Analysts at Rabobank offered the key events taking place ahead.
Key Quotes:
"Next we have a slew of ECB speakers, who will walk the fine line between being upbeat enough to support confidence, and not being so upbeat that the market thinks they are unwilling to throw more QE fuel on the liquidity fire next year as lower oil also means they will fail to see CPI rise.
In the US there are wholesale inventories, where the ratio to actual sales continues to head into recessionary territory ahead of a Fed rate hike. At some point all this cheap oil should see the ratio start to head lower again as economic ‘life begins at 40’. However, that’s not happening so far. Instead, indications are that shoppers are proving parsimonious. Indeed, the always punchy NFIB Small Business survey headline yesterday was “Optimism collapses in November after three stagnant months,” going on to explain that “Overall, the outlook remains the same with a slow 2%-ish growth and there is still not much pressure on prices from Main Street. All we can do at this point is hope for a more business friendly New Year.” And all I can do is to add ‘quelle surprise’ for those in various policy-making echo chambers who still don’t get the ‘nouvelle normale’.
In which light overnight we have the RBNZ, where a cut of 25bp to 2.50% is expected by the majority surveyed. In this FX War the other option, holding rates, will paint a giant target on the NZD’s forehead that says “Buy me!”. Considering the NZD trade-weighted index is up over 6% since its September low, that would hardly be welcome. Remember NZD/USD was in the 40s once too..."
Key Quotes:
"Next we have a slew of ECB speakers, who will walk the fine line between being upbeat enough to support confidence, and not being so upbeat that the market thinks they are unwilling to throw more QE fuel on the liquidity fire next year as lower oil also means they will fail to see CPI rise.
In the US there are wholesale inventories, where the ratio to actual sales continues to head into recessionary territory ahead of a Fed rate hike. At some point all this cheap oil should see the ratio start to head lower again as economic ‘life begins at 40’. However, that’s not happening so far. Instead, indications are that shoppers are proving parsimonious. Indeed, the always punchy NFIB Small Business survey headline yesterday was “Optimism collapses in November after three stagnant months,” going on to explain that “Overall, the outlook remains the same with a slow 2%-ish growth and there is still not much pressure on prices from Main Street. All we can do at this point is hope for a more business friendly New Year.” And all I can do is to add ‘quelle surprise’ for those in various policy-making echo chambers who still don’t get the ‘nouvelle normale’.
In which light overnight we have the RBNZ, where a cut of 25bp to 2.50% is expected by the majority surveyed. In this FX War the other option, holding rates, will paint a giant target on the NZD’s forehead that says “Buy me!”. Considering the NZD trade-weighted index is up over 6% since its September low, that would hardly be welcome. Remember NZD/USD was in the 40s once too..."
