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The Week Ahead – Heavyweight data and central bank decisions before year’s end

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EURUSD awaits double catalyst

The euro is consolidating as the central banks prepare to fire their last rounds of the year. Expectations of inflation remain high in the eurozone, which will boost the probability of a 50 bp increase by the ECB. The greenback is driving market dynamics. Despite the euphoria from Powell’s hint of slower tightening, robust jobs and services data have sowed doubt about the terminal rate, which may end up above 5% if the Fed vows to keep interest rates restrictive for a prolonged period of time. Only a soft US CPI reading would keep the pivot hope alive, and the dollar under control. 1.0900 The next hurdle is 1.0300 The first support.

GBPUSD braces for volatile week

The pound steadies ahead of key economic data and the BoE’s policy meeting. Sterling continues to recover after the previous administration’s mini-budget fiasco, which suggests that traders have regained faith in the UK’s policymaking. As the BoE rate decision is made on Thursday, volatility could be caused by inflation and employment. Andrew Bailey, Governor of the Bank of England, has tried to manage market expectations by stating that the peak rate might be lower than what is currently priced in. The market expects a 50 bp rate increase ,…



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