Trading This Week’s Fundamental Events

Trading This Week’s Fundamental Events

Traders should closely watch for signals on potential Federal Reserve 2024 rate cuts. Goldman Sachs predicts the ECB’s first rate cut in April, followed by quarterly 25 basis points reductions.

The market’s attention will be fixed on the Federal Reserve’s final policy meeting of 2023 scheduled for this Wednesday, with the expectation that the US will maintain interest rates at a 22-year high.

Investors will have an opportunity to scrutinize the Fed’s statement and Chair Jerome Powell’s press conference for any indications of potential rate cuts in 2024 (or lack thereof).

One day prior to the Fed’s decision, the US is also poised to unveil essential inflation data. Forecasts suggest a marginal uptick of 0.1% in November consumer prices.

Turning attention to Europe, traders will focus on rate decisions from the European Central Bank (ECB) and the Bank of England (BoE), both occurring on Thursday.

The BoE is predicted to maintain borrowing costs at a 15-year high while reiterating the necessity for elevated rates. Any commentary from the bank deviating from this outlook could potentially cause ripples in the market.

Eurozone inflation dropped to 2.4% last month, down from over 10% a year earlier, following ten consecutive rate hikes. This decline brings the ECB’s 2% inflation target into view and makes a further rate increase unlikely. Goldman Sachs has forecasted that the European Central Bank’s meeting in April will mark the initiation of its first rate cut, followed by a 25 basis points cut at each subsequent meeting throughout the year.