Market movers
- As the holiday season is just around the corner, market movers will be limited. However, if the US Congress and President Trump do not reach an agreement on the budget, we may have a government shutdown starting on Saturday 22 December.
- The next data point on the agenda is the US jobs report due out on 4 January, where we expect 190,000 new jobs. More importantly, we estimate average hourly earnings rose +0.25% m/m in December (equivalent to 2.9% y/y).
- Similarly, 4 January is the next focal point in the euro area as the inflation report is due out. We expect headline to remain at 1.9%, but core inflation to tick up to 1.1%.
- We expect little news on the Brexit turmoil and US-China trade war during the holiday season.
Weekly wrap-up
- Both the Fed and Riksbank hiked policy rates and lowered their projected rate paths.
- The Italian government struck a deal with the EU over the budget for 2019.
- The Brexit turmoil continues, with the next crucial date set to be during the week of 14 January, when the House of Commons is due to vote on the Brexit deal.
- Global risk sentiment remains fragile. In FX markets, EUR/USD has edged higher amid softer Fed pricing and declining political risk premia in Europe..
