Investors’ attention will be shifted away from the US this week as markets expect two major central banks’ rates decisions with the ECB president Lagarde’s speech.
The NFP report released on Friday revealed that the US economy added more than the expected number of 200K jobs as the actual figure for November came at 236K jobs, the unemployment rate stabilized as expected at 3.7%, while the average hourly earnings for November 5.1% came in higher than expected of 4.6%. This data highlighted that the Fed needs to do more work to push inflation back to the 2% boundary.
On the other side of the pond, the EU sanctioned Russia by setting a price cap on its seaborne oil at $60 a barrel, while Russia warned of a possible output reduction as a response to this sanction. Nonetheless, this update’s effect was muted on the oil price as markets already anticipated such a move. On the other hand, oil traders will follow the Chinese Covid-Zero policy in terms of its effect on the country’s demand, especially after last week’s unexpected protests.
The US dollar extended losses last week on the Fed’s chair’s statements of a possible moderation of the rate hike pace as soon as December combined with the Personal Consumption Expenditure's numbers (the Fed's favorite data to measure inflation) of October that came in line with expectations of 5% falling from previous data at 5.2%. As a result, commodities such as gold rallied by 2.5% and most of the US major indices closed in the green on Friday.
Economic data highlights
Monday 5th of December
Tuesday 6th of December
- EUR- Global Services PMI Final (NOV)
- GBP- Global/CIPS UK Services PMI Final (NOV)
- EUR- Retail Sales (OCT)
- USD- Global Services PMI Final (NOV)
- USD- ISM Non-Manufacturing PMI (NOV)
Wednesday 7th of December
- RBA Interest Rate Decision
- GBP-Retail Sales (NOV)
- CAD-Balance of Trade (OCT)
- ZAR- GDP Growth Rate Q3
Thursday 8th of December
- AUD -GDP Growth Rate (Q3)
- CHF- Unemployment Rate (NOV)
- EUR- GDP Growth Rate (Q3)
- BoC Interest Rate Decision
- ZAR- Foreign Exchange Reserves (NOV)
Friday 9th of December
- JPY- GDP Growth Rate (Q3)
- ECB President Lagarde’s Speech
- ZAR- Current Account Q3
- ZAR- Manufacturing Production (OCT)
Central Banks Rates Decisions
- CNH-Inflation Rate (NOV)
- USD-PPI (NOV)
- USD- Michigan Consumer Sentiment (DEC)
The RBA board will meet this week to decide on monetary policy and while the Australian inflation levels remain elevated (CPI headline at 7.3% Q3-2022) it’s highly likely to see the central bank hiking rates in its upcoming meeting by 25 bp taking the current rate from 2.85% to 3.10%.
The Bank of Canada is likely to hike rates in its upcoming meeting for the same reason (controlling high inflation levels combined with a tight labor market). Therefore, the central bank may hike rates by 50bp taking the cash rates from 3.75% to 4.25%.
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