Forex Signals Brief December 11: Awaiting the FOMC,SNB and ECB Meetings
Last week, markets were focused on the labour data since this sector used to be solid, keeping the US economy afloat but it was starting to show dents here and there. The week started with some soft numbers, as JOLTS job openings dived below 9 million again, reaching the lowest level in almost two year, followed by the AADP non-farm employment change numbers, which were also weak, both the October revisions and the November figures.
The USD resumed the decline, anticipating the FED to remain dovish and expecting hints of a rate cut in this week’s meeting. But, the economic figures started turning positive in the second half of the week, indicating that the labour market is still holding well. Unemployment claims remained steady on Thursday, while the Non-Farm Employment report (NFP) was quite strong on Friday.
Net new jobs jumped to 200k in November, while the unemployment rate declined by 2 points to 3.7%, despite the participation rate increasing by 1 point, which makes this report even better. Elsewhere, the Reserve Bank of Australia left interest rates unchanged at 4.35% with no plans to raise them again, while crude Oil closed another bearish week. Another highlight of last week was the hawkish remarks by the BOJ governor Ueda, which sent the JPY around 600 pips higher across the board, although let’s see if it will continue the bullish momentum this week.
This Week’s Market Expectations
This will be another heavy week, with the FOMC meeting on Wednesday evening being the main event. Although before that we have some important economic releases. The consumer price index (CPI) report will be released on Tuesday and headline inflation is expected to tick lower to 3.1%, followed by the producer price index (PPI) report on Wednesday before the FED meeting.
The FED is not expected to raise rates, but markets are expecting Powell to hint at a rate cut for Q1, which will be the main catalyst for any move. On Thursday the Swiss National Bank and the European Central Bank will also hold their meetings, which are expected to keep interest rates unchanged at 1.75% and 4.50% respectively.
This Week’s Events:
Tuesday:
- Japan PPI
- UK Labour Market Report
- German ZEW (Zentrum für Europäische Wirtschaftsforschung) Economic Sentiment
- NFIB (National Federation of Independent Business) Small Business Optimism Index
- US Consumer Price Index (CPI)
Wednesday:
- UK Gross Domestic Product (GDP)
- Eurozone Industrial Production
- US Producer Price Index (PPI)
- FOMC (Federal Open Market Committee) Policy Decision
- New Zealand Gross Domestic Product (GDP)
Thursday:
- Australian Labor Market Report
- Swiss National Bank (SNB) Policy Decision
- Bank of England (BoE) Policy Decision
- European Central Bank (ECB) Policy Decision
- US Retail Sales
- US Jobless Claims
- New Zealand Manufacturing Purchasing Managers’ Index (PMI)
Friday:
- Flash Purchasing Managers’ Index (PMI) releases for Australia, Japan, the Eurozone, the United Kingdom, and the United States
- China Industrial Production and Retail Sales
- Eurozone Wage Data
- US Industrial Production
- People’s Bank of China (PBoC) Medium-term Lending Facility (MLF)
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