forex trading outlook today - financial market outlook december 2011 ; In an otherwise quiet day, the key release is US non-farm payrolls for November. Recent signs of firming economic activity has led to an improved level of sentiment in the US. As a result, cautious optimism has risen that the labour market is stabilising. Figures for initial claims averaged below 400k last month, a feat last achieved in March. However almost 8m jobs have been lost during the recession. Many in construction and manufacturing look unlikely to return and the public sector continues to shed jobs.
The onus remains with the private sector to provide the bulk of new jobs and services hiring led the 120k increase in the three months to October. Survey evidence and a pick up in the ADP employment indicator suggests the pace of hiring in November accelerated over the previous month. As a result we forecast 110k non-farm payrolls were added in November, up from 80k in October, while the rate of unemployment is expected to hold at 9.0%.
Elsewhere, Euro area producer price inflation is out this morning. Although, the release may show another small rise on the month, the growth rate over recent months has softened. As a result is unlikely to add to worries about inflation ahead of next week’s ECB rate setting meeting.
China
While Chinese growth is starting to slow and has been impacted by the combination of the weakness in developed economies and the delayed impact of tighter domestic policy, the economy still looks capable of delivering between 8.0-8.5% growth in 2012. By Chinese standards this constitutes a soft landing. The government is endeavouring to reorientate the economy away from export to consumption led growth. If the economy was to show signs of decelerating too fast then fiscal stimulus will be deployed – unlike 2009 it will focus on tax cuts (boosting demand) rather than infrastructure projects.
CPI inflation has started to decline providing scope for monetary easing next year. Indeed, the authorities have already started to cut interest rates at a regional level.
Japan
The Japanese economy has started to recover from the impact of the earthquake and tsunami. The supply chain disruptions were not as great as first feared and consensus forecasts expect the rebuilding process to deliver 2.8% growth in 2012. The yen has rallied significantly partly in response to capital repatriation but also due to its safe haven status. The pressure this is exerting on the economy and corporate margins has prompted the finance minister together with the BOJ to consider measures to curtail the recent strength of the currency.
The onus remains with the private sector to provide the bulk of new jobs and services hiring led the 120k increase in the three months to October. Survey evidence and a pick up in the ADP employment indicator suggests the pace of hiring in November accelerated over the previous month. As a result we forecast 110k non-farm payrolls were added in November, up from 80k in October, while the rate of unemployment is expected to hold at 9.0%.
Elsewhere, Euro area producer price inflation is out this morning. Although, the release may show another small rise on the month, the growth rate over recent months has softened. As a result is unlikely to add to worries about inflation ahead of next week’s ECB rate setting meeting.
China
While Chinese growth is starting to slow and has been impacted by the combination of the weakness in developed economies and the delayed impact of tighter domestic policy, the economy still looks capable of delivering between 8.0-8.5% growth in 2012. By Chinese standards this constitutes a soft landing. The government is endeavouring to reorientate the economy away from export to consumption led growth. If the economy was to show signs of decelerating too fast then fiscal stimulus will be deployed – unlike 2009 it will focus on tax cuts (boosting demand) rather than infrastructure projects.
CPI inflation has started to decline providing scope for monetary easing next year. Indeed, the authorities have already started to cut interest rates at a regional level.
Japan
The Japanese economy has started to recover from the impact of the earthquake and tsunami. The supply chain disruptions were not as great as first feared and consensus forecasts expect the rebuilding process to deliver 2.8% growth in 2012. The yen has rallied significantly partly in response to capital repatriation but also due to its safe haven status. The pressure this is exerting on the economy and corporate margins has prompted the finance minister together with the BOJ to consider measures to curtail the recent strength of the currency.
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