The Week Ahead: 5th – 9th December 2022

Overview for the Week Ahead

It’s set to be a quiet week on the economic data front and Federal Reserve policymakers are in their traditional blackout period ahead of their final policy meeting for 2022. Investors will be looking to Friday’s U.S. producer price inflation data for clues about how hawkish the central bank may be after four consecutive jumbo rate hikes to fight decades-high inflation. OPEC+ ministers are due to decide on output targets, while the Reserve Bank of Australia and the Bank of Canada are to deliver what will be closely watched interest rate decisions.

Markets are expecting the Reserve Bank of Australia to keep the cash rate on hold at 2.85% at its upcoming meeting on Tuesday, after inflation slowed sharply in October, but economists are forecasting another quarter basis point increase before policymakers pause the current rate hike cycle.

That wouldn’t necessarily cut short a rally in the Australian dollar, which recently has been driven more by China’s re-opening hopes and a retreating greenback than the RBA.

Meanwhile, markets and economists are split about whether the Bank of Canada will hike rates by 25 or 50 basis points when it meets on Wednesday.

The BOC has raised rates by 350 basis points since March, one of its steepest tightening cycles ever.

European Central Bank President Christine Lagarde is to make two appearances this week before the start of the ECB’s blackout period ahead of its final policy meeting of the year on Dec. 15.

Markets are leaning towards a 50-basis point rate increase at the ECB’s upcoming meeting after data last week showed that Eurozone inflation eased far more than expected in November.

With inflation running well above its 2% target, the ECB has hiked rates at its fastest pace on record this year and a string of hikes over the coming months is still likely.

But some policymakers have recently made the case for slowing the pace of increases after back-to-back 75 basis point moves, arguing that inflation is finally peaking.

In other news, China is easing some of the world’s most stringent anti-virus controls and authorities say new variants are weaker. But they have yet to say when they might end a “zero-COVID” strategy that confines millions of people to their homes and set off protests and demands for President Xi Jinping to resign.

This Week’s High Impact Events

The times below are GMT +2.

Monday 5th December

  • 17.00 – US – ISM Services PMI

Potential instruments to Trade: USD Crosses. 

Tuesday 6th December

  • 05.30 – Australia – Cash Rate & RBA Rate Statement

Potential instruments to Trade: AUD Crosses. 

Wednesday 7th December

  • 02.30 – Australia – GDP q/q

Potential instruments to Trade: AUD Crosses. 

  • 17.00 – Canada – BOC Rate Statement & Overnight Rate

Potential instruments to Trade: CAD Crosses. 

Thursday 8th December

  • 14.00 – Europe – ECB President Lagarde Speaks

Potential instruments to Trade: EUR Crosses. 

  • 15.30 – US – Unemployment Claims

Potential instruments to Trade: EUR Crosses. 

  • 16.30 – Switzerland – Gov. Board Member Maechler Speaks

Potential instruments to Trade: CHF Crosses. 

  • 17.00 – Canada – Ivey PMI

Potential instruments to Trade: CAD Crosses. 

Friday 9th December

  • 15.30 – US – Core PPI m/m & PPI m/m

Potential instruments to Trade: USD Crosses. 

  • 17.00 – US – Prelim UoM Consumer Sentiment

Potential instruments to Trade: USD Crosses.

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