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Data thin on the ground as Christmas holiday approaches


There will be a series of public holidays surrounding this week’s Christmas break, although markets continue to operate throughout. Volumes may be a little suppressed too, which brings with it the potential to see volatility exaggerated too. The week will kick off with the Chicago Fed’s National Activity Index for November. Forecasts have this print tipped to edge slightly lower, down to 0.22 from the previous month’s reading of 0.24 and short of February’s 0.77. This is an aggregated reading so doesn’t bring much new to the table, but given the absence of other indicators, it’s more a case that the data will validate last week’s Federal Open Market Committee (FOMC) call over monetary policy.

Many European markets will be closed all day today, with others closing early.


Today sees the publication of the Bank of Japan’s (BoJ) monetary policy meeting minutes from late October. This is unlikely to throw up much of interest given the insight seen after last week’s policy meeting, and the expectation that the BoJ will now hold fire until late in 2019 before considering a rate hike. This is owing to a planned increase in consumption tax later next year, and previous uplifts here have served to drag on the economy. Deteriorating global trade is adding to downside risk for Japan, but even if there are signs of a modest recovery now, this could prove difficult to sustain.
The vast majority of global markets are closed today.


Wednesday is another day where economic data is set to be thin on the ground, but the US S&P/Case-Shiller Home Price Index is due for release. After last week’s disappointing National Association of Home Builders (NAHB) print, today’s number is likely to come under added scrutiny. The Federal Reserve made the controversial decision to hike interest rates for a fourth time this year at last week’s meeting, but with a print of 4.8% expected versus last month’s 5.1%, any suggestion that the US housing market is catching a cold off 2018’s prolific policy tightening could serve to rock the Dollar.
Again, many markets are closed today.



The US Consumer Confidence Index for December is due for publication, and a modest uptick is expected, from 135.7 to 135.9 a month ago. This print could generate some volatility as steady interest rate hikes through the year may be wearing down sentiment when it comes to spending. It certainly isn’t all negative for consumers, however, as the economy remains buoyant and falling fuel prices should also be spreading some cheer.

However, an overshoot of the forecast may do little more than exacerbate the stand-off between the Federal Reserve and Donald Trump over monetary policy. The US President has made it clear on multiple occasions that he is ready for the central bank to ease off the tightening agenda, but a buoyant consumer economy may again call that idea into question.


The week ends with a flourish of numbers, which have the potential to provide added volatility for currency markets given the likely thinner trading conditions. The privately produced UK House Price Index for December by Halifax will be under scrutiny, although given the disappointing print last week from online estate agents Rightmove, the market will already be braced for a decline. Discounting at this time of year is to be expected, although downside pressure on prices has been reported as greater than usual. Concerns that the UK housing market is stalling even before Brexit could weigh on the Pound.
The German Consumer Price Index (CPI) flash reading for December is forecast to show some reasonable contraction, falling from 2.3% to 2.0%. Last month’s reading was notable given the evident disparity between different regions of the country as inflation was running higher in the more populated areas. There may be value in digging down a little here if the number falls short. However, with the European Central Bank (ECB) still wanting to push ahead with policy tightening measures in the New Year, a print much below 2.0% could raise questions.  
A series of US economic prints are to be pushed back to the end of the week as a result of the holidays. The Chicago PMI reading may provide some broader direction for the US Dollar, and a notable decline is expected here at 63.0 down from 66.4. However, assuming there’s no undershoot, downside pressure at this point could be limited as the number still sits some distance away from the break-even level of 50.0.