Start your trading prep for the week by plotting these upcoming economic releases and market events on your schedule and checking out these potential plays.
U.K. data dump (starting Dec. 12, 9:30 am GMT)
It’s gonna be another one of those busy weeks for the British pound as market participants are busy catching up to the second season of “The Crown” and will be keeping close tabs on the U.K. top-tier data lined up.
First up is the CPI report lined up for tomorrow’s London trading session. Headline inflation is expected to hold steady at 3.0% while core inflation could also sit tight at 2.7%. Stronger than expected results, however, could stoke expectations of another BOE hike occurring sooner rather than later.
Next is the jobs data due on December 13, 9:30 am GMT. November claimant count could come in at 0.4K, which would be lower compared to the previous 1.1K gain in joblessness. The average earnings index could improve from 2.2% to 2.5% to reflect faster wage growth and upside inflationary pressure.
Lastly, we’ve got the U.K. retail sales due on Thursday. Consumer spending is slated to advance by 0.4% in November, which would be a notch higher than the previous month’s 0.3% gain and probably enough to show that Brits are keepin’ calm and carryin’ on despite higher price levels and Brexit uncertainties.
FOMC rate statement and presser (Dec. 13, 7:00 pm GMT)
And now for the moment that dollar junkies have been eagerly waiting for over the past few months… the December FOMC decision! An interest rate hike of 0.25% is widely expected and has been priced in for quite some time, so there’s a strong chance of profit-taking during the actual event.
Besides, traders might be more interested in the updated economic forecasts as policymakers have previously hinted at a weaker inflation outlook. These could shape monetary policy expectations for 2018 as next Fed head Powell takes over Yellen’s throne.
Chinese data dump (Dec. 14, 2:00 am GMT)
As the world’s second largest economy and one of the top consumers of commodities, China tends to make huge waves in global growth forecasts and overall market sentiment when it releases its performance numbers.
Data on industrial production, retail sales, and fixed asset investment are all up for release on Thursday’s Asian trading session, so additional volatility could be seen in financial markets then. A slight dip in fixed asset investment is eyed but retail sales is projected to climb from 10.0% to 10.3% on a year-over-year basis for November.
SNB interest rate decision (Dec. 14, 8:30 am GMT)
It’ll be SNB Chairman Thomas Jordan’s turn to announce their rate decision later in the day, but no actual changes are expected. Heck, the SNB rarely makes any policy adjustments, save for the major shocker back in 2015 and a few rate cuts to negative territory.
In any case, the SNB would likely sit on its hands again and maintain rates at -0.75%, which means that market watchers would have to take their cues from the press conference that will follow.
BOE decision and MPC minutes (Dec. 14, 12:00 pm GMT)
Rounding out the potentially crazy week for the British pound is the BOE decision, also on December 14’s London session. Keep in mind that the U.K. central bank is just coming off a 0.25% hike from their earlier statement.
No actual rate changes or adjustments to asset purchases are expected this time, but traders could still keep an eye out for any tightening hints from the MPC minutes.
In particular, any votes to hike could still be interpreted as a more hawkish tilt for the central bank as the consensus is for a unanimous vote to stand pat. The data dump from earlier in the week could provide better clues on how the MPC might be leaning.
ECB policy decision (Dec. 14, 1:30 pm GMT)
No actual policy changes are also expected from the ECB since they’ve already announced their plans to start tapering by next year. However, this particular announcement will be accompanied by updated economic forecasts, which should give traders a better idea on when rate hikes could be expected.
German coalition talks
Political uncertainty is still in play for the euro zone’s largest economy as German Chancellor Merkel makes another attempt to strike a coalition, this time with the SPD.
Leader Martin Schulz has secured the backing of SPD members to start talks with Merkel’s political party this week, but there are concerns that this could go on until the end of the year. In any case, updates on the situation could push the shared currency around as prolonged uncertainty or the odds of another elections could mean more risks.
Trump’s tax reform announcement (Dec. 13)
The Donald has a YUUUGE statement coming up this week in the form of his closing arguments on tax reform. There aren’t a lot of details floating around on what his speech might contain, but many believe that this could encourage members of the House and Senate to iron out the differences in their respective versions and come up with a unified one pronto.
Charts to Watch:
Last week’s pullback setups played out quite nicely, but this week’s catalysts could still make or break the trends.
Here’s a classic break-and-retest setup materializing, with stochastic suggesting that the selloff is likely to resume soon. Event risks for this play include the German coalition talks, ECB statement, FOMC decision, and Trump’s tax announcement.
The channel that keeps on giving! This pair looks prime for another test of support, this time around the 1.6950-1.7000 levels. Upgraded ECB forecasts or a potential German coalition could allow the climb to resume, but the Kiwi is currently drawing support from the new RBNZ head announcement.
Dollar bulls have taken this pair past the descending trend line on the 1-hour time frame, but a pullback seems due before it heads further north. Stochastic is already indicating oversold conditions with a bullish divergence to boot, so buyers might simply be waiting for more tax updates or the FOMC statement before hopping in.