Top Things to Watch

After a shortened week, be prepared for five days filled with critical economic data.

Investors will be eager to hear Jerome Powell's outlook on global growth in the New York Times DealBook Summit on Wednesday, especially as tariff threats rise.

Last week, President-elect Trump shook the markets by threatening to impose 25% tariffs on all products from Mexico and Canada, alongside an additional 10% on goods from China.

In response, analysts believe that Beijing could introduce fresh stimulus measures to counter the economic impact of a trade war. Several experts suggest that the outcome may accelerate China's drive toward high-tech self-sufficiency.

Investors have been adjusting their expectations, believing that Trump's pro-business policies could boost economic growth and corporate profits. However, many economists are concerned that tariffs will lead to increased inflation, slow down the pace of the Fed's rate cuts, and dampen global growth.

Also on Wednesday, the OECD will release its latest Economic Outlook. In its previous forecast, published in September, the OECD anticipated that the global economy would grow by 3.2% in both this year and the next, slightly increasing its 2024 forecast from 3.1% but keeping the 2025 forecast unchanged.

With inflation moving toward central bank targets, the OECD projected that the Fed's main interest rate would drop to 3.5% by the end of 2025, down from the current range of 4.75%-5%. Similarly, the European Central Bank is expected to reduce its rate to 2.25% from the current 3.5%. Will this prediction hold true?

The upcoming events will provide clues on what to expect:

December 2nd

U.S. ISM Manufacturing Purchasing Managers Index (PMI)

The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) Report on Business is based on data compiled from monthly replies to questions asked of purchasing and supply executives in over 400 industrial companies. A higher-than-expected reading should be taken as positive/bullish for the USD, while a lower-than-expected reading should be taken as negative/bearish for the USD.

The ISM will also be publishing Manufacturing Prices (which are expected to come lower than previous) and the Manufacturing Purchasing Managers Index (which is expected to come equal to the previous report).

On wednesday we will have the exact same reports for the Services sector.

December 3rd

U.S. JOLTS Job Openings

This survey collects data from employers about their businesses' employment, job openings, recruitment, hires and separations. JOLTS defines Job Openings as all positions that are open (not filled) on the last business day of the month.

The market will be paying close attention to all labor market publications to be released this week, as they represent the final reports before the upcoming FOMC decision in mid-December. There is a general expectation for an uptick in employment figures compared to October, despite last month's low numbers being affected by temporary factors like hurricanes.

December 4th

U.S. ADP Nonfarm Employment Change

The ADP National Employment Report is a measure of the monthly change in non-farm, private employment, based on the payroll data of approximately 400,000 U.S. business clients.

This report provides an overview of employment trends in the private sector across the US, and is published just 2 days prior to the official Non-Farm Payrolls (NFP) report. This data serves as a strategic tool for professional traders, helping them to gain an advantage over their non-professional counterparts. Significant trading opportunities emerge when actual data deviates from these forecasts, leading to notable market fluctuations. With the FED keeping a close eye on employment statistics and uncertainty surrounding future interest rate decisions, the ADP report is expected to significantly influence market volatility.

December 5th

U.S. Initial Jobless Claims

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week.

Initial jobless claims serve as a key early indicator of the economic landscape in the U.S. Last week, we observed a modest decrease in these claims, which is encouraging news for the U.S. economy and has bolstered the strength of the USD. Nevertheless, economists advise caution, noting that these numbers can fluctuate weekly and may signal potential economic challenges ahead.

December 6th

U.S. Nonfarm Payrolls

Nonfarm Payrolls (NFP) tracks the monthly change in employment figures, specifically excluding the agricultural sector. This metric is a crucial barometer for consumer spending, which drives a significant portion of economic activity.

The figure advanced on Investing.com is so odd that I had to double check. If we see a repeat of the impressive job growth reported in September, it could shake up expectations regarding future interest rate cuts by the Federal Reserve, potentially jeopardizing a vital pillar supporting the stock market's upward trend.

NFP announcements typically lead to significant fluctuations in the forex market. Should the Fed opt to lower interest rates, it would likely diminish demand for the dollar, resulting in a decrease in its value. On the other hand, a substantial increase in job numbers—especially anything above 200,000—tends to bolster the dollar's strength. Additionally, a particularly optimistic forecast prior to an NFP release can create a similar positive impact as unexpectedly strong NFP results.