- A busy week sees rate decisions from the RBA, RBI and BoC, while potential action from the ECB is set to take centre stage
- This week will also see the final US nonfarm payroll report before the crucial Fed decision later this month and the biannual OPEC meeting
After a subdued end to last week as a result of the US Thanksgiving holiday, this week will see markets served a deluge of data and tier 1 releases. Starting in Europe, the ECB are poised to come to market with their latest policy announcement. Ahead of the event, consensus is that the central bank will cut the deposit rate by 10bps, however, numerous investment banks and recent source comments from the ECB have suggested that Draghi and his team may actually come to market with a more aggressive cut in the region of 15-20bps. Furthermore, analysts have also suggested that the ECB could expand the pool of securities in their QE programme to include regional bonds, increases the size of their monthly purchases and extend the duration of the programme.
Stateside, next week sees the release of the latest US nonfarm payrolls with consensus currently calling for another stellar month of gains (200k), with such a reading likely to reassure markets that the Fed will be set to lift rates later in the month. That said, with markets currently pricing in a 74.0% chance of a lift-off this month, it would take a particularly disastrous reading for participants to perhaps revaluate their expectations for the 16th December.
Another event to be aware of is the latest OPEC meeting on Friday with consensus suggesting that OPEC will leave their production target unchanged at 30mln bpd. So far, OPEC have resisted the temptation to lower output, with rhetoric suggesting they’ll be defiant and the cartel will not lower their output unless other oil producers also cut their output. This is a particularly important event given the role that energy prices play in forming inflation expectations and thus central bank policy, with current subdued levels of inflation continuing to provide headaches for many a central bank around the world.
Finally, next week will also see the release of the latest round of Eurozone manufacturing and services PMI data with rate decisions also expected from the BoC, RBI and RBA – all of which are expected to refrain from cutting rates further.