As there is little data scheduled to be released in the upcoming week, markets are likely to focus more on political headlines. This is especially because of the failure of President Donald Trump and the U.S. Congress in coming to an agreement as regards the spending bill by Saturday midnight. This has resulted in a partial shutdown of the U.S. government. According to reports, President Trump suggested firing Jerome Powell, the Federal Reserve Chair. This move could shake the already volatile financial markets.
Last week, the Fed raised the rates for the 4th time this year. In addition, the central bank mostly maintained its hikes guidance over the 2019 and 2020. This quashed investor expectations that the monetary outlook will be more dovish.
The U.S. dollar gained against all of its rivals and moved away from the one-month low. Meanwhile, the index that measures the strength of greenback against six major currencies, ended the week down nearly 1.0 percent as mostly negative economic data raised concerns about the country’s economic growth. On the other hand, the safe-haven Japanese currency benefited from the fragile sentiment. The USD/JPY pair lost about 1.9 percent last week, the largest decline in a week since mid-February.
It is expected that the trading volumes will remain light during the upcoming week because of the Christmas holiday. Many traders have already closed their books of accounts for the year.
#1: Japan BoJ Governor Haruhiko Kuroda Speaks (12/27/2018 Thursday 04:00 GMT)
Haruhiko Kuroda, Governor of the Bank of Japan, is scheduled to speak at the Board of Councillors Meeting of Japan Business Federation in Tokyo. Markets may remain volatile during his speeches. This is because traders make an attempt to understand the direction of interest rates in the future.
#2: U.S. CB Consumer Confidence (12/27/2018 Thursday 15:00 GMT)
In the U.S., the Consumer Confidence Index announced by the Conference Board declined in the month of November after the improvement registered in the previous month. Currently, the Index stands at 135.7, down from the October’s 137.9 level. While the Present Situation Index improved slightly to 172.7 from the 171.9 level, the Expectations Index dropped to the 111.0 level this month from the 115.1 level recorded in the previous month.