Welcome to our regular Monday summary of the most important economic events that took place at the turn of the month.
USD
Earlier in the week, we focused on the output of the US Federal Open Market Committee (FOMC) member Jerome Powell (Fed Chairman), who once again prepared his speech on inflation. Powell said the factors driving inflation higher are likely to persist through 2022. Inflation is well above target (2%), pushed up by a pandemic-related supply-demand imbalance. Although the U.S. economy continues to strengthen, the new variant of the virus poses a problem for employment, feeding heightened uncertainty about inflation... Powell acknowledged that it is time to drop the term "transitory" for inflation. The risk of higher inflation is a risk to the return of full employment. Late in the week, data was released on the US Nonfarm payrolls, which measures the change in the number of people employed from the previous month, excluding the agricultural sector. Higher values mean a bullish mood, which we did not see, as the actual values came out much worse (210k vs. 546k previously).
EUR
On Tuesday, we were awaiting data on the change in the Eurozone Consumer Price Index (CPI), which measures the change in prices of goods and services from the consumer's perspective. The current reading was slightly more positive (4.9%) than the previous reading (4.1%). Eurozone inflation soared to its highest level in 30 years, while the core figure is the highest on record in November, as rising energy prices are the main driver of price increases.
CAD
On the same day (Tuesday), GDP data from Canada were also released.
The month-on-month GDP result was slightly worse than in the previous month (0.1% actual vs. 0.6% previous),
At the end of the week we were still interested in the change in the number of people employed. Job creation is an important indicator of consumer spending. In this respect, we were surprised when the actual result was more positive than last month (153.7 thousand vs. 31.2 thousand). The unemployment rate is the lowest since February 2020 and the total number of jobs is now 186,000 above pre-pandemic levels.
What's in store for the current trading week?
This week, we will turn our attention to the interest rate decisions coming from Australia and Canada on Tuesday and Wednesday. These days we expect a lot of volatility on the AUD and CAD currency pairs. At the end of the week, we will be waiting for data from the US regarding the change in GDP and the Consumer Price Index (CPI).
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