1. U.S. Third Quarter GDP & Tax Vote To Affect The USD
The U.S. is to release final figures on third quarter economic growth at 13:30 GMT, on Thursday with forecasts pointing to a 3.3% economy expansion. This would mean that there will be no change from preliminary estimates. This week’s calendar also features U.S. data on durable goods orders, building permits, home sales as well as reports on Personal Spending. It will certainly be a busy seven days for economic data in the US, but the main driver of the USD is expected to be the U.S. Tax Bill. The Senate and House of Representatives are expected to vote this Tuesday on the final version of the tax legislation. Failure of the bill to pass in the Senate could trigger a sharp sell-off of the dollar.
2. German Ifo To Climb To An All-Time High
On Tuesday, investors will focus on the German Ifo Business Climate Index which rates the current German business climate and measures expectations for the next six months. The monthly index is based on a survey of around 7,000 German firms in the manufacturing, construction, wholesale and retail sectors. The Ifo’s business survey is forecast to climb at a record high of 117.6 in December which could push the EUR pairs higher.
3. New Zealand GDP To Affect NZD Pairs
On Wednesday, New Zealand’s Gross Domestic Product (GDP) is expected to shift NZD pairs. It should be noted that the NZD touched a near 1½-year low against the USD in November driven by uncertainty about the new Labour-led economic policies and upcoming reforms to the Reserve Bank of New Zealand. GDP data due on Thursday are seen coming in lower at 0.5% versus a previous 0.8%, while an even lower than expected reading could cause NZD pairs to fall.
4. BOJ Interest Rate Decision
After a busy week of central bank meetings, it will be the turn of the Bank of Japan to hold its last policy meeting of the year. The Bank of Japan is not expected to make any changes to its monetary policy at the conclusion of its two-day rate review on Thursday. It should be noted however, that BoJ officials have been making some noise recently about the negative effects of ultra-low interest rates, raising some hopes that the BoJ could surprise the markets this week by tightening policy sooner than anticipated. Even though the BoJ is more likely to maintain its ultra-easy policy until inflation is sustainably above 2%, the yen (JPY) could get a major boost from any shift in BoJ policy.
5. U.K. Final Q3 GDP
The Office for National Statistics will release a third estimate on U.K. third quarter economic growth this Friday at 09:30 GMT. Current consensus is that the economy grew 0.4% in the last quarter, unchanged from its preliminary reading. On a year-over-year basis, the economy is forecast to have grown by 1.5%, also unchanged from the initial estimate. GBP pairs will be affected by any unexpected readings but Brexit negotiations will still be seen as the main driver of the sterling this week. Investors will be focusing on any developments in Brexit negotiations after Prime Minister Theresa May secured agreement from the European Union to begin mapping out a plan for the future trade relationship.
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