6th ofDecember 2023
Wednesday
In an upcoming series ofsignificant economic developments scheduled for Wednesday, December 6, 2023,several countries are poised to release key financial data. Australia is set toannounce its latest Gross Domestic Product (GDP) figures on a quarterly basis.Meanwhile, the United States will provide updates on its ADP Non-FarmEmployment Change, a crucial indicator of employment trends outside theagricultural sector. Additionally, Canada is expected to disclose its latestOvernight Rate, an important benchmark for short-term interest rates. Theseannouncements are highly anticipated by the global financial community, as theycould offer valuable insights into the economic health of these nations.
AUD – GDP q/q
This is the most comprehensive indicator of economic activity and serves as the primary measure of the economy's overall health.
In the second quarter (Q2) of 2023, Australia's economy experienced a 0.4% increase, continuing its growth trajectory for the seventh consecutive quarter. The expansion was fueled by a boost in exports and investments, though this was somewhat balanced by shifts in inventory levels. Over the fiscal year 2022-23, the Australian economy witnessed a 3.4% growth, outperforming the 10-year pre-pandemic average growth rate of 2.6%. This notable growth primarily stemmed from a strong rebound in demand after the Delta-variant related lockdowns in the preceding fiscal year. When comparing the second quarter of 2022 with that of 2023, the year-over-year growth rate stood at 2.1%, excluding the influence of the recovery from the lockdowns.
TL;DR
Metric
Value
Details
1 Q2 2023 Growth
0.4%
Seventh consecutive quarter of growth
2 Fiscal Year 2022-23 Growth
3.4%
Outperformed 10-year pre-pandemic average growth rate of 2.6%
3 Year-over-Year Growth (Q2 2023)
2.1%
Compared to Q2 2022, excluding the influence of the recovery from lockdowns
4 Primary Growth Drivers
Exports, Investments
Boosted by exports and investments, with some impact from shifts in inventory levels
5 Context
Post-Delta Variant Lockdowns
Strong rebound in demand following Delta-variant related lockdowns in previous fiscal year
The latest forecast for the GDPq/q growth indicates a small downturn, with projections showing a 0.3% increase. This represents a slight decline from the previous figure of 0.4%, suggesting a modest slowdown in economic growth.
The forthcoming announcement for the GDP q/qis scheduled for release on Wednesday, December 6, 2023, at 12:30 AM GMT.GBP – Bank ofEngland (BoE) Governor Bailey Speaks
In the United Kingdom, the benchmark interest rate is determined by the Monetary Policy Committee (MPC) of the Bank of England. The key interest rate set by the MPC is known as the repo rate. This rate is specifically applied to open market operations conducted by the Bank of England with a selected group of financial institutions, which includes banks, building societies, and securities firms. The repo rate serves as a critical tool for the Bank of England in managing monetary policy, influencing the cost of borrowing, and ultimately affecting economic activity within the country.
During its November meeting, the Bank of England opted to keep its benchmark interest rate steady at 5.25%, a 15-year high, marking the second time in a row this decision was made. This move comes amid signs of an economic slowdown in the UK, coupled with the ongoing issue of high inflation. The decision was made with a 6-3 vote by the Monetary Policy Committee, where the minority favored a rate hike of 25 basis points. The central bank underscored its commitment to a prolonged restrictive monetary policy to bring inflation down to the 2% target, and didn't rule out the possibility of further tightening if needed. Inflation forecasts have been marginally raised, and the GDP growth outlook indicates a stagnation in the UK economy in the last quarter, with only slight growth expected in the year's final quarter.
TL;DR
·The Bank of England maintained its benchmark interest rate at 5.25%, the highest in 15 years, for the second consecutive meeting.
·The decision, influenced by signs of economic slowdown and high inflation, was taken with a 6-3 vote by the Monetary Policy Committee.
·A minority of the committee advocated for a 25 basis points increase in the rate.
·The Bank emphasized a continued restrictive monetary policy to achieve the 2% inflation target, with openness to further tightening if necessary.
