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In the week ahead, we’ll get the post Brexit Autumn Statement from the UK, which will provide us with a detailed outlook for the public finances. The statement is likely to lean towards increased borrowing and higher deficits, which could leave the UK vulnerable in the event of an economic shock.
Meanwhile, over in the US this week, the FOMC meeting minutes (due out Wednesday) are likely to suggest that the Fed will hike rates next month, in line with market expectations and prior meeting statements.
In the Eurozone, the German IFO Business Climate survey (Thursday) is forecast to continue pointing to only a modest improvement in the economy. Furthermore, this afternoon we have ECB President Mario Draghi speaking at 4PM and The ECB has not been clear about the QE bond-buying program plans. Economists expect the ECB to announce plans on December 8th. Analysts believe Draghi will extend its bond-buying stimulus program by six months in the coming ECB meeting.
Overall, we’re expecting another uncertain and volatile week with a few bits of important macroeconomic data scattered throughout the week.
US Dollar gains throughout last week
Throughout last week, US Dollar gains and euro weakness was the main theme – with a weak Sterling at the beginning of the week, let’s hope that this week brings more positivity with the minimal macroeconomic data we have to work with. Last week’s main push from the US Dollar came off the back of a number of factors, including strong US data and expectations of higher inflation and interest rates.
Euro faces pressure
The euro has been facing a bit of pressure due to increasing political concerns – The soonest of which is next month’s referendum in Italy, which is not expected to pass. This could force early elections, with anti-EU groups expected to profit. We also expect to see Mario Draghi giving a speech at the ECB conference in early December as all eyes will be watching in anticipation of seeing a potential announcement to further QE.
