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The key focus will be on a number of US data releases this afternoon. The most important release will be the PCE Inflation Indicator, as this is the main gauge of inflation that the Federal Reserve focuses’ on. It is expected that inflation will remain flat, at 1.7%, but there is some potential for upward inflation pressures.
Today we have the third and final revision of US GDP for the third quarter, and it is anticipated that growth will be revised slightly up to 3.3%, from 3.2%. We will also have US durable goods orders this afternoon, which is expected to show an improvement, and finally we have initial jobless claims to give feedback on the labour market.
Potential rate hikes in 2017
As we close the year, the market is focusing heavily on the expected path of rate hikes in 2017, and as we stand, the Federal Reserve is expected to raise interest rates a further three times in 2017. However, ongoing data will be crucial to back up this momentum. The USD has continued to strengthen since the Federal Reserve raised interest rates last week.
Data to come
From the UK today we receive the final reading for GDP in the third quarter, and growth is expected to remain at 0.5%. The pound is on the back foot this morning following Gfk consumer confidence data, which came in at -7. Although UK data is holding up well, consumers are not as confident, and expectations are matching the lows seen just after the Brexit vote.
