Despite the strong volatility accompanying the markets, the US stock indices maintain positive momentum and trade within a long-term bullish trend. The US dollar also continues to dominate the market.
Last week, the four largest world central banks, the European Central Bank, the Reserve Bank of Australia, the Bank of Canada, and the Swiss National Bank, held their meetings on monetary policy issues.
In the upcoming week, market participants will focus on the US Fed meeting. The regulator has indicated that inflation is nearing its 2.0% target, and the economy appears to be in a strong position. It is widely expected that the interest rate will be cut again by 0.25%. Additionally, the Fed’s report, which will include projections for interest rates, inflation, and economic growth over the next 1 to 3 years and beyond, will be particularly noteworthy. The perspectives of FOMC members regarding interest rates will also capture significant attention.
During the coming week, 16.12.2024 – 22.12.2024, investors will monitor the publication of important macro statistics on China, Germany, the eurozone, the UK, the US, and Canada, as well as the results of the Bank of Japan and the Bank of England meetings.
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: preliminary PMIs of Germany, the eurozone, the UK, and the US.
- Tuesday: UK labor market data.
- Wednesday: US Fed interest rate decision
- Thursday: Bank of Japan and Bank of England interest rate decisions.
- Friday: US PCE indexes.
- The key event of the week: US Fed interest rate decision.
Monday, December 16
02:00 – CNY: Industrial Production. Retail Sales
China is a major buyer of commodities and a supplier of a wide range of finished goods to the global commodity market. Since China’s economy is the second largest in the world, the release of its significant macroeconomic indicators can profoundly influence the overall financial market.
Besides, China is the largest trading partner of Australia and New Zealand, purchasing a significant amount of commodities from these countries.
Therefore, positive macro statistics from China may also exert a positive influence on these commodity currencies. Conversely, if the anticipated data indicates a deceleration in one of the world’s largest economies, it would be a detrimental factor for global stock markets and commodity currencies.
The National Bureau of Statistics of China report on industrial production shows the output of Chinese industrial enterprises, such as factories and manufacturing facilities. The increase in industrial production is a positive factor for the yuan, indirectly signaling the possibility of accelerating inflation, which may force the People’s Bank of China to tighten monetary policy.
Conversely, the decline in the indicator value may negatively impact the yuan.
Previous values YoY: +5.3%, +5.4%, +4.5%, +5.1%, +5.3%, +5.6%, +6.7%, +4.5%, +7.0%, +6.8%, +6.6%, +4.5%, +3.7%, +4.4%, +3.5%, +5.6%, +3.9%, +2.4% in February 2023.
The retail sales level index, published monthly by the National Bureau of Statistics of China, gauges the change in the aggregate value of sales at the retail level across the country. The index is often viewed as an indicator of consumer confidence and economic prosperity and reflects the state of the retail sector in the near term. An increase in the index value is usually positive for the yuan, while a decrease in the index value will affect it negatively. Previous values YoY: +4.8%, +3.2%, +2.1%, +2.7%, +2.0%, +3.7%, +2.3%, +3.1%, +5.5%, +7.4%, +10.1%, +4.6%, +2.5%, +3.1%, +12.7%, +18.4%, +10.6%, +3.5%, -1.8%, -5.9% after +8% in the last months of 2019 and -20.5% in February 2020.
The data indicate that this sector of the Chinese economy continues to recover after a strong decline in February and March 2020. If the data prove weaker than the forecasted or previous values, the yuan may experience a decline, potentially a sharp one.
08:30 – EUR:Manufacturing and Services Purchasing Managers’ Index of the German Economy by S&P Global. Composite Purchasing Managers’ Index of the German Economy by S&P Global (Preliminary Release)
The manufacturing and services PMIs are important indicators of the business environment and the health of the German economy. These sectors play a significant role in Germany’s GDP. A reading above 50 indicates a positive outlook and bolsters the euro, while a reading below 50 is negative for the euro. Conversely, data worse than the forecasted and/or the previous value will prove to be negative for the euro.
