The US dollar’s weakness offered a boost to emerging-market currencies and oil.
Important things this week will bring us
One of the last weeks of this year turns out to be pretty eventful.
Monetary policy decisions:
- Federal open market committee statement and Federal Funds rate (Wed, 21:00 MT (19:00 GMT) time) – The Fed Chair Jerome Powell and the members of the FOMC are expected to raise the interest rate from 2.25% to 2.5%. If it happens, it will be the 4th rate hike for the Fed this year. Analysts predict the 75% chance of a hike. We also anticipate the Fed to provide hints on the future path of the US monetary policy and rate expectations for 2019.
- Bank of Japan policy rate and press conference (Thu, tentative) – We await the Bank of Japan to keep its interest rate at -0.1%. In addition, the BOJ Governor Haruhiko Kuroda may provide the hawkish comments during the press conference.
- British Monetary policy committee summary (Thu, 14:00 MT (12:00 GMT) time) – The Bank of England and his colleagues will likely keep its interest rate unchanged at 0.75%. Any surprising vote or comment during the MPC meeting minutes will support the British pound. However, the main focus for the currency is still on the Brexit developments.
- British CPI y/y (Wed, 11:30 MT (9:30 GMT) time) – Last time the level of British inflation came out lower than expected at 2.4%. This time analysts also anticipate a decline to 2.3%. If the actual level is higher, it will support the British pound.
- Canadian CPI m/m (Wed, 15:30 MT (13:30 GMT) time) – As for Canada, last month’s release cheered the CAD traders with an increase by 0.3% (vs. expected 0.1%). This time experts project a decline in consumer price index by 0.1%. Higher-than-expected data will push the CAD up.
- New Zealand GDP q/q (Wed, 23:45 MT (21:45 GMT) time) – The economy of New Zealand is forecast to grow by 0.6%. The data for the last quarter made the NZD rise. We will see what this week's release will show us.
- Australian employment change and the unemployment rate (Thu, 02:30 MT (00:30 GMT) time) – According to analysts, the level of employment for Australia will increase by 20 thousand people. As for the unemployment rate, it is expected to stay at the same level at 5%. The higher level of employment change and the lower level of the unemployment rate will bring a positive momentum to the AUD.
- US core durable goods orders m/m (Fri, 15:30 MT (13:30 GMT) time) – the indicator rose by 0.2% last time. This time, experts predict an increase of 0.3%.
- US final GDP q/q (Fri, 15:30 MT (13:30 GMT) time) – According to the release in the third quarter, the US economy grew by 3.5%. The third and final release will likely confirm the data. Keep an eye on the USD.
- Political uncertainties still trigger the investors. US Secretary Ryan Zinke will leave his post at the end of this year after the federal investigations.
- Theresa May plans to attack the supporters of a second Brexit referendum on Monday. She will say the second referendum would damage the British economy as well as the trust in the democracy. In addition, UK business secretary Greg Clark supported May and said the second referendum would increase the uncertainty.
- The trade tensions between the US and China are still in focus. According to the latest news, US trade envoy said Chinese approach to economy and trade does not fit to the rules of WTO.
Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.