We’ve got a couple more major central banks scheduled to make their rate statements this week, plus a fresh batch of inflation readings and consumer spending data!
Before all that, ICYMI, I’ve written a quick recap of the market themes that pushed currency pairs around last week. Check it!
And now for the closely-watched economic indicators on the calendar this week:
BOJ monetary policy statement
After last week’s set of central bank decisions, we have another potential big mover this week!
BOJ head honcho Ueda and his fellow policymakers are widely expected to keep interest rates on hold at current levels while maintaining their pace of easing for the time being.
Still, additional volatility might come around for yen pairs during actual BOJ announcement and presser on December 19, as any slight shift in tone could impact policy expectations in the near-term.
Some say that the Japanese central bank might start veering away from its easy monetary policy bias, as policymakers could hint at a framework for eventually lifting interest rates from negative territory.
After all, 10-year JGB yields have fallen and the Japanese yen has appreciated since their October meeting, which suggests that the BOJ might have room to tighten. Then again, policymakers are likely to sit on their hands for the time being and opt for then wage negotiations in April before taking actual action.
PBoC monetary policy decision
Another central bank statement worth watching out for this week is the People’s Bank of China’s policy statement on December 20, 1:15 am GMT.
No actual changes to the 1-year (3.50%) and 5-year (4.20%) prime loan rates are eyed, but it’s worth noting that the latest round of Chinese data points turned out mixed.
In particular, industrial production beat expectations with a 6.6% year-over-year gain while retail sales came up short with a 10.1% year-over-year gain versus the expected 12.6% increase.
Inflation reports
A fresh round of inflation figures are lined up from Canada, the U.K. and the U.S. later in the week, and these might shape policy expectations for their respective central banks in the coming months.
First up, Canada’s CPI figures are due on December 19, 1:30 pm GMT and analysts are counting on dips in price pressures. Headline CPI could fall by 0.2% month-over-month in November while the median CPI might dip from 3.6% to 3.3% year-over-year.
Next, the U.K. economy might show another drop in inflationary pressures when the U.K. CPI figures are printed on December 20, 7:00 am GMT.
Headline inflation could fall from 4.6% to 4.3% year-over-year while core CPI could dip from 5.7% to 5.6%. Weaker than expected results could reinforce rate cut bets for the BOE, which might spell downside for GBP pairs.
Last but certainly not least is the U.S. core PCE price index lined up on December 22, 1:30 pm GMT. The Fed’s preferred inflation measure might indicate another 0.2% month-over-month uptick for November, which could be enough to underscore the FOMC’s preference for sitting on its hands for the time being.
Still, watch out for downbeat data that might spur rate cut bets for next year!
Retail sales reports
Other top-tier releases to keep tabs on this week are consumer spending reports from the U.K. and Canada, as these could shed more light on whether or not their economies warrant monetary policy changes.
Canada’s retail sales data due December 21, 1:30 pm GMT might show a 0.7% month-over-month increase in headline consumer spending and a 0.6% increase in core retail sales. This would be quite an improvement over the earlier 0.6% uptick in headline retail sales and 0.2% gain for the core figure.
The U.K. retail sales report due December 22, 7:00 am GMT might show a 0.5% month-over-month rebound in spending for November, following the earlier 0.3% decline.