Previous values:
- Manufacturing PMI: 43.0, 43.0, 40.6, 42.4, 43.2, 43.5, 45.4, 42.5, 41.9, 42.5, 45.5, 43.3, 40.8, 39.6, 38.8, 40.6, 43.2, 44.5, 44.7, 46.3, 47.3, 47.1, 46.2, 45.1, 47.8, 49.1, 49.3, 52.0, 54.8, 54.6;
- Services PMI: 49.3, 51.6, 50.6, 51.2, 52.5, 53.1, 54.2, 53.2, 50.1, 48.3, 47.7, 45.7, 48.2, 50.3, 52.3, 54.1, 57.2, 56.0, 53.7, 50.9, 50.7, 49.2, 46.1, 46.5, 45.0, 47.7, 49.7, 52.4, 55.0, 57.6, 56.1, 55.8;
- Composite PMI: 47.2, 48.6, 47.5, 48.4, 49.1, 50.4, 52.4, 50.6, 47.7, 46.3, 47.0, 47.4, 45.9, 46.4, 48.5, 50.6, 53.9, 54.2, 52.6, 50.7, 49.9, 49.0, 46.3, 45.1, 45.7, 46.9, 48.1, 51.3, 53.7, 54.3, 55.1, 55.6.
09:00 – EUR: Manufacturing and Services Purchasing Managers’ Index. Composite Purchasing Managers’ Index of Eurozone Manufacturing Activity by S&P Global (Preliminary Release)
The eurozone manufacturing and services PMIs are significant indicators of the European economy state. Readings above 50 are positive and strengthen the euro, while readings below 50 are negative for the currency. If the figures are worse than the forecasted and/or the previous value, the euro will be affected negatively.
Previous values:
- Manufacturing PMI: 45.2, 46.0, 45.0, 45.8, 45.8, 45.8, 47.3, 45.7, 46.1, 46.5, 46.6, 44.4, 43.1, 47.2, 42.7, 43.4, 44.8, 45.8, 47.3, 48.5, 48.8 in January 2023;
- Services PMI: 49.5, 51.6, 51.4, 52.9, 51.9, 52.8, 53.2, 53.3, 51.5, 50.2, 48.4, 48.8, 47.8, 48.7, 50.9, 52.0, 55.1, 56.2, 55.0, 52.7, 50.8 in January 2023;
- Composite PMI: 48.3, 50.0, 49.6, 51.0, 50.2, 50.9, 52.2, 51.7, 50.3, 49.2, 47.9, 47.6, 46.5, 47.2, 48.6, 52.8, 54.1, 53.7, 52.0, 50.3, 49.3 in January 2023.
09:30 – GBP: Manufacturing and Services Purchasing Managers’ Index. Composite Purchasing Managers’ Index of the UK Manufacturing Sector by S&P Global (Preliminary Release)
The manufacturing and services PMIs serve as a vital indicator of the UK economy’s health. The services sector employs the majority of the UK’s working-age population and contributes approximately 75% of GDP. Financial services continue to be the most important part of the services sector. If the data is worse than forecast and the previous value, the British pound will likely experience a short-term but sharp decline. If the data exceeds the forecast and the previous value, it will have a positive impact on the currency. At the same time, a PMI reading above 50 is favorable and strengthens the British pound, while a reading below 50 is negative for the currency.
Previous values:
- Manufacturing PMI: 48.0, 49.9, 51,5, 52.5, 52.1, 50.9, 51.2, 49.1, 50.3, 47.5, 47.0, 46.2, 44.8, 44.3, 45.3, 46.5, 47.1, 47.8, 47.9, 49.3, 47.0, 45.3, 46.5, 46.2, 48.4;
- Services PMI: 50.8, 52.0, 51.4, 53.7, 52.5, 52.1, 52.9, 55.0, 53.1, 53.8, 54.3, 53.4, 49.5, 49.3, 51.5, 53.7, 55.2, 55.9, 52.9, 53.5, 48.7, 49.9, 48.8, 48.8, 50.0, 50.9, 52.6;
- Composite PMI: 50.5, 51.8, 49.6, 53.8, 52.8, 52.3, 53.0, 54.1, 52.8, 53.0, 52.9, 52.1, 48.7, 48.5, 50.8, 52.8, 54.0, 54.9, 52.2, 53.1, 48.5 in January 2023.
