U.S. inflation data are likely to be the highlight of the week as the outlook for U.S. interest rates remains uncertain.
In Europe, a rate cut is expected by the European Central Bank and by the Swiss National Bank.
In Asia, a decision by Australia's central bank, plus key data from Japan and China are the main items in focus.
U.S.
U.S. inflation data due Wednesday could be a key indicator of whether or not the U.S. Federal Reserve cuts interest rates at its decision on Dec. 18.
A rate cut in December is broadly expected but far from being a done deal. A strong inflation reading could make it more likely that rates are left on hold, so the data have potential to cause volatile moves in the dollar and U.S. Treasurys.
Analysts at BNP Paribas expect that the Fed will cut rates in December even if the inflation data are moderately higher than expected.
"Seeing rates as still restrictive and having already laid the communications groundwork to pursue a pause next year if they choose, we think most [Fed] officials will be comfortable proceeding with a December cut," they said in a note.
Producer price data for November on Thursday will give an indication of pipeline inflationary pressures, while weekly jobless claims data on the same day will give an additional snapshot of the state of the labor market.
The Treasury will auction $58 billion in three-year notes on Tuesday; $39 billion in 10-year notes on Wednesday, and $22 billion in 30-year bonds on Thursday.
CANADA
The Bank of Canada announces an interest-rate decision Wednesday. It is widely expected to cut interest rates, though analysts are divided as to whether the central bank will opt for another larger 50 basis-point reduction or whether it will revert back to a more typical 25 basis-point cut. Money markets suggest a roughly 50% chance of either outcome.
Although Canada's economy is weak, the recent GDP report revealed underlying strengths which argue in favor of a smaller rate cut, Scotiabank's Derek Holt said.
On the other hand, the prospect of hefty tariffs being imposed under U.S. President-elect Donald Trump could push policymakers toward a larger reduction.
Rising uncertainty about tariffs "could lead policymakers to take out insurance against further weakness," said Karl Schamotta, chief strategist at forex firm Corpay.
LATIN AMERICA
Brazil's central bank is expected to hike rates again when it announces a decision Wednesday in order to stem inflationary pressures. Money markets suggest an 80% chance of a 75 basis-point hike from the current rate of 11.25%, with a 20% chance of a bigger 100 basis-point increase.
"We have penciled in a 75 basis-point hike but, given the hawkish noises from Copom officials recently, there is a chance of an even larger move," said Jason Tuvey, deputy chief emerging markets economist at Capital Economics in a note.
Mexico is due to release inflation data for November on Monday.
EUROZONE
The European Central Bank's last meeting of the year will take centre stage with a rate cut looking like a done deal, although the size is still a question.
Market expectations tilt toward a 25 basis-point rate cut, although a 50 basis-point reduction is possible.
Attention will focus on the ECB's quarterly staff forecasts and any potential guidance for next year.
"A significant downward revision of the economic outlook is probably not to be expected," said DZ Bank analyst Christian Reicherter in a note.
Besides the ECB meeting, final German CPI for November are due on Tuesday. German foreign trade figures for October will be released on Friday, alongside with final French and Spanish CPI for November. Eurozone October industrial output data are due Friday.
The last bond auctions of the year will take place and focus shifts to sovereigns' 2025 funding plans.
Austria will auction 2034- and 2053-dated bonds on Tuesday. Italy will have an auction on Thursday, with the bonds yet to be announced.
U.K.
Monthly U.K. gross domestic product data for October are due on Friday, where a rebound is expected following a small contraction in September.
"We are expecting a pick-up in the pace of GDP growth over the fourth quarter as whole to +0.4% and for this pace of activity to be broadly maintained over the course of 2025," said Investec economist Philip Shaw in a note.
Also on Friday, industrial production and trade data for October will be released.
Other U.K. data include the RICS housing survey Thursday and GfK consumer confidence data Friday.
The U.K. is scheduled to auction the November 2033 gilt on Tuesday and the July 2034 gilt on Wednesday.
SCANDINAVIA
Norway releases inflation data Tuesday. These are expected to show headline annual CPI inflation falling and the annual CPI-ATE rate edging higher but remaining below the forecasts of Norges Bank, Norway's central bank, analysts at SEB said in a note.
