FUNDAMENTAL REVIEW FOR THE WEEK (16- 20 December 2024)

Key points: 

High liquidity: High liquidity is expected in the markets this week due to potential profit-taking before the Catholic Christmas.

FORC meeting: The key event will be the Fed meeting, where a rate cut is expected. However, this cut may be hawkish given the revised inflation, GDP and unemployment forecasts. Comments from Fed Chairman Jerome Powell will be important - how concerned he is about the extreme increase in manufacturing inflation and what the Fed's plans for rates are for the beginning of next year.

Rate forecasts: Most banks expect the Fed to reduce the number of rate cuts in 2025, indicating a more cautious approach. Markets are not expected to react strongly to the Fed's decisions in December.

BOJ and BOE decisions: The Bank of Japan is likely to delay rate hikes until January, while the English regulator is more likely to keep rates at current levels but will not rule out a rate cut.

Chinese data: Data from China may impact risk appetite at the start of the week, with more fiscal and monetary stimulus possible, as well as a hint of an upcoming rate cut from the Chinese central bank.

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