Monetary policy meetings for both Fed and ECB are on the menu the week ahead with a special focus and interest for investors on Thursday’s UK election.
Brits will decide if it’s Johnson or Corbyn. Fresh polls showed current Prime Minister Johnson’s Party has extended its lead in opinion polls. The ruling Conservatives extended their lead over the main opposition to 14%. Investors see this leading to parliament approving a Brexit deal Johnson has secured with the EU to end the political chaos.
A busy economic week is up-and-coming with focus shifting to the monthly inflation figures. The Federal Reserve bank will be holding its monetary policy meeting this week. After three consecutive rate cuts, the world’s most powerful central bank is set to hold its fire in the last meeting of 2019.
New European Central Bank President Christine Lagarde presides over her first policy meeting on Thursday. Investors will be looking to see if there is any shift in the policy making under the new leadership. Her predecessor, Mario Draghi, only recently unleashed yet more stimulus to boost a weak economy.
The US dollar was kicked lower at the beginning of December amid unimpressive data.
In the UK front, the pound posted sharp gains, as investors were pleased that the Conservatives held onto their lead in the polls.
The EUR/USD enjoyed a quiet week and posted slight gains.
GBP/USD enjoyed an excellent week, posting gains of 1.5 percent. This marked the highest 1-week gain since May.
The AUD/USD enjoyed an excellent week, climbing over 1.0%. It was the pair’s sharpest one-week gain since late October.
The Dollar/yen erased gains last week as the pair declined close to 1.0%. Investors are keeping an eye on the release of Japanese GDP, US inflation and the Fed statement.
START TRADINGLQDFXperts – The week ahead – Fed, Lagarde’s ECB debut and UK election
- On Tuesday (10.12) the UK monthly GDP report is due to come. This report is the last one before the elections and may have an outsized impact. For October, UK’s gross domestic product is forecast to rise 0.1% which would reverse the declines from the month before.
- On Wednesday (11.12) The US inflation – CPI report is out just hours before the Federal Reserve’s decision (11.12 – 19:00). Back in November, Core CPI disappointed by sliding to 2.3% yearly, losing steam after a few robust months. But, core CPI is expected to remain unchanged at 2.3% on the year.
- On Thursday (12.12) the UK election exit polls are due at 22:00. We will have information of the full results on Friday (13.12) morning. Brits are called to vote for the fourth time in as many years and after just half the usual parliamentarian term. Also, Christine Lagarde presides over her first rate decision amid a growing dispute over the ECB’s loose monetary policy.
- On Friday (13.12) the all-important consumption report – US Retail Sales – from the US is set to move the dollar. Further, the indication of Black Friday profits will be of interest.
Follow this week’s economic calendar.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, CNBC, FX street