World Week Ahead: US jobs, Fed speeches

US jobs data will form a key focus this week, along with a flurry of speeches by Federal Reserve policy makers, as investors position for a potential interest rate increase by the end of the year.

The latest US labour market data will arrive with the ADP employment report on Wednesday, weekly jobless claims on Thursday, and nonfarm payrolls data on Friday.

Friday's report is expected to show that US employers added about 175,000 workers last month, according to a Bloomberg survey.

"Strong data puts November on the table," Mark McCormick, North American head of foreign-exchange strategy at Toronto-Dominion Bank, told Bloomberg. "The data feeds into the Fed view – anything above 150,000 keeps December live and could support the US dollar against the majors."

Other closely-watched reports this week include the PMI and ISM manufacturing indices, and construction spending, due today, as well as international trade, PMI services index, factory orders, and ISM non-manufacturing index, due Wednesday.

A report last Friday showed the US consumer paused spending in August. Commerce Department data showed that consumer spending was unchanged, while, when adjusted for inflation, spending unexpectedly declined 0.1% .

"It was a soft month for consumer spending following a strong one, and it's not anything to get worried about," Tom Simons, a money-market economist at Jefferies in New York, told Bloomberg. "Based on slowly accelerating wage growth and recent data on confidence, I'm optimistic about the outlook for consumer spending."

Meanwhile, the slew of US monetary policy makers slated to speak this week include Richmond Fed President Jeffrey Lacker and Chicago Fed's Charles Evans on Tuesday, Minneapolis Fed's Neel Kashkari on Wednesday, as well as Fed vice chairman Stanley Fischer, Cleveland Fed's Loretta Mester, Kansas City Fed's Esther George,and Fed Board governor Lael Brainard on Friday.

Last Friday the Dow Jones Industrial Average climbed 0.9%, while the Standard & Poor's 500 Index advanced 0.8% and the Nasdaq Composite Index also increased 0.8%.

Stocks climbed on both sides of the Atlantic after Agence France-Presse reported that Deutsche Bank is near a $US5.4 billion deal with the US Department of Justice to settle an investigation into the German lender's sale of bad mortgages – far less than the $US14 billion initially asked for. It helped ease some concern about the financial industry.

"Deutsche Bank is not Lehman and does not threaten a 2008-like 'sudden stop' to the global economy," Mohamed El-Erian, chief economic adviser at Allianz, told Reuters. However, it served as "a reminder of the fragility of some European banks" and an additional headwind to European growth.

For the week, the Dow gained 0.3%, while the S&P 500 rose 0.2% and the Nasdaq added 0.1%.

In Europe, the Stoxx 600 Index eked out a gain of less than 0.1% on Friday, though posted a drop of 0.7% for the week.

On Friday the International Monetary Fund and the World Bank will start their annual meeting in Washington.

Meanwhile, oil prices rose again last Friday, bringing their jump for the week to 8.5%, as the Organisation of Petroleum Exporting Countries agreed in principle to curb production to a range of 32.5 million to 33 million barrels a day.

"This has been a momentous week," John Kilduff, a partner at Again Capital, a New York hedge fund focused on energy, told Bloomberg. "Opec has gotten some reward for this nascent effort at coming together."

Even so, the details won't be finalised until November, keeping a lid on price gains.

"The agreement still leaves hard and difficult negotiations for the individual caps to be set," Bjarne Schieldrop, chief commodities analyst at SEB, told Reuters. "Now, with an Opec curb on the cards for the first time in eight years, Brent crude is not even able to lift above $US50. At least not yet."

(BusinessDesk)

Click the hamburger symbol top right of our homepage to access the Rich List 2016 and other sections.