Weekly Forex Market Reports; Dec 5th 2022

Following Powell’s speech at the Brookings Institution on Wednesday we saw sharp volatility in the market last week while US non-farm payrolls were released on Friday. Next week’s news begins before markets open on Monday as OPEC+ holds a virtual meeting to discuss whether to increase, cut or leave oil supplies on Sunday.

This is also the start of the main central bank meetings as the RBA meets on Tuesday and the BOC on Wednesday. Markets are undecided about how much central banks will raise rates. On Friday, China releases its CPI data. Does the data show that inflation is rising in China?

OPEC Plus

OPEC+ meets to decide on the amount of crude oil production. Indications are that the group will do nothing and leave oil supplies unchanged. In addition, OPEC+ may wait to see what changes will be made to the EU’s price ceiling on Russian offshore oil. The last price discussed was $60 a barrel, with the goal of revising the ceiling every few months to remain about 5 percent below market value.

RBA

The Reserve Bank of Australia is scheduled to meet on Tuesday this week. However, there are questions over whether the RBA will raise rates by 25 basis points or keep them unchanged. At the last meeting, the board announced that further interest rate hikes are necessary because inflation is so high. It also announced that inflation will reach its peak this year at around 8%, against the previous forecast of 7.75%.

Boc

The financial institutions of Canada has a similar situation with the Central Bank of Canada. Markets appear to be undecided on whether the central bank will raise rates by 25 basis points or 50 basis points. At its last meeting, the BOC surprised markets by raising rates by just 50 basis points, against expectations for a 75 basis point increase, and raised its overnight interest rate to 3.75 percent. The jobs figures released on Friday were still strong, showing that the Canadian economy added 10,100 jobs in November. (As a reminder, the October reading was +108,300!). However, the number of full-time jobs added in November was +50,700 and the number of part-time jobs was -40,600. Additionally, the unemployment rate fell to 5.1 percent from 5.3 percent in October.

Economic data

The economic calendar is usually clear the week after nonfarm payrolls, and this month is no different. China’s CPI is expected to remain unchanged at 2.1 percent year-on-year in November from October. China’s PPI is expected to be -1.6% in November versus -1.3% previously. Other important economic data this week include Australia’s third quarter GDP, Canada’s Ivy PMI and preliminary estimate of US Michigan consumer sentiment.