Several largest American companies will publish their financial results this week. BTCUSD and XAUUSD are skyrocketing. What's going on in the markets?
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.
- 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.
- 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.
- If decisions are as expected, CHF, GBP, and EUR may slide lower.
- Otherwise, they may rise.
Instruments to trade: EURUSD, GBPUSD, USDCHF.
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