14:45 – USD: Manufacturing and Services Purchasing Managers’ Index of the US Economy by S&P Global. Composite Purchasing Managers’ Index (Preliminary Releases)
The PMIs of the most important US economic sectors, released by S&P Global, are an important gauge of the US economic conditions. A PMI reading above 50 signals bullishness, bolstering the US dollar, whereas a reading below 50 bodes negatively for the greenback.
Previous values:
- Manufacturing PMI: 49.7, 48.5, 47.6, 47.9, 49.6, 51.6, 51.3, 50.0, 51.9, 52.2, 50.7, 47.9, 50.0, 49.8, 49.0, 46.3, 48.4, 50.2, 47.3, 46.9, 46.2, 47.7, 50.4, 52.0, 51.5;
- Services PMI: 56.1, 55.0, 55.2, 55.7, 55.0, 55.3, 54.8, 51.3, 51.7, 52.3, 52.5, 51.4, 50.6, 50.1, 52.3, 54.4, 54.9, 53.6, 50.6, 46.8, 44.7, 46.2, 47.8, 49.3, 43.7, 47.3, 52.7, 53.4, 55.6;
- Composite PMI: 54.9, 54.1, 54.0, 54.6, 54.3, 54.8, 54.5, 51.3, 52.1, 52.5, 52.0, 50.9, 50.7, 50.2, 52.0, 53.2, 54.3, 53.4, 52.3, 50.1, 46.8 in January 2023.
20:45 – CAD: Bank of Canada Governor Tiff Macklem’s Speech
Tiff Macklem will share his comments on the resilience of the Canadian economy and central bank monetary policy in the face of declining inflation: in October, the annual Canadian CPI stood at +2.0% after +1.6%, +2.0%, +2.5%, + 2.7%, +1.9%, +1.8%, +1.6%, +2.0%, +2.1%, +2.4% (January 2024) in previous months, with the inflation target for the Bank of Canada between 1% and 3%.
If Tiff Macklem mentions the Bank of Canada’s monetary policy, the volatility in the Canadian dollar will grow sharply. A signal of monetary policy tightening will bolster the Canadian dollar. Conversely, an intent to ease monetary policy will have a negative impact on the currency.
Additionally, Tiff Macklem will likely clarify the Bank of Canada’s recent interest rate decision and provide guidance for investors ahead of the central bank’s upcoming meeting.
Tuesday, December 17
07:00 – GBP: UK Average Weekly Earnings Over the Last Three Months. Unemployment Rate
The UK Office for National Statistics monthly publishes a report on average weekly earnings covering the period for the last three months, including and excluding bonuses.
This report is a key short-term indicator of employee average earnings changes in the UK. A wage increase is positive for the British pound, whereas a low indicator value is unfavorable. Forecast: The December report suggests that average earnings, including bonuses, rose again in the last three months, including August, September, and October, after gaining +4,3%, +3.8%, +4.0%, 4.5%, +5.7%, +5.9%, +5.7%, +5.6%, +5.6%, +5.8%, +6.5%, +7.2%, +7.9%, +8.1%, +8.5%, +8.2%, +6.9%, +6.5%, +5.8%, +5.9%, +6.0%, +6.5%, +6.%, +6.1%, +5.5%, +5.2%, +6.4%, +6.8%, +7.0%, +5.6%, +5.7%, +4.8%, +4.3%, +4.2% in previous periods. The earnings value excluding bonuses also increased with percentages at 4.8%, +4.9%, +5.1%, +5.4%, +6.0%, +6.0%, +6.0%, +6.1%, +6.2%, +6.6%, +7.3%, +7.7%, +7.8%, +7.8%, +7.8%, +7.8%, +7.3%, +7.2%, +6.7%, +6.6%, +6.6%, +6.7%, +6.5%, +6.1%, +5.8%, +5.5%, +5.2%, +4.7%, +4.4%, +4.2%, +4.2%, +4.1%, +3.8%, +3.7%, +3.8% in previous periods. These figures show continued growth in employee earnings levels, which is positive for the British pound. If the data outperforms the forecast and/or previous values, the pound will likely strengthen in the currency exchange market. Conversely, if the data falls short of the forecast/previous values, the pound will be negatively affected.
