Trader’s calendar on December 19: USD may suffer losses

Summary

The video reviews key upcoming financial events, focusing on central bank interest rate decisions, including those from the Federal Reserve, Bank of England, Bank of Japan, and other major institutions. With the US dollar under pressure due to slower economic growth and expected inflation data, volatility is anticipated in currency markets, particularly for the Japanese yen, British pound, and euro. Market participants are also looking to economic reports, such as German consumer confidence and US housing sales, to gauge potential market movements. The video concludes with a focus on the December 19 announcements and their potential impact on major currency pairs.

Takeaways

• 😀 Market focus has shifted to the potential impact of a new surge in inflation under Donald Trump’s administration, following the Federal Reserve's interest rate decision.
• 😀 Investors are eagerly awaiting interest rate announcements from major central banks, including those of the United Kingdom, Japan, and China, scheduled for Thursday, December 19.
• 😀 The Bank of Japan is expected to leave its interest rate unchanged at 0.25% in December, though there is a possibility of a rate hike to support Japan’s recovering economy.
• 😀 If the Bank of Japan raises interest rates, it would signal economic recovery and could lead to heightened volatility or a rally in the Japanese yen.
• 😀 The euro may strengthen if German consumer confidence improves by the expected 1.3 points, despite remaining negative compared to last year.
• 😀 The Bank of England’s interest rate decision on December 19 is expected to show no change, but any comments from policymakers could lead to volatility in the pound sterling.
• 😀 A slowdown in U.S. economic growth to 2.8% in the third quarter could weaken the U.S. dollar, providing room for gains in riskier assets like the euro and British pound.
• 😀 A decrease in the U.S. GDP price deflator from 2.5% to 1.9% is expected, supporting a weaker U.S. dollar and further bolstering the case for a stronger euro or pound.
• 😀 Any decline in the U.S. dollar is likely to be modest and short-lived due to anticipated decreases in weekly initial jobless claims, indicating a strong labor market.
• 😀 A potential rise in existing home sales above 4 million in November could act as a growth driver for the U.S. dollar, despite the housing sector lagging behind in economic data.

Q & A

What is the primary focus of the market following the Federal Reserve's interest rate decision?

The market's primary focus has shifted to the prospect of a new surge in inflation under Donald Trump's administration, as well as the upcoming rate announcements from other major central banks.

Which central banks are expected to announce their monetary policy decisions on December 19, 2024?

The central banks of the United Kingdom, Japan, and China are set to announce their monetary policy decisions on December 19, 2024.

What is the expected policy decision from the Bank of Japan in December 2024?

The Bank of Japan is widely expected to keep its key interest rate unchanged at 0.25%. However, there is speculation that a rate hike could be considered to support economic recovery.

What impact could a rate hike by the Bank of Japan have on the Japanese yen?

A rate hike by the Bank of Japan would likely lead to heightened volatility in the Japanese yen and could potentially trigger a rally if it signals a recovery in Japan's economy.

How might German consumer confidence impact the euro in December 2024?

If German consumer confidence improves by the expected 1.3 points, the euro could gain strength. However, the index remains deeply negative compared to the same period last year, so the overall impact might still be cautious.

What is the current interest rate of the Bank of England, and what is expected from their December 2024 meeting?

The current interest rate of the Bank of England is 4.75%. It is expected that there will be no change in the rate at the December 2024 meeting, though the accompanying comments could lead to increased volatility in the British pound.

What factors could affect the strength of the British pound after the Bank of England's rate decision?

Volatility in the British pound could occur depending on the Bank of England's comments regarding future monetary policy, despite expectations that there will be no change in the interest rate.

How could U.S. economic data affect the dollar in December 2024?

U.S. economic data, including a forecasted slowdown in Q3 economic growth to 2.8%, could lead to a weaker or consolidating U.S. dollar. However, a strong labor market and the potential rise in home sales could provide some support for the dollar.

What role could the U.S. GDP price deflator play in the dollar's momentum?

The U.S. GDP price deflator, which tracks inflation, is expected to decrease from 2.5% to 1.9%. This decline could further support a weaker dollar momentum, especially if inflation remains subdued.

Why is the U.S. housing market important for the dollar’s outlook?

The U.S. housing market remains a key driver for the dollar. A strong housing sector, with forecasts suggesting an increase in existing home sales, could provide positive momentum for the dollar despite weaker economic growth in other areas.