeconomic releases at the start of the week. Coming just days ahead of a critical ECB meeting, this forward-looking indicator is set to show further deterioration in the economic situation for the currency bloc. Expectations are that this print will be around 25, well below the 32.8 seen last month and may be lower than the 25.2 recorded in April.
Wednesday sees the publication of the German Balance of Trade data for October. As has been noted previously, this is a contentious reading as it tends to illustrate the net benefit Germany sees from its position at the heart of the EU. With a surplus of around EUR23 billion forecast, that could be the highest level recorded in almost three years, having the potential to reignite the debate over wealth distribution across member states.
Also on Wednesday, US JOLT Job Opening data for October will be released. The figure is expected to hold steady around the 6.4million level, but anything much below that could be seen as a red flag over the state of the US economy. As companies continue to reshape in the wake of the pandemic, there’s a genuine need for new job creation to continue.
Thursday sees a slew of data releases, with the UK Balance of Trade for October set to be issued. The number has been positive for the last six months, although September’s reading only just made it, coming in at a shade over £600m. Expectations are for a print in the region of £1.5 billion to be seen, which would provide some welcome relief for policymakers and allay concerns of import stockpiling before the Brexit transition period ends.
The latest UK GDP readings for October are also due to be reported. Expectations here are for the three-month average to be around the 10%, down from the 15% recorded last month, whilst the one month year-on-year figure is tipped to improve slightly from the -8.4% seen in September. A trend like this would give Sterling a little more to cheer, following last week’s better than expected PMI prints.
The ECB will also announce its latest monetary policies on Thursday. With the Eurozone economy continuing to struggle, there’s a real need for fresh stimulus measures, whilst growth projections are likely to be downgraded for the final quarter in light of new lockdowns. Vaccine hopes may however give the bank room to take a more optimistic view of 2021, but there’s still a need for action now. It’s been well telegraphed to the market so perhaps the bigger risk is should any package be seen as coming up short then stocks and the Euro alike may suffer.
Rounding off the week is US PPI data for November due on Friday. This number is expected to come in showing some modest growth of around 0.2%, which will arguably be sufficient to allay any fears of deflationary pressure. The PPI reading reflects the prices paid by manufacturers so is seen as instrumental in driving underlying inflation.
Article by Tony Cross of Monk Communications. This article first appeared in Octo
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