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Relaxed start to the week, focus on OPEC+

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By Craig Erlam  

It’s been a calm start to the week which isn’t entirely surprising given the lack of events on the calendar. That said, things are expected to pick up with the rest of the week serving up some big economic releases and a hugely important OPEC+ meeting.

All data now, particularly that of the US, is being looked at through the prism of what it will mean for the final central bank meeting of the year and the new projections it’ll be accompanied by.

Since the last meeting, the data has been encouraging and we’ll get another batch before the Fed meets on 13 December. This week we’ll get the October PCE inflation data – the Fed’s preferred measure – as well as third quarter GDP, ISM manufacturing and jobless claims.

Outside of the US, we’ll get flash HICP inflation data for the eurozone, PMIs from China, CPI figures for Australia and a rate decision from the RBNZ. On top of all that, there’s a plethora of central bank speakers making appearances which will keep us on our toes.

Bank of England Governor Andrew Bailey got the week off to a start on that front, pushing back against expectations for rate cuts from Q2, claiming he doesn’t expect any for the “foreseeable future”.

A vague commitment as ever, but all we can expect from policymakers for now. There’s still a way to go and as Bailey highlighted, getting from peak to now is likely to be much easier than from here to 2%.

Oil choppy ahead of OPEC+

Arguably, the OPEC+ meeting will be the week’s most impactful event.

Not just because any decision could have direct consequences for price and therefore inflation, but also due to the meeting already being pushed back by four days, so there’s clearly some disagreement within the alliance.

The group has always found a way to get an agreement over the line before, even if that means the biggest producers taking on more of the additional commitments.

It’s probably safe to say something similar will be achieved this week. But the question is how far they’ll push it, given the recent trend in oil prices and increasing concerns around global growth next year.

Gold eyeing record highs?

Gold has got the week off to a strong start, up around half a percent and hitting a six-month high.

It just about managed to end last week above the psychologically challenging $2,000 level – where it’s repeatedly been pushed back from over the last month – and it seems that has propelled it on.

We’re still seeing some pushback, though, but this break has been backed by softer US data in recent weeks and less hawkish commentary from the Fed.

That may be the difference this time around and enable it to look up towards record highs, only a few percent above where it currently finds itself.

 

Craig Erlam is Senior Market Analyst, UK & EMEA at OANDA

Opinions are the author’s, not necessarily that of OANDA Global Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. Losses can exceed investments.