MS 
EN 
FR 
ES 
KO 
PT 
ZH 
AR 
FA 
RU 
NL 
VI 
PH 
TH 
ID 
Leaving a heavy week behind us, full of key risk events, we slowly start to approach the Christmas holiday period. The coming week is expected to provide a number of important financial indicators, yet we also tend to zoom in two interest rate decisions by central banks, namely BoJ’s and BoE’s, both on Thursday. Also, on the monetary front we get from Australia RBA’s meeting minutes on Tuesday. As for financial releases, the calendar is full, from Monday to Friday, however the preliminary PMIs of the Eurozone and the UK for December on Monday are expected to draw additional attention. The same applies for UK’s employment data for October on Tuesday, Canada’s inflation rates for November on Wednesday and Australia’s employment data for November on Thursday. As for political issues which could move the markets, after the fuelling of hopes for the US-Sino relationships we could expect further developments on the issue and as for the pound we would not be surprised to see further Brexit developments after the Conservatives won the UK elections.
USD – US-Sino relationships in focus.
The current week seems to end with hopes regarding the improvement of the US-Sino trade relationships being stronger. It should be noted though that during the day, further developments could take place, as well as during the weekend. On Thursday, media reported that the US reached in principle a phase 1 trade deal with China. Also, statements made by US officials and a tweet from US President Trump seem to support such a notion. Should the development be confirmed, we could see the planned US tariffs for December 15th being delayed and even see some existing tariff levels being reduced, in an improvement of the trade relationships of the two countries. Yet further announcements could predispose the market’s sentiment before Sunday’s deadline. Please bear in mind that an official Chinese response is still pending. On the monetary front, after the Fed’s interest rate decision last Wednesday, we could see some interest surrounding speeches of Fed’s policymakers, delivered mostly on Wednesday and Thursday. As for financial releases from the US, we tend to focus on the release of the final GDP growth rate for Q3 on Wednesday and the industrial production growth rate for November on Tuesday. On second base we would also like to mention the release of the preliminary Markit PMIs for December on Monday, the Philly Fed Business index for December on Thursday and finally on Friday the consumption rate for November and the preliminary University of Michigan Consumer Sentiment for December.
.PNG)
GBP – BoE and employment data eyed
The pound soared after the UK elections on Thursday, as the results showed a landslide victory for Boris Johnson and the Tories. The results seem to show that the Conservatives are about to secure 364 seats in the UK Parliament (1 seat still pending), providing the Tories with the long seeked comfortable majority, of 38 seats as these lines are written. Such a substantial majority could enable Boris Johnson to pass his Brexit deal with the EU, practically enabling the UK to reach Brexit. It was characteristic that Boris Johnson stated “We will leave the EU on 31st of January; no ifs, no buts”. The wide majority of the Conservatives in the UK Parliament could also act as a cushion for any repercussions which are to follow with the EU, about the country’s trade relationships. Hence we expect Brexit developments to be rapid. On the monetary front pound traders are expected to focus on BoE’s interest rate decision on Thursday. The bank is widely expected to remain on hold at +0.75% and GBP OIS imply a probability of 97.14% for such a sccenario currently. We could see some optimism in the Bank’s accompanying statement deriving from a possible improvement of UK’s outllook. On the flip side UK’s weak financial data underscore the toll payed by the UK economy, from the prolonged Brexit period and could limit such an optimism. Also the financial stability report is to be released on Monday and any comments made by the BoE Governor in the following press conference are expected to be scrutinised by analysts for any hints on monetary policy. As for financial releases, pound traders are to have a busy week ahead, as on Monday we get the preliminary PMIs for December. We expect the Services PMI to be closely watched, albeit it should be noted that all the PMIs for November, had indicated a contraction of economic activity, with readings below the cutoff point of 50.0. Other important financial releases for the pound to watch out for, are to be the UK employment data for October on Tuesday, the inflation rates for November on Wednesday and the retail sales growth rates for November on Thursday. All of the above releases could be gaining additional attention as they are relased before the BoE interest rate decision.