Norway isn't expected to start cutting interest rates until next year. SEB forecast a first rate reduction in March.
"Gradually easing inflationary pressures and moderating expectations for wage growth expectations should prove reassurance for Norges Bank, which has previously expressed concerns about persistently high inflation due to strong wage growth," they said.
Unlike Norway, Sweden is already in the process of cutting interest rates in order to boost a stuttering economy. It announces November inflation data Thursday and labor data Friday.
Sweden will sell inflation-linked bonds on Thursday.
SWITZERLAND
The Swiss National Bank announces a rate decision on Thursday where it is widely expected to cut its main policy rate from 1% currently, although it is uncertain whether it will opt for a bigger 50 basis-point reduction or a smaller fall of 25 basis points.
Money markets show a roughly 55% chance of a half-point cut, LSEG data show.
Recent weak inflation data suggests the SNB will trim its inflation forecasts again, Pantheon Macroeconomics economist Melanie Debono said in a note. Alongside the recent strength in the Swiss franc, she expects that this should be sufficient to push the SNB to trim its key policy rate by a half point to 0.5%.
Switzerland will conduct an auction on Wednesday.
AUSTRALIA & NEW ZEALAND
The Reserve Bank of Australia will hold its final policy meeting for the year on Tuesday amid speculation that it will keep interest rates unchanged, and some potential for it to open the door to a cut in February.
Third-quarter GDP growth data this week was surprisingly weak, with Treasurer Jim Chalmers saying that had it not been for strong spending by state and federal governments, the economy would have contracted.
To be sure, Chalmers said growth has been running on the one engine of government spending for some time, and without it, the commodity-rich economy would be in recession.
If RBA Gov. Michele Bullock does indicate a shift in thinking in her press conference, it will be pretty obvious given it has been more than a year since interest rates were last adjusted, and only recently she again ruled out cuts in the near-term.
Currently, most economists expect the RBA will wait until May before cutting. Another key focus of the week will be a speech to economists on Wednesday by the central bank's deputy governor, Andrew Hauser.
Hauser said recently that interest rates haven't been cut because the RBA feels that inflation is still troubling. If he backs away from that view, it will be a strong signal to markets to prepare for a cut in February.
In a final flurry of activity for the year by the RBA's leading lights, chief economist Sarah Hunter will also speak in Adelaide on Friday.
In terms of data, employment data for November will be released on Thursday. Unemployment is low with firms hiring despite the slowdown in the economy.
If there is evidence that employment growth is starting to cool in the November numbers, added impetus will be given to calls for a cut in the official cash rate earlier than economists currently expect.
JAPAN
The Bank of Japan's quarterly Tankan corporate sentiment survey, scheduled to be released Friday, is under close scrutiny as market participants are looking for clues on whether the central bank will raise its policy rate later this month.
The survey is expected to show business confidence is mostly unchanged, said Katsuhiko Aiba, economist at Citi Research, in a research report. "We are watching to see if uncertain U.S. trade policies have any impact on corporate outlook and capex plans," Aiba added.
Economists are also waiting to confirm the strength of third-quarter growth when revised gross domestic product data is released Monday.
According to the first preliminary estimate released in mid-November, the Japanese economy expanded 0.2% in the three months to September from the previous quarter, or 0.9% on an annualized basis. Economists expect no major significant revisions, but capital expenditures may be revised up, given the Ministry of Finance's recent corporate activity survey.
Results of current account balance for October and bank lending for November are also due on Monday.
The Ministry of Finance is scheduled to auction 2.3 trillion yen of five-year Japanese government bonds on Tuesday. The auction may be a focus for market participants ahead of the Bank of Japan's much-anticipated meeting on Dec. 18-19.
CHINA
Several key releases are due out of China, starting with inflation figures on Monday that will help indicate if demand is picking up.
Consumer prices likely edged up 0.5% from a year earlier in November, compared with the 0.3% increase in October, according to a poll of economists by The Wall Street Journal. Meanwhile, factory-gate prices likely fell 2.8% last month compared with October's 2.9% decline.
Despite Beijing's more aggressive push to revive the economy, deflationary pressures remain strong as the property downturn has yet to show signs of bottoming out.
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12-08-24 1614ET
