Week Ahead Preview 19th of December

As More central bank meetings are expected in the coming week across Japan and Indonesia following a busy week in which the Fed and ECB signalled further rate hikes in the coming months. The US core PCE figures and final Q3 GDP readings will also be anticipation in addition to personal income and consumption figures. Also as a result of the Christmas holidays, market Markets will have a light economic calendar in the week ahead. This will give investors the time to digest the last weeks central banks meetings updates and to think about their portfolios in 2023 to overcome the difficulty of finding where to invest.

The FOMC hiked rates by 50bp last week taking the cash rate to a 15-year high at 4.5% and 17 out of the 19 members expected that the US interest rates would be above 5% by the end of 2023. The Fed Chair welcomed the fall in inflation levels in October and November nonetheless, Powell highlighted that the central banks monetary policy is not at sufficiently restrictive policy yet and for that reason, he expected that the ongoing hikes would be appropriate.

More rate hikes are coming was the main takeaway from the latest Federal Open Market Committee (FOMC) meeting, followed by a similar hawkish tone at the ECB and a matching 50 basis point hike by the Bank of England. However, while the central bankers went to great lengths to manage expectations of the likely need for more rate hikes in 2023, the reality is that all three banks have slowed the pace of tightening.

The Bank of England hiked the rate by 50 bp last week taking the UK interest rate to 3.5%. The new policy statement contained some dovish signals as the committee expected the rate to peak at 4% hinting at another 50 bp hike in February followed by a rate hike pause the MPC nonetheless, warned that it could act if required.

Most US major indices closed in the red on Friday as investors did not like the Feds hawkish message. The US dollar recovered its losses and the Gold closed below the $1800/oz threshold. The oil price bounced back on better demand as China seemed to abandon the Covid Zero policy and the Biden administration plans to refill the US strategic reserves.

Economic data highlights

Monday 19th of December

• USD- NAHB Housing Market Index (DEC)

Tuesday 20th of December

• RBA Meeting Minutes

• BoJ Interest Rate Decision

• CAD- Retail Sales (OCT)

• USD- Building Permits (NOV)

• EUR- Consumer Confidence Flash (DEC)

Wednesday 21st of December

• EUR- GfK Consumer Confidence (Germany-JAN)

• CAD- Inflation Rate (NOV)

• USD- CB Consumer Confidence (DEC)

• USD- Crude Oil Inventories

Thursday 22nd of December

• GBP- GDP Growth Rate Final

• USD- GDP Growth Rate (Q3)

• USD- Core PCE Prices (Q3)

Friday 23rd of December

• JPY- Inflation Rate (NOV)

• CAD- GDP Growth Rate

• USD- PCE Price Index (NOV)

• USD- Durable Goods Orders MoM (NOV)

• Michigan Consumer Sentiment Final (DEC)