Trading Week Ahead: 6th – 10th December
Important Data Releases & EventsTuesday
AUD RBA Rates Statement, Cash Rate Thursday
CAD BOC Rate Statement, Overnight Rate – USD JOLTS Job Openings – CAD BOC Press Conference Friday
AUD RBA Gov Lowe Speaks Saturday
AUD USD CPI, Core CPI
What happened last week?
Last week, we all watched with interest if Omicron would start Covid crash 2.0 after seeing selling come into markets the week prior. Well, this didn’t really eventuate last week. Stock indices started the week with more of the same. Sellers took charge, sending weekly bars lower. Buyers returned during the week, cutting gains as Omicron and message from the Fed looked to calm nerves.
On the Fed, Powell changed his message regarding the term “transitory.” He said the Fed looked to retire the term and clearly explain what they mean. Inflation has continued to increase above expectation, and this continues to feed speculation the bank could be forced to monetary policy.
The Omicron factor
Fed comments and Omicron worries continued to support the USD this week. The variant touched down in the US as cases continued to be reported in NY city. Suggestions have emerged that this variant could have been circulating for longer than first thought. The USD index started the week lower but fought back, short-lived gains as it traded flat for the week before the NPF data.
The EUR was flat before the NFP, but the AUD and GBP traded lower during the week. All three majors had lower weeks to the JPY. The AUD also had GDP worries as Australia’s GDP came in at -1.9%. This figure beat expectations but still painted a disappointing situation. The Turkish Lira had another eventful week as it crashed to new all-time lows to the USD. The continued rejection of rates sealed its fate during the week, and not even bank intervention could help it as the USDTRY continued to soar.
US Employment data was a mixed bag. Payrolls missed falling to 210K, unemployment decreased to 4.2%, and average earnings fell to 0.3%. This took shine off the USD and gave beaten down risk currencies like the AUD a shot higher. Gold was another that took advantage of a weaker dollar pulling back some of its losses after the release.
What’s coming this week?
This week traders will be looking at RBA as the bank meets for the cash rate. Last time the market was disappointed, and focus will be on the statement to see if the tone remains the same regarding the hold outlook. The BOC also meets this week, and expectations are for a hold. Is inflation is an issue? Traders will look at the statement for hints. Oil is another factor for the CAD, and lately, it has been weak. This is not a good thing for Canada. OPEC met last week and oil fought back from weekly lows but will we see this continue?
US CPI finishes the week, and this looks like the highlight for the week, under the circumstances. Markets are looking for weaker CPI data compared to last. Could a surprise to upside maintain the pressure and continue to feed the USD? Let’s not forget the USDTRY. Will we see new highs on the pair as the situation in Turkey maintains?
Crypto wise, we will be watching Ethereum and Solana. Both markets finished high last week, getting close to previous records.