Forecasting the upcoming week: Global PMIs kick off another heavy rate call week

The US Dollar Index (DXY) posted a strong week, climbing nine-tenths of a percent and battling the 107.00 handle as market sentiment tentatively pivots back into the safe haven Greenback. Next week will see a continuation of US-centric market focus: US Purchasing Managers Index (PMI) figures are due on Monday, but the key event next week will be the Federal Reserve’s (Fed) final rate call of 2024 on Wednesday. Markets are widely anticipating a third straight quarter-point rate trim for 25 bps, but a recent upswing in US inflation metrics could begin to challenge market hopes for a continued rate cut schedule heading into 2025. Next Friday will round out a tense week with a fresh update to US Core Personal Consumption Expenditures Price Index (PCEPI) inflation data for November.

EUR/USD caught a mild bullish recovery on Friday, sticking close to the 1.0500 level, but the battered Fiber remains below 1.0600 as Euro traders find few reasons to bid Fiber up further from a recent plunge below 1.0400. European Central Bank (ECB) President Christine Lagarde is due to give a flurry of appearances on Monday. Still, meaningful and actionable soundbites are unlikely to be had as ECB President Lagarde sticks close to a common, soothing narrative.

GBP/USD lost its footing this week, dropping back into touch range of 1.2600 after the pair flubbed a technical recovery. Cable bulls tried but failed to recapture the key 200-day Exponential Moving Average (EMA) newar 1.2820 early in the week, but GBP positioning proved to be too anemic and the pair is now waffling back into familiar territory on the low end. After a week of little to no meaningful UK economic data, GBP releases return in a hurry. UK PMI figures are due on Monday, followed by UK labor numbers on Tuesday, UK Consumer Price Index (CPI) inflation on Wednesday, and finally a fresh rate call from the Bank of England (BoE) on Thursday. The BoE is expected to vote seven-to-two in favour of keeping rates held steady for the time being.

USD/JPY reversed a recent decline this week, jumping back above 152.00 and making tracks toward the 154.00 handle. A 0.7% gain on Friday capped off a fifth straight gain for the pair as the Greenback steps higher against the Yen, with USD/JPY capturing a hair over 2.5% over the course of the week. Yen traders will be hunkering down for the wait until Thursday’s early Asia session, where the Bank of Japan (BoJ) will be delivering another rate call. The eternally-dovish BoJ is expected to maintain its policy rates once again, but JPY market participants will be keeping a close eye out for any hints about policy direction from the BoJ’s Press Conference following its rate call.

Key events next week

Central bank appearances and rate calls next week