The UK unemployment data will be released at the same time. Unemployment is expected to stand at 4.3% for the three months of August, September, and October (against 4.3%, 4.0%, 4.1%, 4.2%, 4.4%, 4.4%, 4.3%, 4.2%, 4.0%, 3.8%, 3.9%, 4.0%, 4.1%, 4.2%, 4.3%, 4.2%, 4.0%, 3.9% in previous periods).
Since 2012, the UK unemployment rate has fallen steadily from 8.0% in September 2012. The unemployment decline is a positive factor for the pound, while its growth negatively impacts the currency.
If the UK labor market data appears to be worse than the forecast and/or the previous value, the pound will be under pressure.
Regardless, when the UK labor market data is released, the pound and the London Stock Exchange are expected to experience increased volatility.
13:30 – CAD: Canadian Consumer Price Indexes
The Consumer Price Index (CPI) reflects the retail price trends of a selected basket of goods and services. Meanwhile, the Core CPI excludes fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation, and tobacco products. The inflation target for the Bank of Canada ranges between 1% and 3%. A higher CPI reading is a sign of a rate hike and is positive for the Canadian dollar.
Previous values:
- CPI: +0.4% (+2.0% YoY), -0.4% (+1.6% YoY),-0.2% (+2.0% YoY), +0.4% (+2.5% YoY), -0.1% (+2.7% YoY), +0.6% (+2.9% YoY), +0.5% (+2.7% YoY), +0.6% (+2.9% YoY), +0.6% (+2.9% YoY), +0.3% (+2.8% YoY), 0% (+2.9% YoY), -0.3% (+3.4% YoY), +0.1% (+3.1% YoY), +0.1% (+3.1% YoY), -0.1% (+3.8% YoY), +0.4% (+4.0% YoY), +0.6% (+3.3% YoY), +0.1% (+2.8% YoY);
- Core CPI released by the Bank of Canada: +0.4% (+1.7% YoY), 0% (+1.6% YoY), -0.1% (+1.5% YoY), +0.3% (+1.7% YoY), -0.1% (+1.9% YoY), +0.6% (+1.8% YoY), +0.2% (+1.6% YoY), +0.5% (+2.0% YoY), +0.1% (+2.1% YoY), +0.1% (+2, 4% YoY), -0.5% (+2.6% YoY), +0.1% (+2.8% YoY), +0.3% (+2.7% YoY), -0.1% (+2.8% YoY), +0.1% (+3.3% YoY), +0.5% (+3.2% YoY), -0.1% (+3.2% YoY).
The data suggests that inflation continues to decelerate, which prompts the Canadian central bank to consider implementing a dovish monetary policy. If the expected data is worse than the previous values, it will negatively affect the Canadian dollar, but if the data exceeds expectations, it will bolster the currency.
13:30 – USD: Retail Sales. Retail Sales Control Group
This Census Bureau report on retail sales reflects the total sales of US retailers of all sizes and types. The change in retail sales is a key indicator of consumer spending. The report is a leading indicator, and the data may be subject to significant revisions in the future. High indicator readings strengthen the US dollar, while low readings weaken it. A relative decline in the indicator may have a short-term negative impact on the US dollar, while a rise in the indicator will positively impact the currency. In October, the value of the indicator stood at +0.4% (after +0.4% in September, +0.1% in August, +1.1% in July, -0.2% in June, +0.2% in May, -0.2% in April, +0.5% in March, +0.7% in February, -1.1% in January 2024).
Retail sales are the main indicator of consumer spending in the United States, showing the change in the retail industry.
