Forex Fundamentals of the Week (6 – 10 December): 2 Major Central Bank Decisions and US CPI
ZFX – In our Forex Fundamentals this week, we’re going to have a very busy week as we have the RBA and the Board of Commissioners rate decisions, plus the U.S. CPI release!
What do analysts expect from each top-level event?
Key Economic Events:
RBA rate statement (7 December, 22:30 GMT+7)
Australia’s central bank is widely expected to keep rates at 0.10% once again.
Despite some notable improvements in the Land-Down-Under’s economic performance, policymakers are likely concerned about the Omicron variant that might drive another downturn in growth.
In their previous rate statement, the RBA had signaled that their first rate hike would not occur until 2024 due to weak price pressures and other uncertainties.
ZEW economic sentiment figures (December 7, 17:00 GMT+7)
The euro zone and its main economy, Germany, will print the results of the ZEW economic survey for December.
Germany’s figure could fall from 31.7 to 25.9 while the region-wide index may fall from 25.9 to 22.4, reflecting weaker optimism among institutional investors.
Board of Commissioners rate statement (8 December, 10:00 pm GMT+7)
The Board of Commissioners is also likely to remain silent for the time being, keeping interest rates on hold at 0.25% again.
The jobs data was stronger than expected in the past month, which may be enough for Canada’s central bank to shift to a slightly more upbeat stance.
However, policymakers are also likely to be concerned about changes in crude oil prices and how the new COVID-19 variant could affect growth and trade.
U.S. CPI (10 December, 20:30 GMT+7)
Slightly slower price pressure is observed from Uncle Sam, as the headline CPI is likely to fall from 0.9% to 0.7% while the core figure may fall from 0.6% to 0 ,5%.
A weaker-than-expected result could further undermine tightening expectations, particularly with the Omicron variant forcing policymakers to take a wait-and-see approach.
Meanwhile, when viewed technically, the daily market structure for the British currency, GBP, when compared to the greenback looks very bearish, with the moving averages below the 50, 100, and 200 lines.
Will GBP continue to weaken? There is no certainty for that. However, GBP/USD possibly will head to the next support at 1.31500 in the near term.
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