A Week in the Market: All Eyes on Central Banks (12-16 December)
All major central banks will be in the spotlight this week as they gather for their last meetings of the year.
The US Federal Reserve is expected to decide on a 50-basis point interest rate increase. CME futures estimates that this is 90% likely to happen. If expectations come true, the USD will fall, and risk assets will have a chance to appreciate.
The US will present its inflation statistics for November. The consumer price index is expected to fall to an average of 7.3% year-on-year, which could indicate a significant reduction in pressure. Volatility in the EUR/USD currency pair could widen considerably, and sharp fluctuations in quotations cannot be ruled out.
The UK will publish statistics on industrial production and the employment market. The Bank of England will decide on its monetary policy. The interest rate is expected to rise from 3% to 3.5% per year. GBP could receive support.
The European Central Bank will meet and analyse the components of its monetary policy. The interest rate is likely to increase by 50 basis points to 2.5% per year. The EUR exchange rate is holding onto a strong position, and there is little that can change this now.
China will release statistics on its industrial production, investments in fixed assets, retail sales, and unemployment rate. In addition, there will be a press conference by China's National Bureau of Statistics. Strong reports will support risky asset positions.