Decisive fortnight ahead for pound, euro and US dollar (+ video)

Over the next two weeks the European Central Bank, the Bank of England and the US Federal Reserve all meet to decide on interest rates.
 
By the end of next week the monetary policy divergence the market has long expected should finally be underway, with the ECB set to announce an extension to its quantitative easing programme or a deposit rate cut (or both!), the Fed raising interest rates, and the Bank of England announcing that it’s not far behind its US counterpart.
 
In terms of timing, the ECB meeting is this Thursday with the Fed and BoE next week. In the meantime we have lots of data due out, which will help shape the upcoming monetary policy decisions.
 
Most notable on Friday is US non-farm payrolls, which last month surprised to the upside after the major miss in September. Consensus estimates suggest around 200,000 jobs created in November, and anything inline or above forecast will push the chances of Fed action next week towards 90%.
 
ISM manufacturing tomorrow is also expected to rise slightly, to 50.5, ahead of US Fed Chair Janet Yellen speaking before the congressional joint economic committee on Thursday.
 
European data this week begins with German CPI data later today, which remains well below the ECB’s target and is a crucial factor behind further action by the ECB.
 
The US dollar has begun the week very strongly, trading though 1.50 against Sterling and pushing towards 1.05 against the euro. We can expect further momentum in the dollar as we approach Thursday.
 
Have a great week!

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