As we start the week of December 9, 2024, global financial markets find themselves at a critical juncture characterized by high-stakes central bank decisions, pivotal inflation releases, and influential economic conferences. The next several days will bring rate announcements from the European Central Bank (ECB), Reserve Bank of Australia (RBA), Swiss National Bank (SNB), and Bank of Canada (BoC), as well as crucial inflation data from the United States and China. Against this backdrop, investors are also set to parse a spate of economic indicators from Europe, the UK, and Japan, all while keeping a close eye on China’s Central Economic Work Conference (CEWC) for clarity on the world’s second-largest economy’s 2025 policy direction.
ECB Leads the Charge
The centerpiece of this week’s agenda is Thursday’s ECB meeting, where the consensus leans decisively toward a 25 basis-point rate cut, bringing the main refinancing rate down to 3.00%. Markets have priced in this scenario with roughly a 79% probability, reflecting growing confidence that the ECB, having battled persistently high inflation through 2023 and 2024, is now able to shift gears. The significance of this move is not just about the quarter-point cut but also the tone and outlook communicated by ECB President Christine Lagarde. Observers will be on the lookout for any dovish language that might indicate further easing ahead, especially given the ongoing political struggles in key member states like Germany and France. Amid a relatively light eurozone data docket—limited to Sentix investor sentiment, industrial production figures, and a final reading of German November inflation—this meeting will be the prime directional catalyst for the euro and European bond yields.
U.S. Inflation Remains Central
Over in North America, the U.S. inflation story remains center stage, even as the Federal Reserve enters its “quiet period” before the December 18 rate decision. Market participants are bracing for Wednesday’s Core CPI print, which will be dissected to gauge how effectively the Fed’s earlier rate hikes have contained price pressures. Any upside surprise could rekindle fears of policy tightening in early 2025, while a softer reading might reinforce the notion that the Fed is on hold and possibly done with its hiking cycle. U.S. PPI and weekly jobless claims data, though somewhat secondary, will round out the inflationary picture and labor market health. With the Fed silent for now, the data must speak for itself, and the dollar will likely trade with heightened sensitivity to these numbers.
BoC and RBA Policy Decisions
In Canada, the Bank of Canada looms large with a rate decision scheduled for Thursday. Unlike the ECB’s relatively modest move, the BoC is widely expected to deliver a larger, 50 basis-point cut, slashing the benchmark rate to 3.25%. Such expectations have gained traction after weak third-quarter GDP figures and a noticeable uptick in unemployment—both pointing toward a sharp slowdown in Canadian growth. Markets have priced in an 84% chance of this half-point reduction, and the real question is whether Governor Tiff Macklem might signal further cuts into early 2025. The Canadian dollar and local equities will respond sharply to the BoC’s framing of the domestic economic slowdown and global risks.
The antipodean markets will look to the Reserve Bank of Australia’s policy decision on Tuesday. The RBA is broadly anticipated to hold rates steady at 4.35%, especially after a disappointing Q3 GDP print that showed the economy losing momentum. The focus here will be on the policy statement’s language and upcoming speeches by Deputy Governor Andrew Hauser and Assistant Governor Sarah Hunter. Investors will look for any hints of a policy pivot or signs that the RBA is concerned enough about the domestic slowdown to consider easing next year.
Asia and Europe in Focus
Asia’s attention will be firmly anchored on China, as the release of inflation data on Monday will signal whether deflationary pressures are finally receding in the world’s second-largest economy. Early trade figures on Tuesday could also illustrate whether exports continue to surge as companies try to get ahead of potential U.S. tariff threats. China’s lending data might surface around the same time, adding another layer to the macro narrative. Above all, the upcoming Central Economic Work Conference—likely taking place mid-week—will be a major event for investors seeking clarity on Beijing’s priorities for 2025. Expectations center around new GDP targets, policy stimulus plans, and possible measures to manage the ongoing U.S.-China trade tensions.
In Europe’s peripheral activity, the Swiss National Bank’s decision on Thursday is noteworthy. A quarter-point cut to 0.75% is fully priced in, with a more considerable 50 bps cut seen as less likely but still on the table. Meanwhile, the UK’s economic diary is jam-packed: GDP figures, construction data, trade numbers, industrial production, manufacturing activity, and consumer inflation expectations are all due. Together, these releases will give the Bank of England and market participants a comprehensive snapshot of Britain’s economic health.
Looking Ahead
Taken together, this week is a nexus of critical economic data and central bank action. The themes are clear: the ECB is poised to ease, the BoC likely to cut aggressively, while the RBA and SNB may tread lightly. The U.S. inflation storyline remains crucial, and China’s policy signals will matter greatly for global risk appetite. Ultimately, markets are braced for a week of potential volatility as they parse these decisions and data releases, all of which will shape the trajectory of monetary policy, currency markets, and global growth expectations heading into 2025.