Retail sales serve as an indicator of domestic consumption, contributing the most to the US GDP and being one of the main factors of inflation risks increase or decrease. Deterioration of the indicator values is a negative factor for the US dollar. Inflation deceleration may prompt the Fed to begin the process of monetary policy easing.
The Retail Control Group indicator gauges volume in the retail industry and is used to calculate price indexes for most goods. High readings strengthen the US dollar, while low results weaken the currency. A slight increase in the figures is unlikely to boost the dollar. If the data is lower than the previous readings, the dollar may be negatively impacted in the short term. Previous values: -0.1%, +0.7%, +0.3%, +0.4%, +0.9%, +0.4%, -0.3%, +0.9%, 0%, -0.4% in January 2024, +0.6%, +0.2%, +0.2%, +0.2%, +0.2%, +0.7%, +0.3%, +0.4%, +1.0%, -1.2%, -0.1%, +2.6% in January 2023.
Wednesday, December 18
07:00 – GBP: Consumer Price Index. Core Consumer Price Index
The Consumer Price Index (CPI) measures the retail prices of a group of goods and services comprising the UK consumer basket. The CPI is a key indicator of inflation. The British pound’s movement on the currency market and the London Stock Exchange FTSE 100 index performance depend on the release of the CPI data.
In October, the UK consumer inflation rose +0,6% (2.3% YoY) after 0% (+1.7%YoY) in September, +0.3% (+2.2% YoY) in August, -0.2% (+2.2% YoY) in July, +0.1% (+2.0% YoY) in June, +0.3% (+2.0% YoY) in May, +0.3% (+2, 3% YoY) in April, +0.6% (+3.2% YoY) in March, +0.6% (+3.4% YoY), -0.6% (+4.0% YoY) in January 2024, +0.4% (+4.0% YoY) in December. The data suggests persistent inflationary pressures in the UK, which are expected to bolster the British pound, particularly if the actual data surpasses the forecasted values.
An indicator reading below the forecast/previous value may cause the weakening of the British pound since low inflation will force the Bank of England to stick to the easy monetary policy course.
The Core CPI, published by the Office for National Statistics, measures the price change in a selected basket of goods and services (excluding food and energy) over a given period. It is a key indicator for assessing inflation and changes in consumer preferences. A positive result strengthens the British pound, while a negative outcome weakens it.
In October, the core CPI gained +3.3% YoY, after +1.7% in September, +3.6% in August, +3.3% YoY in July, +3.5% in June and May, +3.9%, +4.2%, +4.5%, +5.1% in January 2024, December and November, after rising +5.7% +6.1%, +6.2% three months earlier. The publication will likely positively impact the British pound in the short term if it exceeds the forecasted and previous values. A reading below the forecast and/or previous values may weaken the pound.
19:00 – USD: US Fed Interest Rate Decision. Fed Commentary on Monetary Policy. FOMC Economic Projections
During the first half of 2024, the US Fed policymakers left monetary policy parameters unchanged at multiple meetings, maintaining the key interest rate at 5.50%. However, at the September and November meetings, the US Fed’s leaders reduced the interest rate to the current 4.75% and did not rule out further reductions. Notably, a month before these decisions, US Fed Chairman Jerome Powell stated that the US central bank’s focus was shifting toward ensuring stability in the labor market. However, Powell emphasized that any decisions regarding interest rates would still hinge on the prevailing economic conditions.
Now, market participants expect the US central bank to continue its monetary easing cycle. Nevertheless, there is also a possibility of an interest rate hike if inflation starts to rise again, as Fed Chairman Jerome Powell has repeatedly warned earlier.
It is widely anticipated that there will be a 0.25% reduction, bringing the rate down to 4.50% at the upcoming meeting.
The financial market may experience higher volatility when the rate decision is announced, particularly in the US stock market and the US dollar, especially if the rate decision does not match the forecast or the Fed makes unexpected statements.
Powell’s commentaries may affect short-term and long-term trading in the US dollar. The Fed’s more aggressive approach to monetary policy is a positive factor that would strengthen the US dollar, while a more cautious position is negative for the greenback. Investors are eagerly awaiting Powell’s remarks on the Fed’s upcoming plans for this year and the next.
