The economic calendar is quieter this week ahead of the Christmas holidays. The ultra-dovish Bank of Japan is expected to stick with negative interest rates. But that doesn't mean the meeting will go completely unnoticed. Japan's inflation continued to accelerate in October, making it more likely that businesses and unions will agree to another round of wage increases next year. And that will increase the likelihood that negative rates will be abandoned soon. There are also important inflation reports to be released this week. No change is expected in the Eurozone, while Canada, the UK, and Japan are forecast to see inflationary pressures fall. In the United States, data on GDP and PCE will give new insight into the strength of the economy. Analysts expect a strong GDP report on Thursday and a moderate rise in PCE inflation on Friday. This may temporarily restore confidence in the US dollar.
Monday, December 18
On Monday, investors should focus on the Germany Ifo data, which determines the health of the business climate in the country. Data are expected to be slightly positive. However, sentiment remains subdued as higher interest rates will weigh on economic activity next year.
Main events of the day:
- – Germany Ifo Business Climate (m/m) at 11:00 (GMT+2);
- – New Zealand Trade Balance (q/q) at 23:45 (GMT+2).
Tuesday, December 19
The Bank of Japan will hold its monetary policy meeting on Tuesday. It is expected that the BoJ will keep its current policy and leave the rate in negative territory. But even the slightest indication that interest rates could move out of negative territory in the spring of 2024 could give confidence to the Japanese currency. Investors should also pay attention to the RBA meeting minutes, which have a significant impact on the Australian dollar. Let's not forget that the RBA still maintains a hawkish bias. Also, on Tuesday, inflation data will be published in the Eurozone and Canada. In the Eurozone, no change is expected, while in Canada, inflationary pressures are expected to decrease further, which may hurt the Canadian dollar.
Main events of the day:
- – Australia RBA Meeting Minutes (m/m) at 02:30 (GMT+2);
- – Japan BoJ Interest Rate Decision at 05:00 (GMT+2);
- – Japan BoJ Monetary Policy Statement at 05:00 (GMT+2);
- – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+2);
- – Canada Consumer Price Index (m/m) at 15:30 (GMT+2);
- – US Building Permits (m/m) at 15:30 (GMT+2).
Wednesday, December 20
On Wednesday, investors will focus on inflation data in the United Kingdom, where consumer prices are expected to decrease. Despite the slowdown, inflation in the UK is much higher than in other major economies, with the core rate remaining steady. Volatility on currency pairs with the British Pound will increase. Investors should also keep their eyes on China's Loan Prime Rate data, which has a significant impact on Asian indices. No changes are expected, but the main question is whether Beijing will increase the stimulation of the struggling economy. The US Crude Oil Reserves data, which significantly impacts oil prices, should also be on the trader’s list.
Main events of the day:
- – Japan Trade Balance (m/m) at 01:50 (GMT+2);
- – German GfK Consumer Confidence (m/m) at 09:00 (GMT+2);
- – China PBoC Loan Prime Rate at 03:15 (GMT+2);
- – UK Consumer Price Index (m/m) at 09:00 (GMT+2);
- – UK Producer Price Index (m/m) at 09:00 (GMT+2);
- – US CB Consumer Confidence (m/m) at 17:00 (GMT+2);
- – US Existing Home Sales (m/m) at 17:00 (GMT+2);
- – US Crude Oil Reserves (w/w) at 17:30 (GMT+2).
Thursday, December 21
On Thursday, investors should keep a close eye on US GDP data for the quarter. The US economy is forecast to have grown by 5.2% in Q3, more than double the previous report of 2.1%. This may temporarily restore confidence in the USD. Hong Kong's inflation data has a strong impact on the HKD and the HK50 Index. At the same time, a rise in inflation is usually accompanied by a rise in the local currency on expectations that the central bank will remain hawkish. And, of course, traders shouldn't miss the Canadian retail sales data. It is expected to grow, which is positive for the currency.
Main events of the day:
- – Hong Kong Inflation Rate (m/m) at 10:30 (GMT+2);
- – Canada Retail Sales (m/m) at 15:30 (GMT+2);
- – US GDP (q/q) at 15:30 (GMT+2);
- – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
- – US Natural Gas Storage (w/w) at 17:30 (GMT+2).
Friday, December 22
The most important Friday release is the US PCE Price Index, which is on the Fed's list of inflation indicators for regulating monetary policy. Economists expect the PCE price index to be unchanged for a second month in November, while the core index, which excludes volatile food and energy costs, is expected to rise by 0.2%. Japan's inflation data should also be on traders' lists. But this time, Japan's core inflation is expected to fall from 2.9% to 2.5% y/y, which could have a negative impact on the yen as it would alienate the BoJ's goal of achieving a sustained rise in inflation. Also, investors should not miss the UK Retail Sales data. Weak sentiment and high-interest rates mean that activity ahead of the festive season may be down as consumers curb Christmas spending.
Main events of the day:
- – Japan National Core CPI (m/m) at 01:30 (GMT+2);
- – Japan Monetary Policy Meeting Minutes at 01:50 (GMT+2);
- – UK GDP (m/m) at 09:00 (GMT+2);
- – UK Retail Sales (m/m) at 09:00 (GMT+2);
- – US Core Durable Goods Orders (m/m) at 15:30 (GMT+2);
- – US PCE Price index (m/m) at 15:30 (GMT+2);
- – Canada GDP (m/m) at 15:30 (GMT+2);
- – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+2);
- – US New Home Sales (m/m) at 17:00 (GMT+2).
by , 2023.12.18
We advise you to get acquainted with the daily forecasts for the major currency pairs.This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
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