Economic calendar: Focus on central banks

Summary:

• SNB expected to stay on hold and leave rates unchanged

• ECB and Norges Bank may give hints on the future monetary policy

• TRY more vulnerable to geopolitics rather than monetary policy

Not many macroeconomic releases are scheduled for Thursday but it does not mean investors will complain about lack of emotions. Four central banks are scheduled to make their interest rate decisions today although neither of them is expected to change the borrowing costs. ECB will be most closely watched as the Bank is set to terminate QE programme with year’s end.

8:30 am GMT - SNB interest rate decision. The Swiss National Bank holds the lowest interest rates among all G10’s central banks. The situation is unlikely to change during today’s meeting as domestic data as well as central bankers’ attitude do not herald it. Moreover, SNB members might not feel need to tighten policy until similar measures are taken in the other parts of the continent (mainly euro area). Market consensus expects SNB to leave main rate at -0.75%.

9:00 am GMT - Norges Bank interest rate decision. The latest data from the Norwegian economy was decent to say the least. Indeed, GDP figures for Q3 disappointed a bit but price growth remains robust and labour market is tight (unemployment rate at 2.3%). Nevertheless, markets do not expect interest rates to be raised today and the next plausible date seems to be meeting in March when Norges Bank will release its projections. However, Norges Bank’s communication is clear and straight forward therefore one analyze statement closely to look for hints on future moves.

11:00 am GMT - CBRT interest rate decision. The Turkish lira suffered greatly in the aftermath of the diplomatic spat with the United States. However, as the issue was resolved the currency began to recoup losses. Slowing inflation with improving current account balance hints that situation may continue. CBRT is set to leave main interest rate at 24% today. One should keep in mind that President Erdogan announced yesterday that Turkey will target Kurds in Syria who are viewed as US allies. Having said that, there is a possibility that the US-Turkey spat will be renewed putting lira under pressure once again.

12:45 pm GMT - ECB interest rate decision. The final ECB meeting of the year is finally here and investors are eager to hear more remarks on the future policy of the Bank. ECB is set to terminate its net asset purchase programme with the year end and market participants will look out for some hawkish remarks on possible rate hikes next year. Right now markets give 62% chance for a rate hike in December 2019. Mario Draghi’s conference will begin at 1:30 am GMT.

EURUSD keeps trading in a range limited by 1.13 handle and 33-period moving average (green line on the chart above). The pair is testing the aforementioned moving average at press time and potential hawkish remarks from Mario Draghi could see it finally closing reasonably above it. Source: xStation5