The main event of the week will be the FOMC Policy Decision, but we will also have the BoE and BoJ releasing their policy decisions and get lots of top tier data points.

UK Employment (Tue):

The UK Employment in the three months to October is expected at -12K vs. 219K prior, while the Unemployment Rate is expected to remain unchanged at 4.3%. The Average Earnings Ex-Bonus is expected at 5.0% vs. 4.8% prior, while the Average Earning including Bonus is seen at 4.6% vs. 4.3% prior.

This report is unlikely to change the market’s expectations for the BoE to remain on hold this week unless we see huge downside deviations from the forecasts, especially on the wage growth side.

Canada CPI (Tue):

The Canadian CPI Y/Y is expected at 2.0% vs. 2.0% prior, while the M/M figure is seen at 0.1% vs. 0.4% prior. The Trimmed-Mean CPI Y/Y is expected at 2.6% vs. 2.6% prior, while the Median CPI Y/Y is seen at 2.4% vs. 2.5% prior. 

The BoC recently dropped the line saying “if the economy evolves broadly in line with our latest forecast, we expect to reduce the policy rate further", which suggests that we reached the peak dovishness and the central bank will now switch to 25 bps cuts and will slow the pace of easing.

US Retail Sales (Tue):

The US Retail Sales M/M is expected at 0.5% vs. 0.4% prior, while the ex-Autos M/M measure is seen at 0.4% vs. 0.1% prior. The focus will be on the Control Group M/M figure which is expected at 0.4% vs. -0.1% prior.

Consumer spending has been stable which is something you would expect given the positive real wage growth and resilient labour market. We’ve also been seeing a strong pickup in consumer sentiment/confidence reports which suggest that consumers’ financial situation is stable/improving.

UK CPI (Wed):

The UK CPI Y/Y is expected at 2.6% vs. 2.3% prior, while the M/M figure is seen at 0.1% vs. 0.6% prior. The Core CPI Y/Y is expected at 3.6% vs. 3.3% prior, while the Services CPI Y/Y is seen at 5.1% vs. 5.0% prior.

As previously mentioned, the data is unlikely to change the market’s expectations for the BoE to remain on hold this week unless we see huge downside deviations from the forecasts. The market sees an 87% probability of no change at this week’s BoE’s decision and roughly three 25 bps cuts in 2025.

FOMC Meeting (Wed):

The Fed is expected to cut by 25 bps bringing the FFR to 4.25-4.50%. We will also get the updated Summary of Economic Projections (SEP) where growth and inflation should be revised upwards, and the Dot Plot will likely show two rate cuts in 2025. Fed Chair Powell should acknowledge the strength in the US data and announce a slowdown in the pace of easing.

This should be already priced in as the market expects just two rate cuts in 2025 with the first one coming in March at the earliest. Therefore, market participants will look for deviations from the expectations and the data in Q1 2025 will have the final say.

BoJ Meeting (Thu):

The BoJ is expected to keep interest rates unchanged with the market pricing a 77% probability for such a move. A couple of weeks ago a rate hike was the most probable action but the chances dwindled as the JPY strengthened.

The data has been in favour of a hike but not really screaming for it. The recent “leaks” talked about the BoJ seeing little cost in waiting, so the market switched its focus to the January’s meeting, although there are higher chances for a hike in March.

The focus will be on the forward guidance with the market participants taking clues from Governor Ueda’s Press Conference.

BoE Meeting (Thu):

The BoE is expected to keep the Bank Rate unchanged at 4.75%. Dhingra is expected to be the lone dissenter. The recent inflation data came on the hotter side and BoE speakers seem to be in favour of “gradual” easing which point to a rate cut every quarter, as touted already by Governor Bailey.

Japan CPI (Fri):

The Japanese Core CPI Y/Y is expected at 2.6% vs. 2.3% prior. We saw already the Tokyo Core CPI beating expectations, so it shouldn’t influence market expectations too much although an upside surprise after a potentially hawkish BoJ hold could give the JPY a boost.

US PCE (Fri)

The US PCE Y/Y is expected at 2.5% vs. 2.3% prior, while the M/M measure is seen at 0.2% vs. 0.2% prior. The Core PCE Y/Y is expected at 2.8% vs. 2.8% prior, while the M/M figure is seen at 0.1% vs. 0.3% prior.

Forecasters can reliably estimate the PCE once the CPI and PPI are out, so the market already knows what to expect. Therefore, unless we see a deviation from the expected numbers, it shouldn’t affect the current market’s pricing.

Disclaimer

This material is provided for informational purposes only and does not constitute financial, investment, or other advice. The opinions expressed in this material are those of the author and do not necessarily reflect the views of Trive International. No opinion contained in this material constitutes a recommendation by Trive International or its author regarding any particular investment, transaction, or investment strategy. This material should not be relied upon in making any investment decision.

The information provided does not consider the individual investment objectives, financial situation, or needs of any specific investor. Investors should seek independent financial advice tailored to their individual circumstances before making any investment decisions. Trive International shall not be liable for any loss, damage, or injury arising directly or indirectly from the use of this information or from any action or decision taken as a result of using this material.

Trive International may or may not have a financial interest in the companies or securities mentioned. The value of investments may fluctuate, and investors may not get back the amount they originally invested. Past performance is not indicative of future results.  

For more information about Trive International, please visit http://trive.com/int  

Additional Information 

Investing involves risk, including the potential loss of principal. Diversification and asset allocation strategies do not ensure a profit or guarantee against loss. The content in this material is subject to change without notice and may become outdated or inaccurate over time. Trive International does not undertake any obligation to update the information in this material.

By accessing this material, you acknowledge and agree to the terms of this disclaimer. If you do not agree with these terms, please refrain from using this information.