The US dollar continues to lead the market, bolstered by its reputation as a safe-haven asset. This was particularly evident early last week following Trump’s comments regarding potential consequences for BRICS member countries if they choose to shift away from the US dollar in favor of a new common currency alternative to the greenback.
Despite the strong volatility accompanying the markets after Donald Trump’s victory in the US presidential election, US stock indices maintain bullish momentum. The country has been releasing positive macro statistics confirming the stability of the US economy.
In the upcoming week, 09.12.2024 – 15.12.2024, investors will focus on the US inflation data, as well as the results of the European Central Bank’s monetary policy meeting. Besides, the Australian (on Tuesday), Canadian (on Wednesday), and Swiss (on Thursday) central banks will announce their decision on this issue. Investors will also monitor important macro statistics on Japan, China, Germany, Australia, and the US.
Note: During the coming week, new events may be added to the calendar, and / or some scheduled events may be canceled. GMT time
The article covers the following subjects:
Major Takeaways
- Monday: Chinese CPIs.
- Tuesday: Reserve Bank of Australia’s interest rate decision.
- Wednesday: US CPIs, Bank of Canada’s interest rate decision.
- Thursday: Swiss National Bank and European Central Bank’s interest rate decisions.
- Friday: no important macro statistics is scheduled.
- The key event of the week: US November inflation data.
Sunday, December 8
23:50 – JPY:Japan GDP for Q3 2024 (Final Estimate)
GDP is a measure of a country’s overall economic condition, which assesses the rate of growth or decline of a country’s economy. The Gross Domestic Product report, published by the Cabinet Office of Japan, represents the total value of all final goods and services produced by Japan over a certain period in monetary terms. A rising trend in GDP is seen as positive for the yen, while a low reading is seen as negative.
In Q2 the country’s GDP stood at +0.7% (2.9% YoY) in the previous Q2 after -0.5% (-1.8% YoY) in Q1 2024, 0.1% (+0.4% YoY) in Q4 2023, -0.8% (-3.2% YoY) in Q3, +1.0% (+4.2% YoY) in Q2, +1.0% (+4.0% YoY) in Q1 2023.
The data suggests a bumpy recovery for the Japanese economy after it collapsed due to the coronavirus pandemic in 2020.
The forecast is based on the fact that Japan’s GDP increased in Q3 2024, which is positive for the yen. Readings that exceed expectations will undoubtedly bolster the yen and Japanese stock indices. Conversely, underperformance will exert pressure on them.
The preliminary estimate stood at +0.2% (0.9% YoY).
Monday, December 9
01:30 – CNY: Consumer Price Index (CPI)
The National Bureau of Statistics of China will release its fresh monthly data on consumer prices. The growth of consumer prices may trigger the acceleration of inflation, prompting the People’s Bank of China to implement tighter fiscal policy. Higher consumer inflation may cause yuan appreciation, while a low result may exert pressure on the currency.
Since China is the world’s second-largest economy, the publication of its significant macroeconomic data has a notable impact on the global financial markets. This influence extends particularly to the yuan, other Asian currencies, the US dollar, and commodity currencies. Moreover, China serves as the largest buyer of raw materials and supplier of a wide range of finished goods to the global commodity market.
In October 2024, the consumer inflation index value stood at -0.3% (+0.3% YoY) after 0% (+0.4% YoY) in September, +0.5% (+0.5% YoY) in July 2024, -0.2% (+0.2% YoY) in June, -0.1% (+0.3% YoY) in May, +0.1% (+0.3% YoY) in April, +0.1% (-2.7% YoY) in December 2023, -0.5% (-0.5% YoY) in November, +0.2% (0% YoY) in September, +0.3% (+0.1% YoY) in July, -0.2% (0% YoY) in June, -0.2% (0% YoY) in May, -0.2% (+0.2% YoY).
The increase in the consumer inflation index will positively affect the renminbi quotes, as well as commodity currencies. Conversely, if the data is worse than forecasted and there is a relative decline in the CPI, it may adversely affect the currencies, particularly the Australian dollar, given that China is Australia’s largest trade and economic partner.
Tuesday, December 10
03:30 – AUD:Reserve Bank of Australia’s interest rate decision. RBA Accompanying Statement
The Australian economy’s primary challenges include sluggish wage growth, a weak labor market, and a slowdown in growth rates.
At the November meeting, the Australian central bank decided to keep the rate at 4.35%. At the press conference after the meeting, Reserve Bank of Australia Governor Michele Bullock stated that “rates will remain on hold for the time being.” Bullock mentioned, “Inflation is still above our target, and it’s proving to be sticky.” Besides, inflation is “above the midpoint of the 2%–3% target range”, and the Reserve Bank Board suggests that “in the near term, it does not see interest rate cuts.”
Additionally, RBA officials had previously hinted at the possibility of implementing new tightening measures in response to any signs of increasing consumer inflation.
It is hard to predict their decision this time. Nevertheless, the central bank may raise the interest rate again at this meeting.
Meanwhile, it is widely expected that the RBA leaders will once again take a pause.
In the accompanying statement, the RBA will explain the reasons for the rate decision. If the RBA signals the possibility of monetary easing in the near term, the risks of the Australian dollar depreciating will increase. Conversely, the hawkish rhetoric of the RBA’s accompanying statement may lead to a strengthening of the Australian dollar.
04:30 – AUD: RBA Press Conference
Michele Bullock will assess the current state of Australia’s economy and outline her department’s monetary policy plans. Market participants anticipate her insights on the central bank’s policies amid global recessionary trends and elevated inflation levels in Australia.
Any signals regarding her plans to adjust the RBA’s monetary policy parameters will cause a volatility surge in the Australian currency and stock market. If the Australian Central Bank Governor avoids discussing monetary policy, the market response will be muted.
07:00 – EUR: German Harmonized Index of Consumer Prices (Final Estimate)
The Harmonized Index of Consumer Prices (HICP) is published by the European Statistics and is calculated using a methodology agreed upon by all EU countries. The HICP is an indicator for measuring inflation and is used by the European Central Bank to assess price stability. A positive index result strengthens the euro, while a negative one weakens it.
Previous values YoY: +2.4%, +1.8%, +2.0%, +2.6%, +2.5%, +2.8%, +2.4%, +2.3%, +2.7%, +3.1% in January 2024, +3.8% in December, +2.3% in November, +3.0% in October, +4.3% in September, +6.4% in August, +6.5% in July, +6.8% in June, +6.3% in May, +7.6% in April, +7.8% in March, +9.3% in February, +9,2% in January, +9.6% in December, +11.3% in November, +11.6% in October, +10.9% in September, +8.8% in August, +8.5% in July, +8.2% in June, +8.7% in May, +7.8% in April, +7.6% in March, +5.5% in February, +5.1% in January 2022.
The data suggests that German inflation continues to decelerate, albeit at a slower pace than expected. This situation is putting pressure on the European Central Bank to ease its monetary policy. Figures lower than the previous reading will likely affect the euro negatively. Conversely, the resumption of inflation growth may provoke the appreciation of the euro. The growth of the indicator values is a positive factor for the currency.
If the November data turns out to be better than previous values, the euro may strengthen in the short term.
The preliminary estimate stood at -0.7% (+2.4% YoY).
Wednesday, December 11
13:30 – USD: Consumer Price Indexes
The Consumer Price Index (CPI) measures the change in prices of a selected basket of goods and services over a given period and is a key indicator for assessing inflation and changes in consumer preferences. Food and energy are excluded from the Core CPI to provide a more accurate assessment.
A high index reading strengthens the US dollar because the probability of a Fed interest rate hike increases, while a low reading weakens the currency.
Previous values YoY:
- CPI: +2.6%, +2.4%, +2,5%, +2.9%, +3.0%, +3.3%, +3.4%, +3.5%, +3.2%, +3.1%, +3.4%, +3.1% +3.2%, +3.7%, +3.7%, +3.2%, +3.0%, +4.0%, +4.9%, +5.0%, +6.0%, +6.4% in January 2023;
- Core CPI: +3.3%, +3.3%, +3.2%, +3.2%, +3.3%, +3.4%, +3.6%, +3.8%, +3.8%, +3.9%, +3.9%, +4.0%, +4.0%, +4.1%, +4.3%, +4.7%, +4.8%, +5.3%, +5.5%, +5.6%, +5.5%, +5.6% in January 2023.
The data indicates a continued slowdown in consumer inflation, albeit at a slower pace than anticipated by the Fed. It remains markedly below the 2022 reading when US annual inflation hit a 40-year high of 9.1% in June. The US inflation rate is still significantly above the Fed’s 2% target level, which will force the regulator to keep the interest rate elevated. Besides, any decision to cut rates will require a further long pause to assess the state of the overall economy and the labor market.
If the figures are confirmed or prove to be lower than expected, the US dollar will likely decline in value in the short term. Readings higher than estimated will strengthen the currency, as it will increase the probability of the Fed keeping the interest rate at high levels for longer.
