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$900 billion spending package & Economic Calendar

USD

After a back and forth of several months, Congressional leaders in Washington finally reached a deal on a roughly $900 billion spending package to prop up the U.S. economy, marking one of the largest economic stimulus packages in the nation’s history. It’s a busy week ahead in the U.S with several key releases to watch out for. The U.S GDP data on Tuesday will provide more detail on economic trends in Q3. Meanwhile, updates to durable goods orders, jobless claims, and personal spending and income data will give more insights into the economy’s resilience through Q4. Key figures coming up:

  • On Monday (12/21): Chicago Fed activity index (Nov)
  • On Tuesday (12/22): GDP (Q3) | Existing home sales (Nov)
  • On Wednesday (12/23): MBA mortgage applications | Personal spending & income (Nov) | University of Michigan inflation expectations (Dec)
  • On Thursday (12/24): Jobless claims | Durable goods orders (Nov)
  • On Friday (12/25): Markets Closed (Christmas Day)

EUR

The EUR continues its strengthening trend vs the USD, with added support from a more aggressive Federal Reserve vs European Central Bank. The overall degree of containment is set to remain significant, hence acting as a drag on the European economy, and further spikes in Covid-19 cases after the Christmas holidays could see restrictions tighten again rather than ease. This Christmas week will offer nothing relevant on the macro calendar. Key figures coming up:

  • On Monday (12/21): Germany Gfk consumer confidence (Dec) | Eurozone consumer confidence (Dec)
  • On Wednesday (12/23): German Import Price Index (Nov)
  • On Friday (12/25): Markets Closed (Christmas Day)

GBP

The U.K. has kicked off the Christmas week amid chaos in the travel sector with police blocking people from boarding packed trains, holidays abroad scrapped, and travel with Europe banned after London went into an emergency lockdown. Britain has seen the government abruptly cancel Christmas and ramp up social restrictions due to the rapid spread of a mutant strain of the Covid-19. As Brexit talks missed another deadline, the market participants' focus during the week will continue to be on Brexit as talks carry over into the final weeks of 2020. Key figures coming up:

  • On Monday (12/21): Confederation of British Industry Industrial Trends Orders (Dec)
  • On Tuesday (12/22): GDP final estimate (Q3) | Public sector borrowing (Nov)
  • On Friday (12/25): Markets Closed (Christmas Day)

JPY

In Japan, the macroeconomic week kicks off with the Bank of Japan (BoJ) meeting minutes on Wednesday, with investors seeking further details as to BoJ’s decision to extend the duration of its relief program by six more months. Japan releases Consumer Price, Retail Sales, and Construction Orders on Christmas Day as Japanese markets are open. This batch of indicators will provide updated guidance on Japan’s economic health in November. Key figures coming up:

  • On Wednesday (12/23): Bank of Japan meeting minutes | Japan leading indicator (Oct)
  • On Friday (12/25): Consumer Price Index (Nov) | Unemployment rate (Nov) | Retail Sales (Nov) | Housing starts (Nov) | Constructions orders (Nov)

CAD

The Bank of Canada Governor Macklem has now called out the recent appreciation in the Loonie as a concern since Canada’s export performance has been damaged by an overvalued exchange rate. Therefore, Canadian exports have had a poor contribution to economic growth, which has left the economy excessively dependent on consumers and housing. Updates to housing on Monday and payroll employment on Tuesday will give more insights into the economy’s resilience through Q4. October GDP is expected to be still heading higher and further progress on vaccines, which will bring any holiday period cheer in Canada. Key figures coming:

  • On Monday (12/21): New Housing Price Index (Nov)
  • On Tuesday (12/22): Average weekly earnings and payroll employment (Nov)
  • On Wednesday (12/23): GDP (Oct)
  • On Thursday (12/24): Building permits (Nov)
  • On Friday (12/25): Markets Closed (Christmas Day)
  • On Saturday (12/26): BoC Gov Council Member Macklem Speaks 

MXN

Last week, Mexico’s Central Bank (Banxico) kept its policy rate unchanged at 4.25%, but it is closely watching the trajectory of inflation, which stands at 3.41% year-over-year, a bit above 3% Banxico’s target. The economic calendar kicks off this week with Mexico’s retail sales for October on Monday, which will bring further evidence of the economic recovery in Q4. The Consumer Price Index on Tuesday and unemployment figures on Thursday are widely expected by the market as well. Key figures coming up:

  • On Monday (12/21): Retail Sales (Oct)
  • On Tuesday (12/22): 1st Half-Month Consumer Price Index (Dec) 
  • On Wednesday (12/23): Economic Activity (Oct)   
  • On Thursday (12/24): Trade Balance (Nov) | Unemployment Rate (Nov) 

CNY

The week starts with a focus on the People’s Bank of China (PBoC) policy rate meeting, with investors looking for clues whether the PBoC will unveil further emergency pandemic support. Although the Chinese economy is recovering at a faster pace, policymakers are concerned over a strengthening yuan, deflation, and credit risks following significant recent defaults in China’s USD 4 trillion domestic corporate bond market. Apart from the PBoC meeting, it is a quiet week for economic data. Key figures coming up:

  • On Monday (12/21): China PBoC interest rate decision
  • On Friday (12/25): Markets Closed (Christmas Day)
  • On Saturday (12/26): Chinese Industrial profit (Nov)

BRL

Last week, Brazilian stocks touched a record high after the central bank raised its 2020 economic growth forecast to -4.4% from 5.0%. Higher consumer prices have led the central bank to clarify conditions that would lead the committee to jettison its “low for long” forward guidance. This week will bring out Brazil’s mid-month inflation reading for December on Tuesday and unemployment rate on Wednesday. Questions about the rollout and acceptance of Covid-19 vaccines in Brazil are also weighing on the BRL. Key figures coming up:

  • On Monday (12/21): Federal Tax Revenue
  • On Tuesday (12/22): Fundação Getúlio Vargas Consumer confidence (Dec) | Mid-Month Consumer Price Index (Dec)
  • On Wednesday (12/23): Unemployment Rate | Bank lending (Nov)
  • On Friday (12//25): Markets Closed (Christmas Day)

Quick Insights

USD: Congressional leaders in Washington finally reached a deal on a roughly $900 billion spending package

USD: Congressional leaders in Washington finally reached a deal on a roughly $900 billion spending package

EUR: Further spikes in Covid-19 cases after the Christmas holidays could see restrictions tighten again rather than ease

EUR: Further spikes in Covid-19 cases after the Christmas holidays could see restrictions tighten again rather than ease

GBP: London went into an emergency lockdown due to a mutant coronavirus

GBP: London went into an emergency lockdown due to a mutant coronavirus

JPY: The macroeconomic week kicks off with the Bank of Japan (BoJ) meeting minutes on Wednesday

JPY: The macroeconomic week kicks off with the Bank of Japan (BoJ) meeting minutes on Wednesday

CAD: Governor Macklem has now called out the recent appreciation in the Loonie as a concern

CAD: Governor Macklem has now called out the recent appreciation in the Loonie as a concern

MXN: Banxico kept its policy rate unchanged at 4.25%, but it is closely watching the trajectory of inflation

MXN: Banxico kept its policy rate unchanged at 4.25%, but it is closely watching the trajectory of inflation

CNY: The week starts with a focus on the People’s Bank of China policy rate meeting

CNY: The week starts with a focus on the People’s Bank of China policy rate meeting

BRL: Questions about the rollout and acceptance of Covid-19 vaccines in Brazil are also weighing on the BRL

BRL: Questions about the rollout and acceptance of Covid-19 vaccines in Brazil are also weighing on the BRL

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