Week ahead: US Interest rate and Inflation in Europe to determine Markets Direction - Crucial Week

The week of December 16-20 will be marked by a series of economic data that will have a strong impact on the markets, in addition to important corporate results. Attention will be focused on economic activity indicators in the US, such as the manufacturing and services sector PMIs, which can provide clues about the health of the American economy. Meanwhile, inflation, retail sales and GDP will also be on the radar, with relevant data coming from the United Kingdom, the Eurozone, Canada and Japan. Interest rate decisions in several countries and reports from companies such as Toro, Accenture and Nike promise to move the markets as well, making the week one of the most volatile of the month.

Here are the week’s key events:

Monday, December 16th: US manufacturing and services in focus

The US Manufacturing PMI will be released, and the latest figures have shown a slowdown, with readings below 50, signalling a certain sluggishness in the industrial sector. In contrast, the Services Sector PMI has been performing stronger, with readings around 55, reflecting a more buoyant and robust services sector. The difference in performance between sectors may provide clues about the economic challenges and possible paths for future growth in the US.

Tuesday, December 17th: Consumption and inflation on the radar

The day begins with the release of US retail sales, which have been a positive surprise, with the last five readings exceeding expectations. Consumption remains robust, despite global economic uncertainties.

The Consumer Price Index (CPI) will be published in Canada. Inflation has been on a slowing trajectory since 2022, stabilizing at around 1.6%. This movement suggests controlled inflation, which may influence expectations for the Bank of Canada's monetary policy.

Wednesday, December 18th: US Interest rates and Inflation in Europe to move the markets

Inflation (CPI) will be released in the UK and the Eurozone. In the UK, inflation continues to fall, with the current rate close to 2.2%. The Eurozone follows a similar trend, with inflation around 2%, reflecting the European Central Bank's efforts to control prices.

The most important news for Wednesday will be the Fed’s decision about the US Dollar's interest rate, as this has the power to change money flow around the world. In recent meetings, the Federal Reserve has been cutting its interest rates in response to more controlled inflation. The big question now is: Will the FED cut the rate again, or will it keep monetary policy unchanged?

In addition, the Toro (TTC) report will be released. The company has shown positive results since 2019, but the 2023 performance was slower than the previous years, showing a certain slowdown. On the daily chart, Toro shares show sideways behaviour, which indicates uncertainty about the future direction of prices.

Thursday, December 19th: JPY and GBP interest rates. Nike numbers expected.

Thursday will be a day full of news that can generate high volatility in the markets.

Japan’s interest rate decision is set, and the Bank of Japan (BOJ) has been on a steady path since it began raising rates in March. After three straight meetings without changes, it will be interesting to see whether the BOJ will follow suit and raise rates again or keep rates on hold. The Bank of England (BOE) is also being closely monitored, with the market awaiting possible further rate cuts following its recent decision. In the US, GDP will also be released, and the expectation is to see whether the US managed to keep its recent growth path at around 2.8% in recent quarters.

From the corporate sector, Accenture (ACM) and Nike (NKE) reports are also worth watching.

Accenture has delivered positive results since 2020, but the 2024 numbers are not very attractive, and the daily chart shows a downtrend line that will only be broken if there is a consistent recovery. Nike has been solid since 2021, with modest results in 2024, with shares close to a support region on the daily chart.

Friday, December 20th: Another inflation data from the US

After a week full of impactful events, Friday promises to be quieter. Attention will be focused on the Core Personal Consumption Expenditures (PCE) Price Index in the US, which showed a slight increase in recent readings, raising warnings about a possible return of inflation in the US. The PCE is an important indicator for inflation and can influence future decisions by the FED.