Beginning of the last meetings of Central banks in 2022.
After many ups and downs, last week ended with a mixed sentiment after NFP numbers. On top of that, geopolitical tensions in the energy market increased with the setting of a price cap for Russian Oil. In the week ahead, we have to see the Russian reaction to this decision while Central banks in Australia and Canada start the last cycle of central banks’ meetings.
1- ISM Services Index – Monday
At 54.4, the ISM services index slid to its lowest level in almost two and a half years in October, and it is expected to decline further to 53.5 in November readings. Last week we saw that the ISM manufacturing index slipped into contraction territory for the first time since 2020. In the service sector, it is logical to see that companies have become more cautious. Expected weaker data is supposed to increase the pressures on the US dollar until the next Fed meeting.
2- Reserve Bank of Australia – Tuesday
Officials in Australia believe that their economy will face a recession; however, due to a slower pace of tightening policies and more contained wage growth, it will be a soft landing. In the last monetary policy meeting of the Australian central bank in 2022, we expect another 25 bps rate hike to 3.10%. Besides the expected rate hike, we are also waiting for RBA economic outlook. The expected outlook is about 8% inflation, with moderate economic growth. Expected data and decisions can not support the Australian dollar and stock markets.
3- Bank of Canada – Wednesday
Inflation in October eased a little bit, but it is still high, around 6.9%, much higher than the central bank’s target. Therefore, it is expected that the central bank in Canada to continue contractionary policies, even if at a slower pace. Like RBA, BoC also expected to raise the rates by another 25 basis points in its last meeting of the year. With these policies, it will likely see a weaker Loonie against its crosses, aiming that stock markets benefit from them.
4- Japan GDP – Thursday
After 0.9% growth in the second quarter, the inflation-adjusted value of all goods and services produced by the Japanese economy in the third quarter is expected to fall by 0.3%. The primary indicator of the economy’s health shows that despite the ultra-easy monetary policies, BoJ could not reach its goals to help the recovery. Therefore, with increasing inflation, it will be likely to see some changes in the central bank’s monetary policies. Expected data and its effect on the economy can help the Japanese Yen to strengthen further.
5- China’s Inflation – Friday
Both consumer and producer inflation numbers from China are due to publish on Friday, and both are expected to decline. CPI is expected to increase by 1.6% in November, much lower than the 2.1% seen in October, and PPI is estimated to decline by -1.5% in November. Since in recent months, economic growth has faced different challenges in China; with easing inflation to the expected levels, the central bank can continue its support, which can be an upbeat manufacturing section and energy market with more demand.
6- US PPI – Friday
US Producer Price Index (PPI) started to slow down after reaching 11.8% in May. In October, with 0.2% growth, PPI eased to 8%, and in November, it is expected to decrease further. Expected numbers will confirm that US consumer inflation can also slow down in the following months so that we can count on less hawkish policies by Fed in December and January meetings. These expected data and policies can help the US stock markets grow more.
