What’s happening this week
– Hawkish Federal Reserve rate cut likely to boost USD
– BoE rate decision may infuse volatility in GBP
– Decline in German economic sentiment set to drag on EUR
Pound (GBP)
GBP investors will have a deluge of notable UK economic data to contend with this week. However, the most impactful is set to be the Bank of England’s (BoE) final interest rate decision of the year. With the BoE forecast to leave rates on hold this month, the bank’s policy outlook for the coming months will determine the direction of the pound (GBP).
Euro (EUR)
Following on from December’s lacklustre Eurozone PMIs, the euro (EUR) could face additional pressure this week with the publication of Germany’s latest ZEW economic sentiment index, if it reports morale in Europe’s largest economy deteriorated again this month.
US dollar (USD)
The Federal Reserve’s final rate decision of 2024 will likely act as the main catalyst for movement for the US dollar (USD) this week. While the Fed is widely expected to cut rates again this month, hawkish forward guidance from the bank could strengthen USD demand.
Australian dollar (AUD)
The Australian dollar (AUD) may receive a boost this week if the latest Westpac-Melbourne Institute consumer sentiment index reports that morale continued to improve this month after hitting a two-year high in November.
South African rand (ZAR)
Movement in the South African rand (ZAR) is likely to be tied to market risk dynamics this week amid the absence of any notable domestic data releases.
Canadian dollar (CAD)
Canada will publish its latest consumer price index this week. If November’s CPI figures report an acceleration in inflation, it’s likely to prompt a further trimming of Bank of Canada (BoC) rate cut bets and buoy the Canadian dollar (CAD).
New Zealand dollar (NZD)
The New Zealand dollar (NZD) may face notable selling pressure later this week, if New Zealand’s latest GDP figures report the country slipping into a recession in the third quarter.
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