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Coming up next week: New Zealand's financial stability report, BOE's quarterly inflation report, US: unemployment claims, retail sales and consumer sentiment

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November 7
2:13 PM 2014

New Zealand Outlook

Last month the Reserve Bank of New Zealand left the official cash rate unchanged at 3.5%. Westpac says the New Zealand economy has been successful in achieving strong growth without the usual attendant in inflationary pressures.

Westpac chief economist Dominick Stephens said, "Like some kind of Houdini, New Zealand appears to have escaped from the traditional economic bind”.

However, this week the New Zealand dollar dropped to 15-month low and was trading at 76.67 cents at 12.05 EST on Friday. Analysts say that the kiwi is being weighed down by a weaker Australian dollar and a strengthening USD.

Next week the RBNZ is going to release its financial stability report and on Tuesday Governor Graeme Wheeler is scheduled
to speak.

United Kingdom outlook

This week brought some mixed news for Britain with recovering manufacturing PMI and rising manufacturing output on one hand while decreasing house price index, construction PMI and services PMI on the other. Also, Bank of England kept the official bank rate steady at 0.50%, in line with expectations.

The British Chambers of Commerce (BCC) said that the economic growth may have slowed slightly in the three months to August in 2014, but the expectations for next quarter and 2015 remain strongly positive.

Similar views are shared by National Institute of Economic and Social Research (NIESR) and it says that UK economy is projected to grow by 2.5% next year, revising its value upwards from 2.3% made three months ago.

"Domestic demand growth appears to be somewhat more balanced, with business investment providing a greater positive contribution since the end of the Great Recession," said NIESR.

"Continued stagnation in the euro area poses the most significant external risk to the UK economy's outlook."

BOE will release its quarterly inflation report next week.

USA Outlook

Data released this week showed an increase in employment of more than 200K beating expectations, manufacturing PMI showed clear signs of expansion and unemployment claims fell from previous month.

Abby Joseph Cohen, investment strategist at Goldman Sachs said, “We have been averaging new job increases in excess of 200,000—about 230,000 a month.

Consumer balance sheets are much stronger than they were just a handful of years ago. I think what the bears are missing is that the U.S. economy is, in fact, sustainably in much better condition.”

“The numbers are projecting that the U.S. economy can grow without the threat of inflation. I think that’s very key,” said Peter Cardillo, chief market economist at Rockwell Global Capital.

US unemployment claims, retail sales and consumer sentiment are to be released in the upcoming week.


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