·Inflation projections are slightly higher, while GDP growth forecasts indicate stagnation in the last quarter and minimal growth in the final quarter of the year.
BoE Governor Bailey is set to speak on Wednesday, 6th of December, 2023, at 11 AM GMT.
Last time, BoE Governor Bailey spoke onthe 29th of November, 2023. You may find the market reaction graph (GBPJPYM5) below:USD - ADPNon-Farm Employment Change
Job creation serves as a crucial leading indicator of consumer spending, which constitutes the bulk of overall economic activity.
In October 2023, U.S. private sector employment saw an increase of 113,000 jobs, falling slightly short of the anticipated 150,000, yet still outperforming the previous month's 89,000 increase. This continued job growth, exceeding the monthly benchmark of 70,000-100,000 needed to keep up with the expanding working-age population, suggests that the labor market remains strong in the face of the Federal Reserve's tightening measures. The service sector was at the forefront, adding 107,000 jobs, with notable contributions from education and health services (+45,000), trade, transportation, and utilities (+35,000), financial activities (+21,000), and leisure and hospitality (+17,000). The goods-producing sector also showed positive movement, adding 6,000 jobs, thanks to growth in construction (+4,000) and manufacturing (+3,000).
TL;DR
Metric
Value
Details
1 Total Job Increase (October 2023)
113,000
Below the anticipated 150,000 but higher than the previous month's 89,000
2 Comparison with Monthly Benchmark
Above Benchmark
Exceeds the 70,000-100,000 needed to keep up with working-age population growth
3 Labor Market Condition
Strong
Despite Federal Reserve's tightening measures
4 Service Sector Job Increase
107,000
Main contributor to job growth
5 - Education and Health Services
+45,000
Significant growth area within the service sector
6 - Trade, Transportation, and Utilities
+35,000
7 - Financial Activities
+21,000
8 - Leisure and Hospitality
+17,000
9 Goods-Producing Sector Job Increase
6,000
Positive growth in this sector
10 - Construction
+4,000
Part of the goods-producing sector growth
11 - Manufacturing
+3,000
The upcoming forecast for the ADPNon-Farm Employment Change suggests a modest decrease in job creation, with expectations set at 95,000 new jobs. This figure is slightly lower than the previous month's total of 113,000, indicating a small dip in employment growth.
The next release of the ADPNon-Farm Employment Change is scheduled for Wednesday, December 6, 2023,at 1:15 PM GMT.
The last time, the US ADP Non-Farm EmploymentChange was announced on the 1st of November, 2023. You may findthe market reaction graph (USDCHF M5) below:CAD - BOC Rate Statement
This is the main instrument used by the Bank of Canada (BOC) to communicate with investors about its monetary policy. It includes details of their interest rate decisions and provides commentary on the economic conditions that influenced these decisions. Crucially, it also covers the economic outlook and gives hints about possible future policy decisions.
The Bank of Canada's RateStatement is scheduled for release on Wednesday, December 6, 2023, at3:00 PM GMT.
CAD - Overnight Rate
Short-term interest rates are the most crucial element in determining the value of a currency. Traders typically examine other indicators mainly to forecast how these rates might shift in the future.
At their October 2023 meeting, the Bank of Canada maintained the overnight rate at 5%, aligning with market predictions. They noted that upcoming rate decisions will be guided by economic data. This decision represented the second halt in their tightening cycle, acknowledging the impact of earlier rate increases on economic activities and price dynamics. Current data showed a deceleration in inflation and a plateau in GDP and retail sales. The Bank is focusing on stabilizing inflation at around 2% by 2025 while keeping a close watch on high energy prices and wage increases as potential challenges.
The forecast indicates stability in Canada's Overnight Rate, remaining at 5.00% as in the previous announcement.
The next announcement for the Overnight Rate is scheduled for Wednesday, December 6, 2023, at 3:00 PM GMT.
The last time, the Canadian Overnight Ratewas announced on the 25th of October, 2023. You may find the marketreaction graph (USDCAD M5) below:
