World’s largest central bank and China data to set market on track?

World's largest central bank and China data to set market on track?

Monday – Japan’s BSI manufacturing index

The weekly financial calendar starts with small effects but will be leading up to crucial central bank data incoming. Including Japan’s BSI Manufacturing Index and BSI Manufacturing Index, which may have a neutral impact on the yen.

Tuesday – US CPI

 Also weighing on the outlook is Tuesday’s November consumer price report, with analysts forecasting the key interest rate unchanged and a 0.3% increase. However, forecasts could soften in the coming days if the latest inflation measure surprises with an accelerating pace or shows little progress toward the Fed’s 2.0 percent target.

November’s CPI is expected to slow slightly year-on-year to 3.1 percent from 3.2 percent previously, while the core figure is expected to be steady at 4.0 percent year-on-year. Additionally, the UK employment report is likely to provide some trading volume on Tuesday.

Wednesday – UK GDP

UK macroeconomic indicators including GDP m/m, construction output, trade balance and industrial production m/m. Monthly gross domestic product (GDP) data could entertain the pound market ahead of the Fed conflict.

Thursday – Central Bank Policy

The most important central banks are of course the Fed and the Bank of England (BoE); followed by the Swiss National Bank (SNB) and the European Central Bank (ECB).

The US Central Bank, the Fed is widely expected to keep key interest rates unchanged at 5.25-5.50 percent, but its stance on a planned rate cut through 2024 will be closely watched for signs of recent strengthening in the labour market. We focus on the so-called spotlight photos and the press conference of President Jerome Powell.

If the FOMC resists pressure to reverse, become more hawkish and commit to keeping interest rates higher for longer, US Treasury yields are likely to rise, reversing some of their recent decline. This scenario is quite bullish for the US dollar, paving the way for another recovery before 2024.

The European Central Bank (ECB) will also announce its interest rate decision on the same day. ECB meeting and updated economic forecasts. Given this premise, the biggest takeaway from the meeting will be the ECB’s updated economic forecasts and rhetoric.

The market is still pricing in an ECB taper in 2024, so what will be of interest is how big the difference is compared to the central banks’ forecasts.

The Bank of England was about to announce this policy. It is widely expected that the BOE will likely keep interest rates at 5.25%. The BoE’s announcement in the policy statement will be closely watched as both the Fed and the BoE begin cutting interest rates in 2024.

The next direction for the pound depends on the outlook for the central bank and BoE policy, but volatility is expected to remain strong.

The Swiss National Bank meets on Thursday, when the bank expects a base rate of 1.75 percent, with Norway as the only possible traveler. There is also a risk that the SNB will play another intervention to weaken the franc.

Meanwhile, the US will fill Thursday with retail sales and weekly jobless data. In addition, India’s WPI releases inflation for November and annually.

Friday – China macroeconomic data

Manufacturing and services PMI data for the US, Europe and the UK will be released on Friday. Chinese macroeconomic data including Industrial Production y/y, Retail Sales y/y, Funded Active Investment ytd and Employment Rate are also released ahead of European and UK PMIs.

The figure gives indications about the Chinese economy.

BOC chief Macklem Speaks will address European classes on Friday, but his speech is unlikely to touch on monetary policy.

Commodity Samachar
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Also Read: Natural gas at multi-week support – will it break or not? , RBI MPC Meeting 2023: Did India Receive the Positive Outlook It Anticipated?.

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