.PNG)
EUR – Preliminary PMIs to be closely watched
The ECB interest rate decision stirred little volatility for the common currency. It was the first monetary policy meeting of the bank with Christine Lagarde at its helm. Lagarde seemed to manage nicely through the press conference, leaving a good impression, yet little was actually said of substance, which could unlock the bank’s future intentions. Hence the event passed with little volatility for the common currency. Speeches and statements from ECB policymakers could make an impression in the coming week as they follow the bank’s interest rate decision. On the political front, the EUR seemed to gain from the UK elections as the prospect of a swift ending to the uncertainty deriving from Brexit seems to strengthen. We could see the negotiations with the UK also provide some volatility for the common currency as well as the prospect of an improvement in the US-Sino relationships. As for financial releases EUR traders are expected to be on the edge of their seats for the release of the preliminary PMIs for December on Monday during the European session. The first effect for the common currency is expected to be delivered with the French PMIs, yet the German manufacturing PMI could be getting a substantial share of attention. Should there be substantial improvement in the readings, we could see the EUR getting a lift as arguments that the area has bottomed out could strengthen further. On second note EUR traders could be watching out for Germany’s Ifo Business Climate indicator on Wednesday, the more foreward looking Germany’s GfK Consumer Sentiment for January on Friday as well as Eurozone’s preliminary consumer sentiment for December.
.PNG)
JPY – BoJ’s interest rate decision front and center.
The Japanese currency was once again heavily influenced by safe haven flows last week. It was characteristic that the Yen weakened against the USD during Thursday’s American session and onwards, as the risks deriving from the US-Sino relationships retreated and a more risk on sentiment seemed to push JPY lower. We expect the Japanese currency to maintain its safe haven qualities next week as well, as the US-Sino relationships seem to be slowly improving. On the flip side we have to mention that further developments are still uncertain as the Chinese side has not yet confirmed the US statements. Hence, we would feel far more comfortable with an official statement of the White House for a possible delaying of the US tariffs on Chinese imports. On the monetary front JPY traders have been watching statements from BoJ’s officials coming and going. The monetary policy of BoJ seems to be aligned with the fiscal policy of the Japanese government yet worries intensify. It was characteristic that BoJ’s Amamiya two days ago seemed to be sending dovish signals as he stated that an easing bias would be appropriate for the BoJ. On Thursday’s Asian session, BoJ will be releasing its interest rate decision and currently seems widely expected to remain on hold at -0.10%, as JPY OIS imply a probability of 92.36% for such a scenario. Also, the recently announced by the Japanese government, fiscal stimulus could be providing some breathing space for the BoJ. We could see the bank maintain a wait and see position, especially regarding a possible improvement of the US-Sino relationships. On the other hand, be advised that the bank in its last meeting had sent a quite dovish signal and Japan’s economic data do not seem to generate substantial hope. Should the bank maintain the current rate level, we could see it once again sending out dovish signals to the market. As for financial releases, the main release for JPY traders could be Japan’s CPI rates for November on Friday, which could be one of the key drivers for the BoJ. Also, on Thursday we get Japan’s trade data for November, which could gather some interest for JPY traders.
AUD – Chinese data and Australian employment data to dominate
The Aussie continued its bullish course against the USD reaching an almost 5 month high today during the Asian session. The hopes about the US-Sino relationships improving strengthened further the Australian currency. Should there be further improvements, we would not be surprised to see the Aussie making further gains and vice versa. On the monetary front we expect the release of RBA’s last meeting minutes to generate some interest among Aussie traders. In its last meeting the bank had decided to keep rates unchanged and maintained a rather neutral tone, which strengthened the Aussie as it seemed to send any further cuts, a bit further into the future. We could see analysts scrutinising the document upon its release on Tuesday for any further clues on what would make the bank tick. Also the speech of RBA’s Jonathan Kearns on Monday could make some headlines. As for financial releases, Aussie traders will be the first to start the week, with the release of Australia’s PMIs for December during Monday’s early Asian session. Also during Monday’s Asian session we get a number of financial releases from China. The main Chinese release seems to be the industrial output growth rate for November, however also the retail sales growth rate for the same month could be attracting Aussie trader’s attention. The main release though for the AUD could be Australia’s Employment data for November on Thursday. The release gets particularly interesting as in the October data the Employment Change figure dropped into the negatives giving an unpleasant surprise for AUD traders, at the time.
.PNG)
JA 
