Economic Calendar

Tuesday, December 12

13:30 GMT

This week's key event could well be the inflation report on Tuesday, overshadowing the expected rate hold at the FOMC meeting a day later. If inflation fails to ease quickly, it could delay expectations of the Fed's first cut. A flat CPI and a decline in core CPI last month increased bets on a Q1 cut, supporting US indices and weakening the US dollar. The possibility of the Fed signalling cuts at the upcoming meeting is debatable, but early signs of deflation could prompt a major reaction in the markets, even if the Fed adopts a cautious approach the next day.

What to watch: USD, Gold, US Tech 100

Wednesday, December 13

19:00 GMT

This is the final Fed meeting of 2023, which means the FOMC will present its staff projections, the dot plots, as well as the usual statement and then a press conference with Chairman Jerome Powell. Fed Fund futures currently imply almost 100% chance of the Fed holding rates. A notable recent shift is the change in expectations for the Fed's initial rate cut, moving from May to March. Current pricing indicates a 54% likelihood of a cut. Given the forward-looking nature of markets and weaknesses in certain sectors of the US economy, anticipating cuts in the first half of next year is not entirely unfounded.

What to watch: USD, Gold, US Tech 100

Thursday, December 14

08:30 to 13:15 GMT

The three major central banks in Europe are expected to keep their policies unchanged on Thursday. The BOE has indicated a prolonged hold on the current rate, and the ECB has recently paused, with market expectations ruling out another hike. Consistently weak economic data has seen traders anticipate an ECB rate cut next year, lifting the DAX to reach fresh record highs. Similar to the Fed, a slightly dovish tone from the ECB is likely needed to justify the repricing for cuts. However, if the ECB doesn’t signal such a move next week, this may support the euro and exert some downward pressure on the DAX.

What to watch: GBP, EUR, CHF, Germany 40, UK 100