The Last Volatile Week of 2022

The Last Volatile Week of 2022

US monthly CPI

December 13, 15:30 GMT+2.

The US Bureau of Labor Statistics will release its Consumer Price Index (CPI) and Core CPI on December 13, 15:30 GMT+2. The reading represents consumer inflation, a change in the price of goods and services purchased by customers. The market considers this release the most important for the economy as the US Federal Reserve adjusts future rate changes based on inflation data.

Currently, oil prices are going down because of the recession; the housing market is contracting; prices for container transportation are on pre-covid levels. All these factors indicate the economy has slowed down. Thus, inflation should continue lowering in the following months. High reading will surprise the market, pushing the USD to the moon. Simultaneously, XAUUSD may plunge as these assets move in opposite directions.

XAUUSDM15.png

  • If the actual data exceeds expectations, the USD will skyrocket.
  • Otherwise, the USD may continue falling.

Instruments to trade: EURUSD, XAUUSD, USDJPY.

US Federal Funds Rate

December 14, 21:00 GMT+2.

The US Federal Reserve will make an FOMC Statement and release Federal Funds Rate on December 14, 21:00 GMT+2. Fed chair Jerome Powell will make a statement half an hour later. The main event in the US economy happens eight times a year and includes an economic outlook and projections for the following months.

Investors are watching closely after the release because Fed’s decisions directly affect the market and point to the current monetary policy. The event causes intense volatility and often changes a local trend in stocks, cryptocurrencies, forex majors (USD-related pairs), and gold. The market expects the rate change to be a 50-basis-point hike down from a 75-basis-point hike in October, meaning the tightening process is slowing. However, Powell’s speech has a bigger impact on the markets.

EURUSDM15.png

  • If the Fed is more hawkish than expected, the USD will rise, and US500 will plunge.
  • Otherwise, the USD may decline.

Instruments to trade: US500, EURUSD, XAUUSD.

Central banks’ meetings

December 15, all-day.

Swiss National Bank (SNB), Bank of England (BOE), and European Central Bank (ECB) will release changes in their interest rate during December 15. All three releases are precious for investors as they show the current banks’ monetary policy. The rate decision is usually priced in the market. Thus, a statement that comes later tends to overshadow it.

Inflation in the EU is close to 50 years high, with the highest among the three in the UK (11.1% annually). Rising prices are a concern that forces banks to increase the bank rate and slow the economy. Without a doubt, all three banks will increase their interest rates. The last rate hike by the BOE appeared to be the same as expected. After the release, GBPUSD plunged by 2300 points in a few hours.

GBPUSDM15.png

  • If decisions are as expected, CHF, GBP, and EUR may slide lower.
  • Otherwise, they may rise.

Instruments to trade: EURUSD, GBPUSD, USDCHF.

Similar

USD Holds the Line
USD Holds the Line

The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now. 

US Dollar Prepares for the Pump
US Dollar Prepares for the Pump

On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies. 

Latest news

Increased Volatility is Coming
Increased Volatility is Coming

The Reserve Bank of Australia (RBA) will make a statement and release a Cash Rate on February 7, 05:30 GMT+2. It's among the primary tools the RBA uses to communicate with investors about monetary policy.

Market Crash Incoming?
Market Crash Incoming?

This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.

What Currency Will Overperform?
What Currency Will Overperform?

S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.

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