Last week French politics took the spotlight with a vote of no confidence resulting in the current Government being dissolved. Upon PM Barniner’s exit, there has been much positive movement with President Macron committing to installing a PM that will get the next budget passed with the backing of Marine Le Pen’s party- from my perspective I no longer see France and Germany as a risk and can now see the Euro rebounding from the lows we have seen over the last couple of weeks- this is good news for EURUSD buyers.
This week is pretty busy from a data perspective with quite a few releases which should move the market, we have around 2 more weeks before liquidity becomes really thin so if you are working on a trade before Christmas, the next 2 weeks will be where you want to be executing.
The first noteworthy release is the RBA interest rate decision on Tuesday morning, we are not expecting any movement on rates, however if we see a surprise cut then we can expect to see the AUD weaken considerably, but it does seem that they will keep rates at 4.35% for now. Once Europe opens we have Germany’s inflation numbers out, which are expected to show deflation for last month at -0.2%, bringing their yearly number to 2.2% overall.
On Wednesday we have U.S Core inflation which is expected to come out at 2.7%, a slight rise from last month at 2.6%- inflation is a little bit of a non issue now across the pond so we do not expect much movement from this release, however the bigger release is the Bank of Canada’s interest rate decision later in the afternoon where we are expecting a 50bps rate cut – this is priced in but I still expect to see some CAD weakness on this decision- if you have CAD you are looking to sell, this may be a opportune moment.
On Thursday the main event is the ECB’s interest rate cut, we are expecting a cut of 25bps down to 3.15%, again, this is widely expected and I am not sure if we see volatility here, however later in the day when President Lagarde speaks, the forward guidance may give the Euro a reason to move, as it will be interesting to see what the ECB’s plans are for 2025 given political issues and risks of tariffs by the U.S.
Friday we start the day with UK GDP, alongside industrial and manufacturing production- UK Data as of late has been relatively week, so we are not expecting strong figures here, we may get a positive surprise, but if you have a GBP transfer to do, you may want to take the risk off the table before Friday, or look at setting market orders to protect the move- as we could see Sterling lower by Friday morning.
GBP/EUR 1.2072 GBP/USD 1.2761 GBP/AED 4.6878
GBP/AUD 1.9814 GBP/CHF 1.1226 GBP/CAD 1.8054
GBP/NZD 2.1770 EUR/USD 1.0560 GBP/ZAR 22.8245