RBC Capital Markets

Week ahead: Thus, EU-UK trade talks will again feature prominently this week. This is the last full week before the year-end holidays, and as such is usually stuffed with central bank meetings, the most consequential of which is the FOMC on Wednesday. We still see very low likelihood of any change in the Fed’s current policy prescription. The FOMC's assessment of the jobs and spending situation probably gets marked down a bit, but the language around inflation is unlikely to change much. Key data releases include China November growth indicators (Tuesday), US retail sales (Wednesday), UK CPI inflation (see GBP), Canada CPI inflation (see CAD), and Australia employment report (see AUD). EUR: We anticipate an improvement in the euro area services flash PMI (Wednesday) to 44.4, led by a recovery in the French reading. The manufacturing sector has been more resilient to the lockdowns, and its flash PMI should continue in strong expansion mode.

JPY: The last BoJ meeting (Friday) of the year should see it holding policy steady. GBP: We forecast that the labour market report (Tuesday) will show the unemployment rate rising to 4.9%, but it has likely been overtaken by events, given the new lockdowns. CPI inflation (Wednesday) is expected to slow to 0.5% y/y due to a weaker contribution from clothing and household goods last month. The MPC is expected stand pat on policy on Thursday, but it might provide an update on its ongoing review of the potential for negative rates.

NOK/CHF: Central bank meetings in Norway and Switzerland (both Thursday) are widely expected to conclude without any policy changes.

AUD/NZD: The Australian employment report (Thursday) should show another decent month of gains (+40k jobs & unemployment down to 6.9%), but there is the risk of some sizeable statistical noise around the data given the weekly payrolls series. The New Zealand Q3 GDP report (Thursday) is widely expected to bounce back into positive growth on a q/q basis.

CAD: We see headline CPI (Wednesday) edging down 0.1% m/m in November, keeping the annual rate steady at 0.7%, which should nudge the BoC’s core measures slightly lower. All three October sales reports are forthcoming, with Friday’s retail sales release likely to be the most closely followed. StatsCan flash estimates have reduced the excitement around the reporting month, with the final print likely to come in around the earlier flat estimate. This is consistent with our proprietary card data as well, though the same data indicates November should see a sequential fall in the area of 2% m/m (flash estimate out with the October release). This would still leave the annual rate in positive territory.

Citi

On the surface, it’s a good start to the week with US equity futures higher and the USD trading on the backfoot. The emergency use approval of the US’s first vaccine and no cliff edge for Brexit are the main reasons. GBP is the top performer after Sunday’s deadline morphed into another extension with markets relieved to avoid no deal risk again.

While CitiFX Strategy retains a positive view on risk assets, the team is agnostic in the short-term. Reflation trades are very consensus, and there are a number of risks. More virus restrictions are coming for Europe, with Germany entering a stricter lockdown on Wednesday and London likely to follow in a matter of time. ZAR is also likely to see such announcements while familiar themes are in place elsewhere.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.