We head to the most important week for the markets before the year ends. The Federal Reserve Bank is likely to raise the Funds Rate for the first time in nearly a decade on Wednesday. The surveys show that the odds for such move are highest than even before, however, a small part of economists have their doubts. The market forecasted a rate hike by a quarter percentage point to 0.50% from 0.25% that has been since December 2008. I would expect the markets to be quiet before the Fed’s historical announcement, as well as the other economic indicators that are not related with the decision, to go unnoticed to the traders.
[B]Monday [/B]will be a quiet day with limited news on the macroeconomic front. In Eurozone, Industrial Production is expected to show a small growth of 0.1% in October following two consecutive months of contraction, 0.3% in September and 0.4% in August.
Overnight, the Reserve Bank of Australia will publish the minutes of the last policy meeting and the Australian Bureau of Statistics will post the House Price index and the New Motor Vehicles Sales for November. In New Zealand, the Budget Balance and the Economic Forecasts regarding government’s financial position will be out.
On [B]Tuesday[/B], there are important economic releases from UK, US and Eurozone as well. During the European morning, the UK National Statistics will release the inflation rate for November. The consumer prices are expected to have risen by 0.1% in November while are forecasted to decline by 0.1% for the third consecutive month if you compare with the corresponding months of the previous year. The producer price index and the retail price index will be out as well.
A while later, the German ZEW Survey is expected to show an improvement in the current condition and economic sentiment of Germany and Eurozone’s as a whole. The Employment Change in Euro Area for the third quarter of the year will be out.
On the second half of the trading session, US will release its inflation rate for November. All the announcement will be closely watched as the two-day crucial Fed meeting starts on Tuesday, and all the latest economic data will be taken into account. The market consensus support that consumer prices remained flat in November versus 0.2% the previous month while they rose by 0.5% compared to November before. The NAHB Housing Market will be out as well.
In New Zealand, the current account for Q3 is scheduled to be released, as well as the Australian CB Leading Indicator. Overnight, the Reserve Bank of New Zealand will publish its Inflation Expectations for the next two years.
[B]Wednesday [/B]is the most important day of the week and not only for the dollar! Fed will announce its interest rate decision. Before that, during the European morning the preliminary Markit Manufacturing and Services PMIs for Eurozone, Germany and France will be released. In UK, the employment report will be strongly eyed. The unemployment rate for the three months to October is predicted to have remained at the record low of 5.3%. The Claimant Count Change, the number of unemployment people in UK, is expected to have increased by 1.5k in November, lowest than the record high of 3.3k in October. The average weekly earnings are expected to have grown by 2.5%, slowest pace than before the 3% before.
The inflation rate in Eurozone is expected to show that consumer prices declined slightly by 0.1% in October. In US the Housing Markets and the Building Permits for November will be out as well as the Industrial Production and Capacity Utilization for the same month. The Swiss National Bank will release the Quarterly Bulletin for the final quarter of the year.
[B]At 19:00 GMT[/B] [B]Fed will announce its Interest Rate decision or any other adjustments to the monetary policy if there are any![/B] Last time Fed raised its benchmark interest rate was on June 2006. The surveys show that the odds for such move are highest than even before, however, a small part of economists have their doubts. The market forecasted a rate hike by a quarter percentage point to 0.50% from 0.25% that has been since December 2008. If such move occurs will panic the markets despite the preparation from Fed policymakers’ comments. Alongside with the decision the central bank will publish the FOMC Economic Projections and a half hour later a press conference from Fed Chairwoman Janet Yellen will complete the picture. In New Zealand, the GDP growth for the third quarter will be out.
On [B]Thursday[/B], the German IFO Survey for November will be out early in the morning. The Norges Bank will have a policy meeting – no changes are expected. In UK, the Retail Sales for November are expected to have grown by 0.5% from a decrease of 0.6% before. In Eurozone, the Construction Output for October will be out. In US, Current Account for Q3, the weekly jobless claims and the CB Leading Indicator for November will be published, as well as the results of the Philadelphia Fed Manufacturing Survey. During the night, Bank of Japan will have its policy meeting and will publish their interest rate decision. The Monetary Policy Statement and a press conference will follow.
On [B]Friday[/B], Eurozone’s current account for October will be out. In Canada, the inflation rate for November will attract some attention. From US, the preliminary Markit Services PMI for December will complete the Composite PMI. The growth of the services sector is expected to have slowed down.