Market Outlook for the Week of 25th – 29th November

The week ahead features several key economic events to watch. On Tuesday, the U.S. will release the CB consumer confidence index, new home sales, and the Richmond manufacturing index, providing updates on consumer sentiment and economic activity.

Wednesday’s attention shifts to Australian inflation data, followed by the Reserve Bank of New Zealand’s (RBNZ) monetary policy announcement. In the U.S., a flurry of data will be released, including preliminary GDP q/q, unemployment claims, durable goods orders m/m, the core PCE price index m/m and the FOMC meeting minutes.

Thursday marks a bank holiday in the U.S. for Thanksgiving, leading to lighter market activity. Finally, on Friday, Japan will report the Tokyo Core CPI y/y, and the eurozone will release its CPI data, highlighting inflation trends in these regions.

At this week’s meeting, the RBNZ is expected to implement a 50 bps cut, reducing the policy rate to 4.25%. Recent inflation data in New Zealand indicates progress toward the Bank’s target, reflecting a successful easing of price pressures.

Meanwhile, economic growth has softened, with declining employment levels and the unemployment rate rising to 4.8%. Given these factors, the RBNZ is likely to maintain its aggressive stance on monetary easing.

The Bank’s projections are expected to suggest further OCR reductions in 2025, with the forecast to reach 3.5% by year-end — approximately 35 basis points lower than the August projection. According to Westpac, the RBNZ’s terminal rate is expected to remain in the 3–3.5% range beyond 2025.

In the U.S., the consensus for the core PCE price index m/m is 0.3% vs 0.3% prior. Personal income is also expected to grow by 0.3% m/m, consistent with the previous month, while personal spending is forecast to rise by 0.4%, a slight deceleration from the prior 0.5%.

Retail sales data for October showed a 0.4% increase, highlighting the sustained resilience of U.S. consumers. This growth continues to be underpinned by income gains, although the pace of income growth appears to be moderating.

The PCE deflator is projected to increase by 0.2% m/m, bringing the annual inflation rate to 2.3%, which is above the Fed’s target. In this context, analysts expect a cautious approach to monetary easing next year.

In the U.S., the consensus for durable goods orders m/m is a 0.4% increase, compared to the prior decline of -0.7%. Core durable goods orders, which exclude transportation, are expected to rise by 0.2% m/m, down from the previous 0.5%.

Recent durable goods data has been volatile, largely due to challenges in the aircraft sector. Despite the forecasted 0.4% rebound for last month, uncertainty remains. There are signs of potential improvement in demand, but potential changes in tariff policies and the unclear timing of future rate cuts temper optimism.

The consensus for Tokyo core CPI y/y is 2.0% vs 1.8% prior. The Tokyo core CPI is viewed as a leading indicator of national trends, so market participants will pay close attention to it.

In terms of monetary policy, 56% of economists polled by Reuters this month expect another rate increase in December, an increase in confidence compared to the previous survey. The BOJ’s Tankan quarterly business sentiment survey is also expected on Dec. 13 and could influence the Bank’s decision.

Inflation data in the eurozone will be closely monitored by the ECB as it evaluates its policy decision ahead of the December meeting. Headline inflation for November is expected to rise to 2.3% y/y with core inflation anticipated to increase to 2.8%.

Despite these projections, the weakening economic sentiment and the potential impact of U.S. tariffs makes further monetary easing likely, but with a more measured approach, Wells Fargo analysts said. Market expectations currently point to a 25 bps cut at the December meeting.

Wish you a profitable trading week.

This article was written by Gina Constantin at www.forexlive.com.