WEDNESDAY IS FED DAY
A deluge of market-moving events will make headlines on Wednesday, as all eyes turn to the Federal Reserve’s final policy meeting of the year.
Action begins at 06:00 GMT with a German report on the wholesale price index. One hour later, the German government will report on the final November consumer price index (CPI). Annual inflation in Europe’s largest economy is forecast to come in at 1.8% year-over-year. The harmonized index of consumer prices (HICP) is expected to hit the same level.
The United Kingdom will release headline employment data at 09:30 GMT. The number of unemployed workers is expected to rise by 3,200 in November following an increase of 1,100 the month before.
Unemployment, as calculated by the International Labour Organisation (ILO) standard, is expected to dip to 4.2% in the three months through October from 4.3%.
Meanwhile, average hourly earnings are expected to rise 2.5% annually in the three months through October.
Shifting gears to the Eurozone, Brussels will report on industrial production and employment at 10:00 GMT. Output in the 19-nation Eurozone is expected to rise 3.5% annually in October despite registering no growth month-on-month.
Overall employment is also expected to rise 0.4%.
In the United States, the Labor Department will issue its official consumer price index (CPI) at 13:00 GMT. Annual inflation in the world’s largest economy is expected to rise 2.2% annually in November, following a 2% gain the previous month.
The Federal Open Market Committee (FOMC) will deliver its rate verdict at 19:00 GMT. Policymakers are widely expected to vote in favour of a 25 basis-point increase in the federal funds rate, bringing it to 1.5%.
The Fed will also release a revised summary of economic projections covering GDP, unemployment, and inflation. It will be the last projection under the guidance of Chairwoman Janet Yellen. In February, she will be replaced by Fed governor Jerome Powell.
Europe’s common currency tumbled to three-week lows on Tuesday, as investors turned their attention to the US Fed. The EUR/USD exchange rate was in recovery mode Wednesday, where it gained 0.2% to 1.1756. Its short-term outlook will be governed by the upcoming Fed decision.
Cable has declined sharply in recent sessions, as sterling gave back some of last week’s rapid gains. GBP/USD was last seen trading around 1.3330. Wednesday is expected to be an active session for the pair amid UK data and Fed policy.
The Canadian dollar has been on a sharp downward spiral for nearly a week after the Bank of Canada tempered expectations about future rate hikes. The USD/CAD approached 1.2900 on Tuesday, but has since tempered its gains. Prices were last seen consolidating around 1.2852, having declined 0.2% from the previous close.