14:45 – CAD:Bank of Canada Interest Rate Decision and Accompanying Statement
At its 2022 and 2023 meetings, the Bank of Canada raised its interest rate and advocated for further increases. Since its September 2023 meeting, Canadian policymakers have held the interest rate at 5.00%, assuming that uncertainty caused by high geopolitical tensions around the world and slowing Chinese, American, and European economies will be accompanied by lower demand for oil. As oil is Canada’s primary export commodity, this situation may weaken its economic growth while grappling with high inflation.
However, at the June 05, 2024 meeting, the Bank of Canada reduced the interest rate by 0.25% to 4.75% and then to the current 3.75%. The central bank’s upcoming decision remains uncertain. The regulator may also take a pause at Wednesday’s meeting.
If the Bank of Canada’s accompanying statement regarding growing inflation and the prospects for further monetary policy signals further tightening, the Canadian dollar will strengthen. Conversely, if the regulator signals the need for a monetary policy easing, the Canadian currency will decline.
Thursday, December 12
00:30 – AUD: Employment Rate. Unemployment Rate
The employment rate reflects the monthly change in the number of employed Australian citizens. The indicator value increase positively impacts consumer spending, stimulating economic growth. A high reading is positive for the Australian dollar, while a low reading is negative. Previous indicator values: +15,900 in October, +64,100 in September, +42,600 in August, +48,900 in July, +52,300 in June, +39,500 in May, +37,400 in April, -6,100 in March, +120,400 in February, +11,900 in January 2024, -58,900 in December 2023, +55,500 in October, +13,400 in September, +62,300 in August, 0 in July, +19,800 in June, +83,800 in May, -14,700 in April, +93,800 in March, +45,100 in February, 23,100 in January 2023.
Besides, the Australian Bureau of Statistics will publish a report on the unemployment rate. It is an indicator that estimates the ratio of the share of the unemployed population to the total number of working-age citizens. The rise in the indicator readings demonstrates the weakening of the labor market, negatively impacting the national economy. A decrease in the indicator is positive for the Australian dollar.
Forecast: Australian unemployment has remained at its lowest levels and stood at 4.1% in November (against 4.1% in October, September, and August, 4.2% in July, 4.1% in June, 4.0% in May, 3.8% in April, 3.7% in March and February, 4.1% in January, 3.9% in December and November, 3.8% in October, 3.6% in September, 3.7% in August and July, 3.5% in June, 3.6% in May, 3.7% in April, 3.5% in March and February, 3.7% in January, 3.5% in December, 3.4% in November and October, 3.5% in September and August, 3.4% in July, 3.5% in June, 3.9% in May and April, 4.0% in March and February, 4.2% in January), while the employment rate has increased.
The Reserve Bank of Australia has repeatedly stated that the Australian economy and the central bank’s plans are influenced by key indicators like the level of household debt and spending, wage growth, and the state of the labor market, in addition to the international trade situation. If the indicator readings are lower than expected, the Australian dollar may decline significantly in the short term, while higher data will strengthen the currency.
08:30 – CHF: Swiss National Bank’s Interest Rate Decision. SNB Monetary Policy Statement
Before the June 2022 SNB meeting, the deposit rate was negative and stood at -0.75%. However, this central bank meeting resulted in the rate being raised to -0.25%.
In the accompanying statement, SNB chairman Thomas Jordan noted that the Swiss franc is no longer overvalued. He also mentioned that the implementation of a tighter monetary policy is intended to prevent an increase in inflation in Switzerland.
Recently, the Swiss franc has once again gained popularity as a safe-haven asset. However, the possibility of intervention is currently preventing the currency from experiencing significant growth. SNB executives emphasize that intervening in the foreign exchange market is crucial for maintaining the low investment appeal of the franc and alleviating upward pressure on the currency.
The deposit rate is widely anticipated to remain at 1.00% at the end of the December 2024 meeting, following the unexpected 0.25% reductions at the March, June, and September meetings.
Besides, traders will scrutinize the SNB statement for signals regarding the SNB’s further monetary policy plans. The hawkish tone of the statement will favor the Swiss franc. Conversely, the soft tone and inclination to resume the loose monetary policy will negatively affect the currency. If the SNB board makes unexpected statements, volatility in the currency market and the Swiss franc is expected to increase.
09:00 – CHF: Swiss National Bank Press Conference
The SNB press conference will commence after the release of the rate decision. During the press conference and the speech of SNB chairman Thomas Jordan, volatility in the Swiss franc will surge. Traders expect signals regarding further plans of the SNB monetary policy. The hawkish tone of Thomas Jordan’s speech will bolster the Swiss franc, while a softer tone and the SNB’s inclination towards a soft monetary policy will negatively affect the franc.
