The long-awaited announcement that the US Federal Reserve will finally begin tapering its QE programme boosted the dollar across the board last week. The big question for this week is whether this trend will continue in what is expected to be a fairly quiet week on the markets.
This week’s main economic releases are US Durable Goods Orders, US housing data, US unemployment claims, and Canadian GDP.
Canadian GDP – Monday, 13:30
The Canadian economy grew by 0.3% in September, ahead of the 0.1% rise that was forecast. The pace of growth hit a two year high of 2.7%, and the Bank of Canada predicts that the rate of growth will escalate in the months to come. However, the global economic outlook isn’t so rosy, and this may put a dent in Canada’s prospects for growth. This time around, the Canadian economy is expected to grow by 0.1%.
US Durable Goods Orders – Tuesday, 13:30
In October, a 16% drop in demand for civilian and military aircraft saw orders for durable goods unexpectedly decline by 2.0%, rather than the 1.5% decrease anticipated. This followed a rise of 4.1% in September. Core durable goods orders also fell by 0.1%, as opposed to the 0.5% gain that was forecast. This suggests that companies may have been reluctant to place orders in October while uncertainty about the budget deal was still in the air. However, stronger figures are expected in the coming months, with ISM figures suggesting that manufacturing has increased since the spring with higher domestic demand and strong auto sales. This time out, orders for durable goods are expected to increase by 1.7%, with core orders forecast to rise by 0.9%.
US New Home Sales – Tuesday, 15:00
The sales of new single-family homes in the US increased by the fastest rate in over 33 years in October, hitting a seasonally adjusted annual rate of 444,000 units, higher than the 432,000 expected by analysts. This represents a 25.4% increase on the September figure, and this huge jump demonstrates the strength of the housing market in spite of rising mortgage rates. At the October rate, it would take 4.9 months to finish house supply in the markets. The November figure is expected to rise further to 449,000.
US Unemployment Claims: Thursday, 13:30
Claims for US unemployment benefits increased last week, unexpectedly, to a near-nine month high of 379,000, in a demonstration of how the holiday season can bring volatility to the jobs market. This was well above the analysts’ forecast of 336,000 new claims. The four-week average, which tends to be more stable, climbed to a one-month high of 343,500, up from 330,250 the previous week. However, the volatility of the claims figure around this time of year means that not too much significance can be placed on this. This week, a rise to 382,000 is forecast.