Besides, the Fed will release a report with projections on the interest rate, inflation, and economic growth for the next 1–3 years and beyond. Additionally, the perspectives of individual FOMC members on interest rates will be of great interest to market participants.
19:30 – USD: US Federal Reserve Open Market Committee Press Conference
The US Federal Reserve Open Market Committee (FOMC) press conference lasts approximately one hour. The resolution is read in the first part of the meeting, followed by a Q&A session, which may increase market volatility. Any unexpected statements by Jerome Powell on the Fed’s monetary policy will cause a hike in volatility in the US dollar and the US stock market.
21:45 – NZD: New Zealand GDP for Q3
The data release will heighten volatility in the New Zealand dollar. Given the recent rise in commodity and agricultural prices, particularly for dairy products, New Zealand’s major export, and considering that the coronavirus pandemic has least affected New Zealand compared to other large economies, the New Zealand Q2 2024 GDP report will likely be positive.
Previous values YoY: -0.5%, +0.3%, -0.3%, -0.6%, +1.5%, +2.2%, +2.3%, +6.4%, +0.3%, +1.0%, +3.0% in Q4 2022.
Data so far remains contradictory, indicating a halt in the New Zealand economic recovery at the end of 2023 after a downturn in the first half of 2020. If data is worse than previous values, it will negatively affect the New Zealand dollar.
Thursday, December 19
В период после 01:00 (Exact Time Not Specified) – JPY: Bank of Japan Interest Rate Decision. Bank of Japan Press Conference and Commentary on Monetary Policy
The Bank of Japan will decide on the interest rate. At the moment, the benchmark rate in Japan is 0.25%. The rate will likely remain at the same level. If the rate is cut and returns to negative values, the yen may decline sharply in the currency market, and the Japanese stock market will likely increase. Anyway, a spike in the yen and Asian financial market volatility is expected during this period.
Since February 2016, the Bank of Japan has kept the deposit rate at -0.1% and the 10-year bond yield target around 0%.
During the 19 March meeting, the BoJ made the decision to increase the interest rate by 10 basis points, shifting it from -0.1% to 0% for the first time since 2007, thus concluding the period of negative interest rates that commenced in 2016. Concurrently, the target for long-term JGBs (YCC) was scrapped, although the BoJ intends to maintain the same level of JGB purchases per month without a specific target. On the other hand, the bank will cease the purchase of ETFs and REITs, gradually decrease, and eventually terminate the acquisition of commercial paper and corporate bonds within 12 months.
According to analysts, if the BoJ hints at further rate hikes, the yen will receive significant support.
During the press conference, BoJ governor Kazuo Ueda will comment on the monetary policy. The BoJ continues to adhere to an extra-soft monetary policy. According to former Japanese central bank governor Haruhiko Kuroda, Japan should continue its current soft monetary policy. Markets usually respond prominently to speeches by the BoJ governor. The governor will likely mention the monetary policy again during his speech, leading to increased volatility not only in the yen but also in Asian and global financial markets.
After 03:00 (Exact Time Not Specified) – JPY: Bank of Japan Press Conference
During the press conference, Bank of Japan Governor Kazuo Ueda, who succeeded Haruhiko Kuroda in April 2023, will comment on the bank’s monetary policy. Despite the bank’s earlier measures to stimulate the Japanese economy, inflation remains low, and production and consumption are falling, which negatively affects export-oriented Japanese manufacturers. Markets usually react noticeably to speeches of the BoJ governor. If he touches on monetary policy during his speech, volatility will rise not only in the yen but also across Asian and global financial markets.
12:00 – GBP: Bank of England Interest Rate Decision. Bank of England Meeting Minutes. Bank of England’s Asset Purchase Facility. Monetary Policy Report
As a result of the August 2023 meeting, the interest rate was increased to 5.25%. The Bank of England’s Monetary Policy Committee has decided to raise borrowing costs amid a robust labor market to curb price growth. However, further tightening of monetary policy may be required to bring inflation to the 2.0% target.
