Top Global Macro Event Risk This Week: ECB, RBA and Other Central Bank Decisions; US CPI; China Lending

Top Global Macro Event Risk This Week: ECB, RBA and Other Central Bank Decisions; US CPI; China Lending

Talking Points:

• As much as there is high-profile event risk schedule for release this week, year-end liquidity trends and anticipation of FOMC on the 18th may weigh on activity levels
• Thematically, the top event risk this week is the first week of a two-week run in major central bank rate decisions from the ECB, BOC, RBA and SNB
• For concentrated event risk, the US CPI release is both recognizable and feeds into the bigger event risk of next week

As far as global macro event risk over the coming week, the center of gravity will shift away from the US and towards major global counterparts for volatility potential. Last week, the top listings included the suite of November labor data (including NFPs) and the ISM service and manufacturing activity reports. And, while there is a healthy dose of event risk from the world’s largest economy ahead of us, it is likely hampered by the expectation of the FOMC rate decision the following week. That shift towards anticipation could throw a wrench in the development of systemic risk trends for the time being, but it won’t necessarily curb volatility in areas were the docket items are weighty for their particular region or asset.

Table of Major Global Macro Events Scheduled for Week

Source: John Kicklighter, StoneX

Taking stock of the docket, the greatest aggregate weight this week is arguably centered on monetary policy via major central bank rate decisions. While the Federal Reserve and Bank of Japan are a another week ahead, there are a range of key policy groups due to update their respective settings this week. Among the central banks to keep tabs on are Australian, Canadian, Brazilian, Swiss and European groups (chronologically). Provisionally, the RBA is expected to hold its benchmark, rate, Brazil’s group is seen hiking 50bp and the SNB is expected to cut by -25bp.

Chart of Relative Monetary Policy Standing of Major Central Banks

Source: John Kicklighter

 

Between the no change and the scale of these banks, the scalability of global impact will likely be measured. In contrast, the Bank of Canada’s (BOC) expected -50bp cut is sizable enough to register as perhaps the largest move of this leg of the cycle – or the market will have to readjust for something more moderate. Then there is the European Central Bank (ECB) which represents the world’s largest aggregate economy with a quarter-percent cut with a policy group that is struggling to get on the same page with its messaging. Keep tabs on the Euro and Canadian dollar crosses.

Chart of USDCAD Exchange Rate Overlaid with US-Canada 2-Year Yield Differential (Daily)

Source: TradingView, John Kicklighter

 

An event that will be significant for controversy, but questionable for its actual market impact will be the November US CPI release. The Fed prefers the calculation behind the PCE deflator, but the market is what sets volatility, and it prefers the leading CPI update. We have not only seen a leveling out of the retreat in inflation trends from the 2022 peak, but there has been tentative evidence that price pressures are starting to percolate again.

Further, a narrative out of the US election reads that inflation never really abated as the statistics have suggested. That will build interest in this indicator a week before the FOMC rate decision; but it begs the question: how market moving will it actually prove? Unless the update is a substantial deviation from expectations, the chance of overriding the market’s penchant for wait-and-see will likely be low.

Chart of DXY Dollar Index Overlaid with Implied Rate Cuts from FOMC in 2025

Source: TradingView, John Kicklighter

 

In other themes, there is worthy fundamental update around OPEC meetings, US budget benchmarking and Japanese business sentiment. However, for a top macro potency, I will be monitoring the run of Chinese data that is on tap. The event risk is noteworthy including inflation and trade figures at the start of the week. That said, it is Friday’s November Chinese lending figures that carry the greatest recognition.

While the government has ambitions to offset US tariff threats and shift its focus to domestic growth, the practicality of the matter is that they have to resort to previously establish lines of expansion – namely, lending. Given that the new loans figures are a Friday release without a clear time, the potency of impact will likely be dampened. That said, there is a curb on reaction to government data regardless baked into skepticism of data accuracy. Nevertheless, this is critical data on growth for the world’s second largest economy without a more prominent or accurate contrast.

Chart of FXI China Large Cap ETF and Alibaba-Shanghai Composite Ratio (Daily)

Source: TradingView, John Kicklighter

 

-- Written by John Kicklighter, Global Head of Content