Forecasting the upcoming week: A key week with US CPI, NFP, PMIs and plenty of central bank activity

The US Dollar (USD) stayed on the back foot this week, extending the broad slide that’s been in place since late November. The Federal Reserve’s (Fed) much-anticipated rate decision delivered few surprises, though Powell did make one thing clear: further rate hikes are off the table.

The US Dollar Index (DXY) retreated for the third consecutive week, coming close to its key support at 98.00 despite the rebound in US Treasury yields across the curve.

The NY Empire State Manufacturing Index will kickstart the US calendar on December 15 ahead of the NAHB Housing Market Index. On December 16 will come the October Nonfarm Payrolls, the ADP Employment Change Weekly, Retail Sales, Business Inventories, the flash S&P Global Manufacturing and Services PMI, and the API’s weekly report on US crude oil inventories. The usual weekly MBA Mortgage Applications come on December 17 along with the EIA’s weekly report on US crude oil stockpiles. The usual weekly Initial Jobless Claims will be released on December 18, alongside the Inflation Rate, the Philly Fed Manufacturing Index, and Net TIC Flows prints. Existing Home Sales and the final U-Mich Consumer Sentiment gauge will wrap up the docket on December 19.

In quite a positive week, EUR/USD managed to reclaim the area beyond 1.1700 the figure and advance to fresh two-month highs. Germany's Wholesale Prices and Industrial Production in the euro area will be released on December 15. The preliminary S&P Global Manufacturing and Services PMI and the ZEW Economic Sentiment in Germany and the euro bloc are due on December 16, seconded by the Balance of Trade results in the Euroland. Germany;s IFO Business Climate is due on December 17 followed by the final Inflation Rate in the euro zone, EMU’s Wage Growth and the Labour Cost Index. On December 18 comes the ECB, while Germany’s Consumer Confidence tracked by GfK and Producer Prices are expected on December 19 ahead of the ECB’s Wage Tracker and the EMU’s Current Account results and the flash Consumer Confidence print.

GBP/USD clinched its third week in a row of gains, at some point surpassing the 1.3400 hurdle for the first time since mid-October. The key UK labour market report will be released on December 16 followed by the advanced S&P Global Manufacturing and Services PMIs. The Inflation Rate is due on December 17 prior to the CBI Industrial Trends Orders. The BoE meeting takes centre stage on December 18. On December 19 comes the GfK Consumer Confidence gauge, Retail Sales, the CBI Distributive Trades and Public Sector Net Borrowing figures.

USD/JPY rose markedly this week, reversing two drops in a row, although the strong bounce faltered just ahead of the 157.00 barrier. The Tankan survey comes on December 15 along with the Tertiary Industry Index. The flash S&P Global Manufacturing and Services PMIs will be published on December 16, while the Balance of Trade results and Machinery Order are due on December 17. The weekly Foreign Bond Investment figures are expected on December 18, while the Inflation Rate and the BoJ meeting will close the domestic docket on December 19.

Another solid performance saw AUD/USD advancing to new three-month peaks just below the key 0.6700 barrier. The advanced S&P Global Manufacturing and Services PMIs are due on December 15, while Westpac’s Consumer Confidence will be published on December 16. In addition, the Westpac Leading Index comes on December 17 and the Melbourne Institute’s Consumer Inflation Expectations is due on December 18. Housing Credit figures, Private Sector Credit and Commodity Prices are all due on December 19.

Anticipating economic perspectives: Voices on the horizon

• The Fed’s Williams and Miran speak on December 15.
• The BoC’s Macklem will speak on December 16.
• The Fed’s Waller, Williams and Bostick speak on December 17.
• The ECB’s Lagarde and the BoE’s Bailey will speak on December 18.
• The BoJ’s Ueda speaks on December 19 ahead of the ECB’s Cipollone.

Central banks: Upcoming meetings/releases to shape monetary policies

• The MNB will meet on December 16 (6.50% act vs. 6.50% exp).
• The BoT will decide on rates on December 17 (1.50% act vs. 1.25% exp) along with the BI (4.75% act vs. 4.75% exp).
• The Riksbank meets on December 18 (1.75% act vs. 1.75% exp) followed by the Norges Bank (4.00 act vs. 4.00% exp), the ECB (2.00% act vs. 2.00% exp), the BoE (4.00% act vs. 3.75% exp) and Banxico (7.25% act vs. 7.25% exp). In addition, the CBRT will publish its Minutes.
• The BoJ meets on December 19 (0.50% act vs. 0.75% exp), while the RBI will release its Minutes.
• The PBoC will decide on rates on December 20 (3.00%, 3.50% act vs. 3.00%, 3.50% exp).