This week’s data and speech releases can help shape expectations for December’s monetary policy decisions!
Think you’re ready to end November and start December trading on a strong note?
Read up on what markets are expecting from these potential market movers!
Major Economic Events:
Eurozone’s initial inflation estimates (Nov 30, 10:00 am GMT) – With the European Central Bank (ECB) reviewing the possibility of smaller interest rate hikes, you can bet that the central bank (and the markets) will pay close attention to November’s inflation numbers.
Eurozone consumer prices are expected to rise by 10.4% y/y, lower than October’s 10.6% annual increase and would mark the first slowdown since July 2021. Core consumer prices are also expected to slow down from 6.4% to 6.3% y/y while producer prices are set to show their first decline since May 2020.
U.S. core PCE price index (Dec 1, 1:30 pm GMT) – The Fed’s preferred inflation gauge is expected to show a 0.3% increase in October after September’s 0.5% uptick.
The lower reading would “confirm” the slowdown we saw from the CPI data earlier this month and would support a 50 bps Fed rate hike in December.
U.S. NFP reports (Dec 2, 1:30 pm GMT) – The U.S. economy is seen adding a net of 200K jobs in November with the unemployment rate remaining at 3.7% and average earnings slowing down from 0.4% to 0.3%.
Before the official numbers are released, traders can take hints from leading indicators like the ADP report (Nov 30, 1:15 pm GMT), JOLTS job openings (Nov 30, 3:00 pm GMT), initial jobless claims (Dec 1, 1:30 pm GMT), and ISM manufacturing PMI (Dec 1, 3:00 pm GMT) scheduled earlier in the week. Take note that these reports are mostly expected to reflect a labor market slowdown in November.
Stronger-than-expected job numbers would give Fed members more confidence to “threaten” markets with a higher terminal rate or even a fifth consecutive 75bps rate hike in December.
Central banker speeches – Policy decision szn is coming up so central bankers will be hard at work with their “forward guidance” before their official forward guidance!
FOMC members like Bullard, Williams, Cook, Bowman, and Barr will be sharing their two cents throughout the week. FOMC Chairman Powell himself will talk economic outlook in DC on Nov 30, 6:30 pm GMT!
Let’s see if they’ll ramp up their “higher terminal rate” and “higher for longer” talks amidst markets pricing cooldowns in Uncle Sam’s inflation and labor markets.
The other major central bankers will not be slackin’! ECB President Lagarde, RBA Governor Lowe, BOE Governor Bailey, BOJ Governor Kuroda, and RBNZ Governor Lowe are all scheduled to give speeches (read: hints) throughout the week.
Make sure to visit the economic calendar so you don’t miss what these central bankers are saying!
Forex Setup of the Week: EUR/USD
Is the euro ready to end its months-long uptrend against the dollar? EUR/USD hit a resistance at 1.0450 for a second time in weeks!
As you can see, the second rejection formed a possible Double Top pattern on the 4-hour time frame.
Tightening speculations for the Fed and ECB should keep EUR/USD’s price action interesting in the next few days.
Hints of inflation slowdown in the eurozone could weigh on EUR especially if FOMC members step up their talks about higher terminal rate or a longer period of high interest rates.
EUR/USD could dip to the 1.0200 psychological handle that lines up with the Double Top’s “neckline” and the 4-hour chart’s 100 SMA.
But what if traders extend last week’s risk-taking?
Keep your eyes peeled for further USD losses which could send EUR/USD back up and maybe beyond the 1.0450 resistance zone!
