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What's the outlook for events in the America's? - TDS

FXStreet (Guatemala) - Analysts at TD Securities noted the key events for next week in the Americas.

Key Quotes:

"Fed Lift-off (16 Dec): Along with 99% of analysts, we expect a Fed hike—but the overall tone of the communique won’t be as dovish as markets expect, reflecting the FOMC’s greater confidence in the economic outlook. The post-announcement press conference, however, will likely be a bit more balanced as Yellen can elaborate on the “gradual” path for rates. See here for a discussion of how short-end rates are likely to move once the Fed lifts off.

Banxico Decision (17 Dec): As the Fed goes, so does Banxico: we and the market expect a 25bp rate hike from the central bank, an expectation (given weaker price dynamics) based on the presumption that it will move in lock-step with the Fed, at least near the start of the policy cycle. Bloomberg consensus has the bias 4:3 in favour of a hike, however it would be unlikely that we see a deviation from the very much expected Fed hike, and so a failure to hike would certainly hit MXN. Banxico’s meeting calendar for 2016 suggests that it will remain fairly Fed-focused until mid-year, at least in terms of proximity to FOMC meetings, which may mean close tracking into the later spring for Mexican policy makers.

Canada October Manufacturing Sales (15 Dec): Not normally a major market mover, but following a significant drop in September’s manufacturing sales (-1.5% m/m), we expect October to show yet another leg down, with a decline of 0.6% m/m. This will paint a very negative picture of 15Q4 GDP growth, and leave manufacturing sales firmly unwinding gains seen in 2015Q3. Weakness in Canadian exports and auto production are likely to lead the move lower in manufacturing sales. Momentum is slowing in the manufacturing sector: new orders have fallen in the last two months, work in progress remained broadly flat in August, and the stock-to-sales ratio remains at elevated levels and needs to be unwound. While a bad report won’t be a massive surprise to the Bank of Canada (who expect GDP growth of 1.5% q/q in 15Q4), we’ll want to see a turnaround in the coming months if the Canadian economy is to recover in 2016."

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