Central banks meetings in a busy trading week

This week is another busy economic schedule since we have central banks meetings and a handful of top-tier reports.

China data highlights

China will release a handful of key economic reports on December 15, which might impact risk sentiment.

Retail sales probably fell from 4.9% to 4.8% year over year in November. However, industrial production likely increased from 3.5% to 3.8%.

Fixed asset investment appears to have tumbled from 6.1% to 5.4%.

Important US data

US producer price data are scheduled to be released on Tuesday. Retail sales data is due on Wednesday, followed by industrial production data and initial jobless claims data on Thursday.

It is expected that consumer spending will decline from 1.7% to 0.8% in November, while the core version of the report is likely to slip from 1.7% to 0.9%.

Federal reserve's meeting

The FOMC will announce its statement, projections, and press conference on December 15. The Fed is widely expected to keep interest rates at *0.25% but may also discuss their economic predictions.

Dollar traders are interested in knowing whether the Fed will shift back to a cautious stance regarding the Omicron variant. Or they will keep up with their current tapering plans. As long as price pressures remain high, policymakers may consider accelerating the timeline for withdrawing stimulus.

Consequently, the Fed's growth and inflation forecasts, as well as its dot plot forecasts of interest rates, could provide clues as to how it plans to tighten monetary policy.

New Zealand and Australia data reports

On Wednesday, New Zealand will release its quarterly GDP that might report a sharp 4.5% contraction for the previous quarter following an impressive 2.8% growth in Q2.

If growth declines even further, that might dampen hopes of another interest rate hike from the RBNZ anytime soon, which could hurt the Kiwi dollar.

On Thursday, Australia released its jobs report. Despite a previous 46.3K drop in employment, hiring might rebound by 200K for November.

In theory, this should drop the unemployment rate from 5.2% to 5.0%, but weaker than expected results could mean further downside for the Australian dollar.

BoE policy statement

The Bank of England is likely to hold interest rates steady for the time being in its monetary policy statement on Thursday, December 16.

In addition, no changes to asset purchases are expected, with policymakers likely to take a step back given Omicron's debut and the possibility of lockdowns.

Before Thursday's policy meeting, job and inflation data will provide UK policymakers with a final insight into the economy's strength. Inflation is expected to hit its highest level in a decade.

ECB's meeting

When ECB's officials meet on Thursday, they are not expected to make any changes to interest rates or bond purchases at the time of being. Policymakers have emphasized how inflationary pressures are temporary, particularly with supply chain disruptions still in play.

While the ECB's pandemic stimulus program is due to expire in March, the fourth wave of the pandemic and the new Omicron variant have clouded the outlook for eurozone growth.

Still, market participants will likely keep their ears peeled for clues on what the central bank will do after the PEPP expires in March.