• MON: EZ Sentix Index (Dec); Eurogroup meeting.
• TUE: RBA Announcement; German Industrial Output (Oct); German ZEW Survey (Dec); EZ GDP R (Q3), Employment F (Q3); US Trade (Oct); Japanese GDP R (Q3); Chinese Trade Balance (Nov); EIA STEO.
• WED: BoC Announcement; RBI Announcement; US JOLTS Job Openings (Oct).
• THU: Chinese Inflation (Nov); German Trade Balance (Oct).
• FRI German CPI F (Nov); UK GDP (Oct); US CPI (Nov) and Uni. of Michigan Survey Prelim. (Dec).

NOTE: Previews are listed in day-order

RBA ANNOUNCEMENT (TUE): Reserve Bank of Australia is expected to maintain the Cash Rate Target at 0.10% and its bond purchases at AUD 4bln per week through to mid-February, while the RBA is also likely to stick to its guidance which it just tweaked at the last meeting to suggest that conditions for a hike are likely to take some time vs. previous reference of no hikes until 2024 at the earliest. Despite the adjustment in guidance, the RBA has kept to a dovish tone as it noted uncertainty on the health front and that the Board is prepared to be patient, while it also stated that inflation has picked up, but remains low in underlying terms and it only sees a gradual pick up in inflation, as well as only a marginal increase in wage growth. Furthermore, Governor Lowe has continued to dismiss prospects for a rate hike in 2022 whereby he stated that the latest data and forecasts do not warrant a rate increase next year and it is still plausible that the first increase in the Cash Rate will not be before 2024, but also kept the possibility open that a hike could be appropriate in 2023 and noted there is genuine uncertainty as to the timing of future adjustments in the Cash Rate. The recent data releases have been mixed and therefore support a wait and see approach with better than expected Q3 GDP at -1.9% vs. Exp. -2.7% and Y/Y at 3.9% vs. Exp. 3.0%, while Retail Sales also topped estimates at 4.9% vs. Exp. 2.5%. Conversely, the latest jobs data disappointed with the Employment Change revealing a surprise contraction and the Unemployment Rate jumping to 5.6% from 4.6%. As a rate adjustment is highly unlikely in the near term, the central bank’s policy will be centred on its bond purchases and participants will be eyeing the statement for any clues on whether the RBA will extend the current program involving AUD 4bln of weekly purchases through to mid-February, given that this would be the penultimate meeting prior to the current program’s expiry.

CHINESE TRADE BALANCE (TUE): The Trade balance for November is expected to have narrowed to a surplus of USD 65.55bln from October’s surplus of USD 84.54bln – with the exports seen at 24.5% (prev. 27.1%) and imports at 25.0% (prev. 20.6%). China has been battling with power outages – which have weighed on factory activity - whilst targeted COVID lockdown measures have not helped. The release itself is unlikely to have much bearing given the fluidity of the COVID situation ahead of the upcoming holiday season, whilst the US and Chinese groups also attempt to step up talks. Recently, US Treasury Secretary Yellen also suggested that cutting some tariffs on Chinese goods could help ease price pressures.

BOC ANNOUNCEMENT (WED): The BoC will keep rates at 0.25% at its December meeting. Traders will be more attuned to commentary on the new Omicron variant as well as any insight about inflation. Canadian bank RBC notes that economic progress has largely unfolded in line with the central bank's expectations: inflation is running above the BoC's target, while labour markets have not yet normalised fully to pre-pandemic levels. "However, with job vacancies at historically elevated levels, the weakness is more likely tied to insufficient labour supply," RBC explains, "and we expect that will start to put upward pressure on wages in coming months." RBC also argues that keeping rates at emergency low levels will need to be reassessed soon: "We continue to expect the first rate hike to come in April next year, and the BoC to reiterate at the meeting next week that, barring significant further disruptions from the new virus variant, the economy is on track to fully recover by mid-2022."

