The Week Ahead: RBA, Fed, and ECB Minutes in Focus with the BoE Taking Center Stage

Highlights

• FOMC Meeting Minutes and Fed Speakers will give more direction on Fed interest rate goals.
• Preliminary private sector PMI numbers for November will provide a snapshot of the global economy midway through Q4.
• The Autumn Statement and Bank of England speeches will put the Pound in the spotlight.

The US Dollar

On Tuesday, the FOMC meeting minutes will be the focal point. During his last speech, Fed Chair Powell said the Fed may have more work to do. However, inflation and retail sales figures suggested otherwise. The minutes could reveal more about what the Fed needs to hit the brakes on rate hikes.

Core durable goods and initial jobless claims will garner interest on Wednesday. Another rise in jobless claims would affirm a weakening labor market environment. However, Michigan consumer sentiment figures also need consideration. Upward revisions to inflation expectations and downward revisions to sentiment could signal a weaker consumer spending outlook.

Prelim private sector PMIs for November wrap up the week on Friday. The focus will be on the services PMI, with the services sector accounting for more than 70% of the US economy.

Beyond the numbers, investors must consider Fed speeches throughout the week.

The EUR

German producer prices kickstart another significant week for the EUR. A less marked decline in producer prices could signal a pickup in demand.

However, preliminary private sector PMIs for France, Germany, and the Eurozone will be of greater interest on Thursday. A less marked contraction across the private sector would support buyer demand for the EUR. Investors should consider the sub-components, including new orders, prices, and optimism.

On Friday, the German economy will be in the spotlight. German business sentiment and Q3 GDP numbers will be in focus. Weaker-than-expected numbers would impact the EUR/USD.

Beyond the numbers, ECB commentary and ECB reports need consideration.

The ECB Financial Stability Review and monetary policy meeting minutes are out on Wednesday and Thursday. ECB President Lagarde and Chief Economist Philip Lane are on the calendar to speak. A deviation from no ECB rate cut talks for the next two quarters could test buyer demand for the EUR.

The Pound

It could be a volatile week for the Pound. On Wednesday, the Bank of England Financial Stability Report will be in focus. Concerns about lending and increasing defaults would signal a deteriorating macroeconomic environment. However, the UK Autumn Statement also needs consideration. Measures to support the economy could limit the impact of a gloomy Financial Stability Report.

Away from the numbers, BoE Governor Andrew Bailey (Mon) and Chief Economist Huw Pill (Tues) are on the calendar to speak.

The Loonie

On Monday, consumer price inflation figures will deliver direction to the Loonie. However, retail sales figures will also move the dial on Friday.

With inflation and consumption in focus, Bank of Canada speeches also need monitoring. BoC Governor Macklem is on the calendar to speak on Thursday.

The Australian Dollar

On Tuesday, the RBA Monetary Policy Statement will influence the appetite for the Aussie dollar. Recent wage growth and employment figures suggest the need for a more hawkish RBA rate path. The minutes could reveal how far the RBA will go to tame inflation.

There are no Australian economic indicators to draw investor interest. However, more measures from Beijing to support growth in China would support buyer demand for the Aussie dollar.

The Kiwi Dollar

On Friday, retail sales figures will influence near-term trends for the Kiwi dollar.

From elsewhere, market sentiment toward the Chinese economy needs consideration.

The Japanese Yen

On Friday, inflation and private sector PMIs will impact the Japanese Yen. Elevated inflation keeps pressure on the Bank of Japan to exit negative rates. Hotter-than-expected inflation numbers may fuel bets on the BoJ pivoting from its ultra-loose policy.

However, weaker-than-expected private sector PMIs for November could give the BoJ some breathing room. The BoJ has expressed concerns about the macroeconomic environment.

Out of China

On Monday, the PBoC will set Loan Prime Rates. After a mixed set of economic indicators, the PBoC may leave Loan Prime Rates unchanged to assess another round of stats.

However, the markets may respond negatively to a lack of further policy easing as the housing crisis continues.