UK: Weekly FX Market Update 12 December
This week includes a host of data releases - UK GDP, Unemployment Data, CPI & Retail Sales are all released.
The BoE sets interest rates on Thursday, with the market expecting a 0.50% hike.
Will the rate hike keep the pound buoyant?
The pound has continued to climb higher against the US Dollar and Euro since September. Will the recent Sterling strength continue or will the data releases bring it to an end?
Last week Eurozone GDP was revised up to 0.3%, a positive surprise.
The ECB sets interest rates on Thursday – Does Lagarde have a Christmas surprise for the market?
With inflation at 10%, a Reuters poll shows 51 out of 60 economists favour a 0.50% rate hike to 2.0%.
Last month’s US CPI disappointed the market, by surprisingly dropping to 7.7%. The next reading is on Tuesday, with an expectation of 7.3% - what impact could this have on the FOMC decision the following day?
Bloomberg WIRP shows a 0.5% rate hike is expected from the Fed on Wednesday, inline with the hikes expected from the ECB and BoE.
The US$ Index has fallen 10% since September, will this weakness continue?
The US Treasury 10 year yield has inverted, implying that a recession is the Bond markets major fear, rather than inflation. Will the Fed agree?
This could be the last full trading week of the year, will investors use the liquidity to hedge or will they risk giving themselves indigestion over Christmas as they worry about possible volatile market moves?
Events for the weekend ahead:
Mon Dec 12
07:00 GBP GDP/Industrial Production
Tue Dec 13
07:00 GBP Claimant Count Change/Average Earnings/Unemployment Rate
11:00 GBP BoE Bailey Speaks
13:30 USD CPI
07:00 UK CPI
19:00 US FOMC Interest Rate Decision/Press Conference
Thu Dec 15
12:00 GBP BoE Interest Rate Decision/Statement
13:15 EUR ECB Interest Rate Decision/Statement
13:30 USD Retail Sales
13:45 EUR ECB Press Conference
Fri Dec 16
07:00 GBP Retail Sales
09:00 EUR Flash Manufacturing/Services PMI
09:30 GBP Flash Manufacturing/Services PMI
10:00 EUR Final CPI/Trade Balance