The markets will be looking to a final trading week of the year in the week leading to Christmas. After last week’s events saw the Fed pushing the short term fed funds rates higher, the focus turns to GDP reports from New Zealand, U.S., UK, and Canada. A particularly slow week from the eurozone while among the central bank meetings next week, the Bank of Japan and the Swedish Riksbank will be on the agenda. Here’s a preview of next week in the currency markets.
U.S. GDP expected to see another upward revision
After being revised higher from 2.9% from 3.2% in the second GDP revision, the third quarter U.S. GDP is expected to show another upgrade albeit it a modest revision to 3.3%. The market reaction to the data is unlikely to see much of volatility as traders are likely to take a break, winding down for the end of the year holidays.
Â
U.S. Q3 GDP: 3.2% (Second estimate)
Besides the GDP report, the durable goods orders will be coming out with expectations of a modest increase in both the headline and core durable goods orders. On Monday, Janet Yellen is scheduled to speak as well, but it is unlikely that the Fed chair will offer comments that will move the markets much. Her speech is called “State of the Labour market.â€
Quiet week from the eurozone
Data from the eurozone is relatively quiet next week with only Monday’s German Ifo business climate. In November, the Ifo business climate was unchanged at 110.4 which suggested that businesses in Germany brushed aside concerns of a Trump victory but the assessment of the current business conditions was seen to be slightly improved. Expectations are for the December Ifo business climate to rise modestly to 110.7.
The ECB’s economic bulletin will also be released this week. Amid a quiet week from the eurozone, the focus remains on the Italian banking sector. Monte Dei Paschi is likely to remain on the radar with some media reports suggesting that the ECB will be looking for the bank to solve its issues on capital adequacy and the non-performing loans by the end of the year. Monte Dei Paschi is still looking for private sector investors to plug the 5 billion euro capital requirements by the end of the year. Failure to resolve the capital requirements and NPA could see the ECB flag the failing bank which could trigger another bailout.
