US GDP on the calendar

22 December,, Lagos – As market volatility thins into the end of the year, so is the economic calendar. Yesterday was quite silent in terms of fundamental data, while we have some important releases like the US GDP and New Zealand trade balance today.

US Final GDP q/q (1:30 P.M GMT)

With the Federal Reserve finally commencing rate hikes after about a decade, stake holders will be digesting the information from the post Fed rate decision which will set markets up for early moves next year, as the usual end of the year market dry up sets in. The US Q3 GDP growth is estimated to be revised to 1.9% from last month’s estimate of 2.1%. Personal consumption growth is forecast to also be to be revised south to 2.9% from 3.0%. The downward revision to the US GDP is expected, considering recent downward revisions in data. Credit Suisse opines that: “Since Q3 GDP’s first revision, we have seen further downward revisions to manufacturing and wholesale inventories. The latest data on Q3 durable goods shipments also are looking weaker. And newly-released “hard data” on service spending suggest a downward revision to personal consumption on health care last quarter.”

Crude oil crash continues

As the crude oil debacle continues, many expect the commodity price to continue to fall much further. Goldman Sachs has made bold prognosis that the commodity could deep as low as $20 per barrel, based on the current OPEC and shale production levels. According to the bank, with crude oil presently trading around $35/barrel, the weak prices are expected to help curb U.S. production by over half a million barrels per day next year. Even so, at present, the US rig count and domestic oil-company spending budget remains too high to ease the global oil glut.

Fed and ECB divergence

The last time US and EU monetary policy moved in opposite directions during the same month was in May 1994. As US interest rate increased, German rate cuts saw the mark depreciate by more than 2% against the USD. Yet, in a twist of events, the EUR has been one of the top USD out-performers this month. Canadian Imperial Bank of Commerce (CIBC) argues this this is simply due to anticipation, as “the ECB failed to live up to expectations, while the Fed did exactly what everyone thought it would.”

New Zealand Trade Balance

The Difference in value between imported and exported goods during the last month is forecast a deficit of 812 million. This is potentially the best trade balance report in four months.

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