NORTH AMERICA TO DRIVE HEADLINES ON WEDNESDAY
North American markets will get plenty of attention on Wednesday, as traders evaluate fresh US jobs numbers and the final interest rate decision of the year from the Bank of Canada.
Action begins at 07:00 GMT with a report on German factory orders. Orders for manufactured goods are forecast to fall 0.3% in October, following a 1% increase the month before. However, that should still be good enough for a year-over-year gain of 7%.
Later in the morning, Switzerland will release the November consumer price index (CPI), a key barometer of inflation. CPI is forecast to flatline in November, translating into year-over-year growth of 0.9%.
On the monetary policy front, European Central Bank (ECB) official Yves Mersh is scheduled to deliver a speech at 10:30 GMT.
The North American session kicks off with the ADP private payrolls report. The monthly release could show the creation of 185,000 private sector jobs in November, following a net gain of 235,000 the month before. The official nonfarm payrolls report is due 48 hours later and is expected to show another month of solid jobs growth.
North of the border, the Bank of Canada (BOC) will deliver its final interest rate decision of the year on Wednesday. Policymakers are widely expected to stand pat for a second consecutive month as the Canadian economy adjusts to back-to-bate rate hikes. The benchmark lending rate is therefore expected to hold steady at 1%.
Earlier in the day, the Australian government reported a smaller than expected rise in third quarter GDP, signaling stronger headwinds for the domestic economy. The Australian economy expanded 0.6% in the third quarter, following an upwardly revised gain of 0.6% the previous quarter, the state-run statistics bureau said. Analysts in a median estimate called for a gain of 0.7%.
In annual terms, the Australian economy expanded 2.8%, which was higher than the Q2 rate but slightly below the consensus forecast of 3%.
The Australia dollar slipped back below 0.7600 US cents on Wednesday following the GDP report. The AUD/USD was last down 0.4% at 0.7583, which is a stark reversal from Tuesday’s highs near 0.7660. The Aussie is now struggling to maintain support at 0.7570. On the opposite side of the spectrum, resistance is likely seen near the Tuesday high.
The USD/CAD attempted at a recovery Tuesday, but prices fell short of the 1.2700 level. The pair had regained momentum early Wednesday, where it was trading at 1.2699. The BOC statement could hold the key to the next move in the USD/CAD.
The euro made another sharp down move against the dollar on Wednesday, with prices falling 0.6% to 1.1830. The pair is showing weakness below 1.1840, putting it on a collision course with the 1.1800 support level. On the flipside, resistance is found at 1.1900.