The Week Ahead: FOMC Minutes and UK & Eurozone PMIs | Daily Market Analysis

Key events:

• UK – BoE MPC Member Cunliffe Speaks     
• USA – 2-Year Note Auction  
• USA – 5-Year Note Auction  
• New Zealand – Trade Balance (MoM) (Oct)
• New Zealand – Trade Balance (YoY) (Oct)

Apart from the opening of the World Cup in Qatar and the start of the "Turkish operation" against the Kurdish militia in Syria, the weekend was rather quiet.  Another working week. What to expect?

• The global economic slowdown has had a negative impact on companies' Q4 earnings forecasts. For example, Goldman Sachs analysts expect corporate sector profit margins to fall to multi-year lows.
• Despite the "dovish" speeches of some Fed members, to say that the dollar will no longer actively grow against other currencies, is not yet necessary. The slide of Europe into recession, the unwinding of the stagflationary spiral in the UK, as well as the growing number of bankruptcies, may lead to another wave of RISK OFF in the market. And a return of the DXY index back to the 110 level, for example.

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•  The U.S. index of leading economic indicators fell 0.8% in October. Analysts had forecast an average decline of 0.4%. The decline reflects worsening consumer sentiment. This is not good news ahead of Black Friday, particularly for companies like Amazon.com Inc (NASDAQ: AMZN).

We guess that Black Friday will not produce outstanding results this year. People are clearly "tight-lipped" and in no hurry to splurge with their former enthusiasm. However, we shall have to wait and see. Apart from that:

• The war on inflation is not over yet;
• The tech giants continue to cut staff;
• The epidemiological situation in the Middle Kingdom is worsening, and this directly affects oil prices;
• The level of geopolitical tension in the world is only increasing.

Loretta Mester, Esther George, and James Bullard's FOMC speeches on Tuesday could lead to a spike in volatility.

On Wednesday, the minutes of the U.S. Federal Reserve's November meeting will be released. The big question is: Is the regulator ready for a "dovish turnaround"? So far, the answer is not obvious. But life and statistics may make the difference.

Economists are predicting that the federal funds rate will be raised by half a percentage point in December, to a range of 4.25%-4.50%. (However, many think they will only raise 0.25. We'll see.)

In the Eurozone and UK, all eyes will be on the PMI.

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On Thursday, the NYSE and NASDAQ will be closed on Thanksgiving. In Europe, meanwhile, the ECB's monetary policy meeting minutes will be released. In fact, Christine Lagarde has already answered investors' concerns from last week: the regulator will need to keep raising rates to stabilize inflation.

The launch of quantitative easing (QT) might allow the ECB to slow the pace of rate hikes. Judging by the comments of Dutch Central Bank President Klaas Knott, the regulator will start cutting the balance sheet at the beginning of next year.

In the UK, investors' attention will be riveted on a speech by Hugh Pill, a member of the BoE's Monetary Policy Committee. According to the Office for Budget Responsibility (OBR), UK living standards will fall by 7% in the next two years, on the back of rising costs of living. Not too optimistic.

Finally, the Central Bank of Turkey will announce a rate decision. Despite soaring inflation, the regulator may announce a rate cut of an additional 150bp. It is not going to happen. The experiment continues.

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Against this backdrop, the USD/TRY might move above 19. The start of the military operation in Iraq and Syria will also put pressure on the local currency.

Investors will have a shortened trading day on Friday - transactions on the U.S. stock market will be conducted from 15:30 to 19:00 (GMT). The key event will be the release of Black Friday buying data. A decline in consumer activity will indicate a worsening of the economy.