A Week in the Market: Focus on Central Banks' Decisions (11-15 December)

This week will be entirely devoted to the activities of central banks, mainly centred around their strategic decisions on borrowing costs. Investors will undoubtedly require both resilience and composure.

GBP: back on stage

The UK is finally returning to the macroeconomic scene, preparing to release data on unemployment, industrial production, and the final GDP for October. The Bank of England will hold a meeting on Thursday and will likely keep the interest rate at 5.25% per annum. While this could be neutral news for the GBP, much will depend on the details.

USD: awaiting the Feds decision

This week‘s key event will be the US Federal Reserve’s interest rate decision, which will likely remain at 5.50% per annum. The market will be primarily interested in the regulators assessment of future actions, particularly forecasts for the end of Q1 2024 regarding the interest rate size. While the USD maintains a strong position, clear signals of the upcoming rate reduction may change the situation.

EUR: the ECB is unlikely to surprise

The European Central Bank will hold a meeting and likely leave the interest rate unchanged at 4.50% per annum. There is little room for intrigue, but the central bank‘s comments on the key macroeconomic data will be critical. At the same time, the EUR exchange rate dynamics will depend more on the USD movements than on the regulator’s decisions.

NZD: all eyes on the GDP

New Zealand is set to publish the GDP data for Q3 2023. The economy is expected to have grown by merely 0.2% q/q, while the previous quarter showed growth of 0.9%. If the data fails to meet expectations, the NZD exchange rate will likely decline.

JPY: a significant volume of statistics

Japan will present a substantial block of significant data, including the Tankan services and manufacturing PMIs for Q4. The figures are anticipated to show considerable growth, which could be good news for the countrys economy and the JPY exchange rate.