Forex Signals Brief December 18: Will the BOJ Tweak the Policy This Week?
Last week, the focus was primarily on the Fed, as markets expected them to hint at a rate reduction. They did indeed turn dovish, and Chair Jerome Powell announced that the rate decrease would take place on Wednesday evening, pushing the USD down. However, at the end of the week, we saw a turnaround in the USD following some excellent retail sales figures for November, indicating that the US consumer is in good form.
The focus switched to the Swiss National Bank, the Bank of England, and the European Central Bank on Thursday.They all held interest rates on hold, but it’s safe to believe that the choices were leaning more toward the hawkish side because they didn’t reference rate reduction like the FED did the day before, which boosted the GBP, EUR, and CHF.
The BOE retained interest rates at 5.25%, with the MPC rate vote yielding a 6-3 decision against predictions of a 7-2 decision, which the market saw as hawkish, despite the fact that the UK economy is in horrible health, thus the GBP has nothing to run on other than USD weakness. The ECB kept rates at 4.50%, 4.75%, and 4.00%, while the SNB kept them at 1.75%.
This Week’s Market Expectations
This week is expected to be quieter compared to last week, although we have some important events, such as GDP reports from a number of countries, as well as the Bank of Japan meeting. Today the calendar is light, with only the German Ifo Business Climate Index for December, which is expected to move slightly higher to 86.7 points from 86.3 points previously.
Monday:
- German Ifo Business Climate Index for December.
- New Zealand Trade Balance for November.
Tuesday:
- Bank of Japan (BoJ) Policy Announcement.
- National Bank of Hungary (NBH) Policy Announcement.
- Reserve Bank of Australia (RBA) Minutes for December.
- Eurozone Harmonized Index of Consumer Prices (HICP) Final for November.
- Canadian Consumer Price Index (CPI) for November.
- Japanese Trade Balance for November.
Wednesday:
- People’s Bank of China (PBoC) Loan Prime Rate (LPR).
- Bank of Canada (BoC) Minutes for December.
- UK Consumer Price Index (CPI) for November.
- Eurozone Current Account for October.
- Eurozone Consumer Confidence Flash for December.
- US Existing Home Sales for November.
Thursday:
- Central Bank of the Republic of Turkey (CBRT) and Czech National Bank (CNB) Policy Announcements.
- UK Public Sector Net Borrowing (PSNB) for November.
- US Final Gross Domestic Product (GDP) for Q3.
- Initial Jobless Claims (week ending December 15).
- Philadelphia Fed Manufacturing Index for December.
- Canadian Retail Sales for October.
- Japanese Consumer Price Index (CPI) for November.
Friday:
- Bank of Japan (BoJ) Minutes for October.
- UK Gross Domestic Product (GDP) for Q3.
- UK Retail Sales for November.
- Swedish Producer Price Index (PPI) for November.
- US Personal Consumption Expenditures (PCE) Price Index for November.
- US Durable Goods Orders for November.
- University of Michigan Consumer Sentiment Final for December.
- US New Home Sales for November.
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