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Busy Week Ahead: FOMC, ECB, BOE, SNB and Chinese Data Print E-mail
ONG Focus | Insights | Written by Oil N' Gold | Mon Dec 11 17 02:10 ET

We have a busy week ahead. The 2-day FOMC meeting ending on Wednesday would bring the third rate hike for this year. While this move has been fully priced in, the market interest would be on the economic and risk assessment. We expect policymakers to turn more upbeat on the growth outlook with the job market continuing to improve. They should, however, remain cautious over the inflation outlook. The dot plot for 2018 would be somehow uncertain. Yet, we expect the median forecast to continue projecting three rate hikes next year. Thursday comes the ECB, BOE and SNB meetings. For the ECB, we do expect any new policy measure to come after the announcement of tapering at the previous meeting. Again the focus would be on the updated economic projections, in which we expect upward revisions on GDP growth and inflation forecasts. At the press conference, President Mario Draghi would inevitably face questions regarding internal division over settling QE end date. The split was revealed in the October meeting minutes which showed that a "few" members (possibly Weidmann, Galhau and Coeure) preferred to set a clear end-date instead of leaving QE open-ended, while some believed that the central bank should stop signaling that asset purchases will continue until there is a sustained improvement in the path for inflation. Rather, these members preferred some flexibility on the matter.

The BOE meeting would bring likely bring a unanimous decision to leave the policy rate unchanged, following the exceptional rate hike at the previous meeting. Another highlight in Europe would be Brexit negotiations. Last week, EU-UK leaders agreed on a divorce bill of 40-60B euro. UK PM Theresa May and European Commission president Jean-Claude Juncker signed a "progress report" on Friday, signifying "sufficient progress" has been made in phase one negotiations and paving the way for the second phase talks on trade issues. The EU summit scheduled on Thursday and Friday would include discussions over whether the EU leaders are satisfied with the progress of Brexit talk. After which PM May would be informed of whether or not trade and transition talks can begin.

Thursday also comes plenty of macroeconomic data. In China, industrial production, retail sales and urban fixed asset investment data for November would be released. In the US, retail sales for November, together with preliminary data for manufacturing and services PMIs for December would also be due on that day.

Commitments of Traders

With the exception of crude oil, speculators were bearish over the energy complex in the week ended December 5. Net LENGTH for crude oil futures increased +1 295 contracts from a week ago to 611 128. NET LENGTH of heating oil decreased -7 150 contracts to 55 533 while net LENGTH for gasoline fell -6 354 contracts to 76 808. Net SHORT for natural gas jumped +23 568 contracts to 121 970 for the week.

Speculators were bearish over the precious metal complex last week. Net LENGTH for gold slumped -51 088 contracts to 173 329, while that for silver futures fell 27 356 contracts to 31 426. For PGMs, net LENGTH for platinum declined -5 018 contracts to 27 028 while that for palladium dropped -949 contracts to 23 582.

 

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