Since the September 2023 meeting, the Bank of England has maintained a wait-and-see stance. Finally, on August 1, 2024, the Bank of England cut the interest rate by 0.25% to 5.00%, marking the first cut since August 2023. The rate currently stands at 4.75%.
At the upcoming meeting, the Bank of England may decide to cut interest rates again, given the declining inflation in the country, or take a pause, considering the positive macro data from the UK and the complex geopolitical situation in Europe, particularly in Ukraine.
Analysts believe that the Bank of England may reduce the interest rate. However, the market reaction may be unpredictable.
At the same time, the BoE will publish the Monetary Policy Committee (MPC) minutes, including a breakdown of the votes for and against interest rate changes. The main UK risks after Brexit are related to expectations of a slowdown in the country’s economic growth, as well as a large deficit in the UK balance of payments account.
Uncertainty about the Bank of England’s next step persists. Meanwhile, the British Pound and FTSE100 futures offer a lot of trading opportunities during the publication of the Bank’s rate decision.
Besides, the Bank of England will release its monetary policy report, providing an assessment of the economic outlook and inflation. Volatility in the British pound may grow sharply during this period. Apart from GDP, the UK inflation rate is one of the primary indicators for the Bank of England’s monetary policy stance. A soft tone of the report will likely boost the British stock market but cause the British pound to weaken. Conversely, the report’s hawkish tone regarding inflation, implying an interest rate hike, will strengthen the pound.
13:30 – USD: US GDP Annual Growth Rate for Q3 (Final Estimate).
GDP data is one of the key indicators, along with labor market and inflation data, for the US Fed in terms of its monetary policy. A positive indicator reading strengthens the US dollar, while a weak GDP report is harmful for the currency. GDP grew 2.5% in Q2 after gaining +1.4% in Q1 2024, +3.4% in Q4 2023, +4.9%, +2.1% in Q2, +2.2% in Q1 2023.
If the data indicate a decline in GDP in Q3 2024, the US dollar will face significant pressure. Conversely, positive GDP figures will bolster the greenback and US stock indices.
The preliminary and second estimates stood at +2.8%.
Friday, December 20
07:00 – GBP: Retail Sales
The retail sales economic indicator is a key metric that tracks the level of consumer demand and significantly impacts market performance and the national currency. Additionally, it serves as an indirect indicator of inflation, making it a key concern for a country’s central bank and market participants.
The Retail Sales report is released by the UK Office for National Statistics. The Retail Sales change is considered to indicate the consumer spending level. High indicator values are positive for the British pound, while low readings are negative.
Previous index values YoY: +2,4%, +3.9%, +2.5%, +1.4%, -1.2%, +1.3%, -2.3%, +0.4%, -0.3%, +0.4% in January 2024, -2.8% in December 2023, +0.0%, -2.3%, -1.1%, -1.2%, -3.1%, -1.8 in June 2023.
13:30 – USD:Personal Consumption Expenditures (Core PCE Price Index)
Personal Consumption Expenditures (PCE) data reflect the average amount of money consumers spend per month on durable goods, consumer goods, and services. The core PCE price index excludes food and energy prices. The annual core PCE is the main inflation gauge used by the US Fed as the primary inflation indicator.
The inflation rate, along with the labor market and GDP data, is crucial for the Fed in determining its monetary policy. Growing prices exert pressure on the central bank to tighten its policy and raise interest rates.
The PCE data above the forecasted and/or previous values may boost the US dollar, while a decline in the reading will likely exert a negative impact on the greenback.
Previous values YOY: +2.8%, +2.7%, +2.7%, +2.6%, +2.6%, +2.6%, +2.8%, +2.8%, +2.8%, +2.9% in January 2024, +2.9%, +3.2%, +3.5%, +3.7%, +3.8%, +4.3%, +4.3% +4.7%, +4.8%, +4.8%, +4.7%, +4.7%, +4.6%, +4.8%, +5.1%, +5.2%, +4.9%, +4.7%, +4.8%, +4.7%, +4.9%, +5.2%, +5.3%, +5.2% in January 2022.
Price chart of EURUSD in real time mode
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