Although plenty of economic data is scheduled for next week, it’s the central banks that will likely create a good majority of the volatility. This is particularly true considering that a total of 5 central banks will be releasing their interest rates decisions. The list will keep forex trades on their toes when the market reopens on Sunday.

Reserve Bank of Australia

  • December 3rd
  • No Change Expected
Rundown: Current money market expectations show a slightly above 50% chance that Governor Glenn Stevens will elect to cut rates by 25 basis points. This is in stark contrast to earlier notions above 60% in October that the central bank would continue to ease monetary policy. However, with labor market gains prominent, and GDP on pace to print 3.7% annually, it remains to be seen if current economic conditions warrant another rate cut. Expect the RBA to stand pat, at least till next year.

The impending decision is likely to directly affect current resistance at 1.0500. Break above the figure would prompt a likely advance to the next resistance figure at 1.0600.

Bank of Canada

  • December 4th
  • No Change Expected
Rundown: Of all of the world’s central banks the BoC is anticipated to raise rates, before cutting them. The world’s 12th largest economy continues to benefit from domestic spending, prompting a 2.5% estimated pace of growth over the last 12 months. However, as indicated by BoC Governor Mark Carney, cracks are beginning to emerge, particularly in sluggish exports. The sentiment should keep policymakers at bay for now.

Key support at 0.9850 is likely to come into play, with a stay on rates supportive of a stronger Canadian dollar. A downside penetration of the USDCAD at 0.9850 would open scope for an extension towards 0.9799 October 4th session low.

Reserve Bank of New Zealand

  • December 5th
  • No Change Expected
Rundown: Newly established RBNZ Governor Graeme Wheeler has warned in recent past of a persistently strong New Zealand dollar in hurting the country’s manufacturing companies. The sentiment has prompted speculation of a potential cut in the overnight cash rate. However, it seems that fundamentals are additionally supportive for a rate cut, particularly with unemployment surging last quarter. Statistics New Zealand reports showed that unemployment surged to 13-year high in the last three month period. Expect any potential RBNZ recognition of slower near term economic growth to churn bearish speculation.

The pivotal barrier for NZDUSD rests in the 0.8350 resistance figure. Look for the spot rate to either fail or break higher from this figure. A failure would prompt a decline to initial support just below 0.8100.

European Central Bank

  • December 6th
  • No Change Expected
Rundown: Nothing new is expected from the European Central Bank - with policymakers likely keeping the rate at the current 0.75%. Potential questioning will emerge in the post decision press conference over the current condition of relatively higher inflation – which still rests just shy of the ECB’s target band – as well as the state of lower debt costs for both Spain and Italy as it pertains to potential OMT execution.

Psychological resistance at 1.3150 remains the lone barrier to break higher in the EURUSD pair. Upside penetration of the figure would shift focus towards a test of 1.3200.

Bank of England

  • December 6th
  • No Change Expected
Rundown: Another central bank expected to keep rates unchanged, the BOE announcement will be scrutinized for any additions to the current asset purchase program. Although chances are slim, there still remains a possibility that central bankers will prefer to add to stimulus now, adding another 25-50 billion pounds to the mix. The sentiment is being supported by recent comments made by Deputy Governor Charlie Bean. Bean noted in an earlier Bloomberg News interview that the central bank hasn’t “closed the door forever on further asset purchases”.

GBPUSD upside is possible, but remains contingent on a break above the 1.6100/1.6125 resistance area. Failure to breach the upside barrier would spark a decline to 1.5835 at the very least.