The focus this week will be on three central bank meetings and two sets of data from the US.
We expect no Sovereign QE announcement from the ECB meeting on Thursday but instead a commitment to more easing likely contingent upon further deterioration in inflation outlook (highly probable given falling oil prices) and unsatisfactory TLTRO take up on December 10th.
The BoE will likely remain cautious and stay put on Thursday as the last week’s GDP data showed great reliance on domestic demand and an interruption in investment cycle. Bank of Canada will also stay put on Wednesday and we expect them to continue doing so until after Fed starts rate normalisation.
We expect the ISM indices to remain at strong levels and the US Jobs report on Friday to post a 245K gain in non-farm payroll and a decline in unemployment rate to 5.7%. These data will intensify the FOMC’s policy divergence from the ECB.
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