Volatility in the currency market and in the value of the Swiss franc is expected to rise.
13:15 – EUR: European Central Bank’s Interest Rate Decision. ECB Monetary Policy Statement
The European Central Bank will publish its decision on the main refinancing operations and the deposit facility rates, which currently stand at 3.40% and 3.25%, respectively.
The ECB’s tight stance on inflation and the level of key interest rates favor the euro, while a softer stance and lower rates weaken it. Given the high inflation in the eurozone, according to the ECB leadership, the risk balance for the eurozone’s economic outlook remains negative.
Anyway, eurozone inflation has started to rise again after a long period of deceleration, when it stood at 10.7% in October 2022 (+2.3% in November, +2.0% in October, +1.4% in September, +2.2% in August, +2.6% in July, +2.5% in June, +2.6% in May, +2.4% in April and March 2024. However, the ECB policymakers suggest that inflation is still high, and the Governing Council is determined to reduce it to 2% in a timely manner. At the same time, the ECB made it clear at its November 2024 meeting that the rate will be reduced by 0.25% again.
The ECB considers that GDP growth may shrink due to the energy crisis in the EU, increased economic uncertainty, global economic slowdown, and stricter financing conditions. Although the recession is not expected to last long, robust growth is also unlikely.
Thus, according to the ECB leaders’ signals, the main refinancing operations and the deposit facility rates will remain unchanged at the end of this meeting. However, a tighter decision and increase in interest rates, as well as the reduction, are possible, given the high risks of recession and slowing inflation in the eurozone.
A dovish tone of the statements will negatively impact the euro. Conversely, a hawkish tone regarding the central bank’s monetary policy will bolster the euro.
13:30 – USD: Producer Price Index (PPI)
The Producer Price Index (PPI) measures the average change in wholesale prices determined by manufacturers at all stages of production. The index is one of the leading inflation indicators in the United States, estimating the average change in wholesale producer prices.
Rising production costs increase wholesale selling prices, which ultimately boosts inflation. In normal economic conditions, growing inflation usually puts upward pressure on the national currency quotes, implying a tighter central bank monetary policy.
Previous values: +0.2% (+2.4% YoY) in October, 0% (+1.8% YoY) in September, +0.2% (+1.7% YoY) in August, +0.1% (+2.2% YoY) in July, +0.2% (+2.6% YoY) in June, -0.2% (+2.2% YoY) in May, +0.5% (+2.2% YoY) in April, +0.2% (+1,6% YoY) in March, +0.6% (+1.6% YoY) in February, +0.3% (+0.9% YoY) in January 2024, 0% (+0.9% YoY) in December 2023, -0.5% (+1.3% YoY), +0.5% (+2.2% YoY), +0.7% (+1.6% YoY), +0.3% (+0.8% YoY), +0.1% (+0.2% YoY), -0.3% (+0,9% YoY), +0.2% (+2.3% YoY), -0.5% (+2.7% YoY), -0.1% (+4.9% YoY), +0.7% (+5.7% YoY) in January 2023.
If the data exceeds the forecasted value, the US dollar will likely strengthen. Conversely, if the data falls below forecasted and previous values, this will exert pressure on the Fed. This could lead to the Fed’s monetary policy easing, which will negatively impact the US dollar.
13:45 – EUR: European Central Bank’s Press Conference
This press conference will draw significant attention from market participants. Volatility may increase not only in euro quotes but also across the entire financial market if the ECB leaders make unexpected statements. ECB executives will evaluate the current economic situation in the eurozone and provide insights on the bank’s rate decision. Historically, after some ECB meetings and subsequent press conferences, the euro exchange rate experienced fluctuations of 3%-5% in a short time frame.
A dovish tone of the statements will negatively impact the euro. Conversely, a hawkish tone regarding the central bank’s monetary policy will bolster the euro.
23:50 – JPY: Tankan Large Manufacturing Index for Q4
The index reflects general business conditions for Japan’s large manufacturing companies and estimates the current state of Japan’s export-oriented economy, which is heavily dependent on the industrial sector.
The index value above 0, the midline, is positive for the Japanese yen, while a reading below 0 is negative.
Previous quarterly values: 13, 13, 11, 13, 9, 5, 1 in Q1 2023. A relative rise in the indicator will bolster the yen, while a relative decline, especially a slide into negative territory, will exert pressure on the currency.
Friday, December 13
There are no important macro statistics scheduled to be released. However, market participants monitoring the British pound movements should focus on the UK macro data release at 07:00 (GMT), which may cause an increase in the pound quotes volatility.
Price chart of EURUSD in real time mode
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