A Week in the Market: All Eyes on Central Banks (12-16 December)

It's a busy week for market players everywhere as we price in FOUR central bank decisions and a few key inflation and labor market reports. All major central banks will be in the spotlight this week as they gather for their last meetings of the year.

Fed: rate hike expected

The Fed raised its key short-term interest rate by half a percentage point Wednesday, dialing back from recent outsize hikes as it draws up an end game in its aggressive campaign to tame soaring inflation. The US Federal Reserve is expected to decide on a 50-basis point interest rate increase at its meeting. CME futures estimates that this is 90% likely to happen. If expectations come true, the USD will fall and risk assets will get a chance to appreciate.

USD: Inflation has a surprise in store

The states will present inflation statistics for November. The consumer price index is expected to fall to an average of 7.3% year-on-year, which could indicate a significant reduction in pressure. Volatility in the EUR/USD currency pair could widen considerably and sharp fluctuations in quotations cannot be ruled out.

GBP: expects support

The UK will publish statistics on industrial production and the employment market. The Bank of England will decide on monetary policy. The interest rate is expected to rise from 3% to 3.5% per annum. GBP could receive support.

EUR: strong position

The European Central Bank will meet and analyze the components of monetary policy. The interest rate is likely to increase by 50 basis points to 2.5% p.a. The EUR exchange rate is holding in a strong position, there is little that can change that now.

China: lots of statistical data

China is expected to release statistics on industrial production, investment in fixed assets, retail sales and the unemployment rate. In addition, there will be a press conference by China's National Bureau of Statistics. Strong reports will support risky asset positions.