The beginning of the week seems to accumulate most of the important events for financial markets. From December 12 to 16, 2022, we will learn the interest rate decisions of the world's major central banks, as well as inflation data and PMI indexes. This could make this week one of the most volatile with possible twists and turns emerging.
One of the important data readings may be the publication of inflation in the US. The market expects that annual price growth slowed to 7.3% in November, with monthly CPI rising just 0.3%. At the same time, core CPI inflation probably rose 6.1% year-on-year, the lowest in four months Meanwhile, Fed policymakers may raise interest rates by 50 basis points, after four consecutive previous 75 basis point increases. However, if inflation continues to weaken, only a 25-basis point hike may be considered in January. The U.S. central bank will also release its quarterly forecasts for inflation, the economy and the future path of interest rates. The so-called dot-plot may be one of the most anticipated charts in recent times. This is because it shows FOMC members' views on where they think interest rates might be at the end of the year. Particularly in 2023, these expectations could be important for the market, i.e. whether rate cuts could occur.
Source: Conotoxia MT5, USDIndex, Daily
After the Fed, it's time for the ECB and BoE
This week in Europe, investors' attention may turn to the ECB's rate decision, with markets expecting a smaller hike than the previous one, of 50 bps, after two consecutive previous hikes of 75 bps. Investors would keep a close eye on new macroeconomic projections. Meanwhile, preliminary PMIs for the eurozone, Germany and France will provide an early indication of private sector activity this month, with forecasts pointing to another contraction in both services and manufacturing, according to a note from the tradingeconomics portal.
In the UK, the BoE is expected to announce a 50-basis-point interest rate hike on Thursday, after raising the rate by 75 basis points at its previous meeting, the largest increase in borrowing costs in 33 years. Other key economic releases include monthly GDP for October, with market forecasts pointing to a 0.4% rebound after a 0.6% drop in September. Inflation data will also be in focus, with the annual rate expected to fall to 10.9% from 11.1%, the highest since 1981.
Source: Conotoxia MT5, GBPUSD, Daily
It seems, therefore, that the week that is about to begin could be one of the most interesting and could excite investors due to a number of key macroeconomic releases.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service)
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