RBI ANNOUNCEMENT (WED): RBI is likely to keep rates unchanged when it concludes the latest 3-day policy meeting on Wednesday with the central bank expected to maintain the Repurchase Rate at 4.00% and Reverse Repo Rate at 3.35%, although some analysts see an outside chance that the latter could be increased and swap markets have even priced in a 40bps lift for the Reverse Repo Rate which if materialises, could be viewed as a signal for an upcoming increase to the Repurchase Rate. The monetary policy committee is also likely to retain an accommodative stance, while the increased calls for the adjustment in the Reverse Repo Rate are due to expectations that the RBI may continue to absorb excess liquidity from the pandemic relief measures as a start to policy normalisation before hiking the Repurchase Rate which analysts expect could occur in Q1 of FY 22/23. The central bank has kept rates unchanged since May last year due to high inflation and although this has since eased back to within the central bank’s tolerance range, it remains above the 4% target with the latest CPI reading for October at 4.48% vs. Exp. 4.32% (Prev. 4.35%), while other recent data releases have been mixed which supports the case for a pause with GDP for the prior quarter matching estimates at 8.4% vs. Exp. 8.4% (Prev. 20.1%) and the latest Industrial Production below forecast at 3.1% vs. Exp. 4.8% (Prev. 11.9%). Furthermore, the uncertainty from the emergence of the highly mutated COVID-19 Omicron variant supports the case for a patient approach by policymakers given that the new variant is expected to be more transmissible than the Delta variant which had ravaged India earlier this year.

CHINESE INFLATION (THU): Both consumer and factory gate prices Y/Y are expected to have increased at a slower pace in November, with CPI forecast at 1.4% (prev. 1.5%) and PPI at 12.4% (prev. 13.5%). Using the Caixin PMIs as proxies, the services release indicate November input prices rose for a 17th month running in November, whilst prices charged by services companies rose at a softer rate in November. “Some firms commented that softer demand conditions had weighed on overall pricing power.” Meanwhile, the manufacturing release – linked with the PPI – suggested, “Inflationary pressure was partly eased. Under the impact of regulations to contain surging commodity prices, manufacturing enterprises’ input costs in November increased at a slower pace than the previous month”, in-fitting with expectations.

UK GDP (FRI): Expectations are for the October monthly GDP release to show an expansion of +0.5% M/M vs the +0.6% increase seen in September. Ahead of the release, Oxford Economics reminds us that the bulk of the gains last month were driven by the health sector, in part due to an increase in COVID testing. This effect is set to dissipate in October, alongside pressure on consumer spending as energy bills rose and inflation continued to pick-up. Retail sales may offer some support, but it will likely not be enough to counter the headwinds; accordingly Oxford Economics looks for a reading of 0.0%. From a policy perspective, the upcoming release is unlikely to have much sway on the December 16th BoE rate decision given the fluidity of the COVID situation and emergence of the Omicron variant, which casts an element of staleness over the release. The uncertainty surrounding Omicron saw a taming of hawkish impulses from MPC hawk Saunders, who this week suggested a potential preference to wait for further data on the variant. With the amount of emphasis placed by policymakers on assessing the severity of Omicron, the October GDP report is unlikely to shift the dial ahead of the MPC confab in two weeks' time.

US CPI (FRI): The November CPI report is the last major US data point before the FOMC's December meeting on December 15th, where the central bank is expected to discuss quickening the pace of its asset purchases. Officials have already declared that their inflation tests have been satisfied, and accordingly, the November CPI report is unlikely to knock that narrative, particularly since Powell was direct in outlining the discussions the central bank would have. "Signs of more persistent strength in the underlying inflation trend have started to emerge, and this report is likely to show a continuation," UBS says, pointing out that shelter inflation and a recovery in services consumption and high wage growth are likely to support inflation in labour-intensive sectors. UBS looks for core CPI to rise +0.7% M/M, and if the data is in line with that forecast, UBS says it should further support the case for an accelerated pace of tapering, with asset purchases possibly ending in Q1 rather than Q2.