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Economic Calendar - Top 5 Things to Watch This Week

EconomyDec 16, 2018 05:43AM ET
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© Reuters. - After another volatile week of trading worldwide, there’s a lot to keep markets on edge in the week ahead.

The Federal Reserve is widely expected to announce its fourth rate hike of 2018 on Wednesday, but more importantly, investors will be watching for signals from the U.S. central bank on its plans for next year.

A recent wave of underwhelming U.S. economic data, along with worries over the ongoing U.S.-China trade conflict, have sparked speculation the Fed may pause its rate-hiking cycle in 2019.

On the data front, the final reading of third-quarter U.S. growth data is due this week.

There is also U.S. housing data for November.

Elsewhere, monetary policy announcements from the Bank of England and the Bank of Japan will be on the agenda, though it's highly unlikely either will rock the boat policy-wise.

Meanwhile, market players will be watching political developments after U.S. President Donald Trump threatened to trigger a government shutdown if Congress refuses to pass a spending bill that allocates funds to pay a border wall.

Markets will also be keeping abreast of the ongoing trade spat between the U.S. and China to see if any more news materializes amid recent signs the world's two biggest economies are working to resolve their differences.

Ahead of the coming week, has compiled a list of the five biggest events on the economic calendar that are most likely to affect the markets.

1. Federal Reserve Rate Decision

The Federal Reserve is almost certain to raise interest rates by a quarter point for a fourth time this year at the conclusion of its two-day policy meeting at 2:00PM ET (19:00 GMT) on Wednesday.

That would put the fed funds target range in a range between 2.25%-2.5%.

Fed Chair Jerome Powell will hold what will be a closely-watched press conference 30 minutes after the release of the Fed's statement, as investors look for fresh clues on how he views inflation trends and the economy and how that will impact the pace of monetary policy tightening next year.

Another issue to watch will be Powell's assessment of the growing external risk from an increasingly long list of sources, including a global trade war, and recent signs of stock market turmoil.

The U.S. central bank will also release new forecasts for economic growth and interest rates, known as the "dot-plot", as investors look for greater signs of the Fed's likely rate hike trajectory through 2019 and beyond.

While policymakers have pointed to three increases in 2019, the market is starting to bet the U.S. central bank may halt its rate hikes altogether next year as risks to the U.S. economy mount.

2. U.S. 3Q GDP - Final Estimate

The Commerce Department is to release final figures on third-quarter economic growth at 8:30AM ET (13:30 GMT) Friday.

The data is expected to confirm that the economy grew at a 3.5% annual rate in the three months ending Sept. 30, unchanged from a preliminary estimate. It expanded by 4.2% in the previous quarter.

Lukewarm inflation, a steep drop in oil prices and dwindling effects from President Donald Trump's tax cuts have underlined concerns that the robust economic growth in the U.S. over the past year may be coming to an end.

3. U.S. Housing Data

The Commerce Department will publish a report on building permits and housing starts for November at 8:30AM ET (13:30 GMT) on Tuesday.

It is expected to show that building permits rose 0.5% to 1.270 million last month, while housing starts are forecast to show a gain of 0.3% to 1.230 million.

Recent data has painted a worrying picture of the U.S. housing market, which is struggling with rising mortgage rates and tight inventory.

This week's calendar also features data on U.S. personal income and spending, which includes personal consumption expenditures (PCE) inflation figures, the Fed's preferred metric for inflation.

The latest report on durable goods orders will also capture the market's attention.

4. Bank of England Policy Announcement

The Bank of England is widely expected to keep interest rates on hold and say it is sticking to its plan to raise them gradually when it meets this week. A decision is due at 7:00AM ET (12:00 GMT) on Thursday.

The BoE has raised interest rates twice since November 2017 and expects to continue pushing them up gradually, assuming Britain's departure from the European Union goes smoothly.

Besides the BoE, traders will also be able to get their teeth into the latest snapshots of UK inflation and retail sales for further indications on the continued effect that the Brexit decision is having on the economy.

Political headlines will also be in focus as investors watch developments surrounding ongoing Brexit negotiations.

With less than four months until Britain leaves the EU, the government has yet to agree a divorce deal with Brussels, as Prime Minister Theresa May's Conservative party remains split on how close the country should remain to the bloc.

5. Bank of Japan Policy Meeting

The Bank of Japan is seen keeping policy on hold at the conclusion of its two-day rate review on Thursday, including a pledge to keep short-term interest rates at minus 0.1% and the 10-year government bond yield target at around zero percent.

BoJ Governor Haruhiko Kuroda will hold a press conference afterward to discuss the decision.

The economy shrank the most in over four years in the third quarter, as a series of natural disasters disrupted factory output and distribution network.

Analysts expect a rebound in growth in the current quarter but global trade woes and slowing external demand have raised risks to the world's third-largest economy.

-- Reuters contributed to this report

Economic Calendar - Top 5 Things to Watch This Week

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Eustáquio Júnio Nunes dos Santos
Eustáquio Júnio Nunes dos Santos Dec 16, 2018 9:44PM ET
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Governments around the world are talking about raising the interest rates! The Austrian economists have been warning about the risks of Governments manipulations and now, the bill is coming!
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Lee Frias
Lee Frias Dec 16, 2018 2:37PM ET
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I think im going to sit on my hands this week and save myself the stress... i could tell big $$$ will smack price up and down shaking out weak hands in trying to trade news
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khizar ali
khizar ali Dec 16, 2018 11:57AM ET
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Isn't that expected around this time of the year?
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Neo Ezekiel
Neo Ezekiel Dec 16, 2018 11:22AM ET
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I'm expecting US Housing Data to come out negative
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