Most important events that will move the markets in the coming days

The final reading of third-quarter U.S. growth will be the main focus for global financial markets this week, as investors begin to wind down trading activity before the Christmas and New Year holidays.

1. Q3 US GDP
The US will release the final data on economic growth for third quarter on Thursday, with expectations for the economy to grow by 3.3%, compared with 3.1% in the second quarter. Last week the Fed raised interest rates and gave guidance on what it plans to do in 2018. As expected from the central bank, they are of the opinion that three increases in 2018. are perfectly suitable.

Meanwhile, lawmakers in the US are working to make the tax reform happen by the end of the week. The vote in the Senate is scheduled for Tuesday, and the likelihood of the reform being approved is high.

We expect increased volatility with USD, and if the reform is a fact we expect a strong growth of large technology companies and the banking sector.

2. Bank Of Japan's interest rate decision
The Japanese central bank is not expected to make any changes to its monetary policy on Thursday, as strong exports and high private consumption raise the prospects for moderate economic expansion. Market analysts expect the BOJ to keep as short-term interest rates and target yield on 10-year bonds unchanged at least until the second half of 2019. Most economists believe that the Japanese central bank will begin to cut QE by the end of 2018, and if necessary thereafter.

3. UK Q3 Official GDP
The data will be released on Friday and the report is expected to confirm that the economy grew by 0.4% in the July-September period. On an annual basis, the economy is expected to grow by 1.5%. Bank Of England voted unanimously to keep interest rates at 0.5%, the main reason being "Fighting Brexit's Uncertainty."

If UK GDP is better than expected, the GBP increase will be significant. Conversely, if we see more bad data, the decline will be limited as most of the negatives caused by Brexit (including weaker GDP) already accumulated in the price of the pound.

The negotiations on Brexit and the trade deal to be discussed remain in focus. Any progress on the deal will support GBP and UKX. We are awaiting any possible agreement between the EU and the UK.

4. IFO Business Sentiment in Germany
German research institute IFO report on German business sentiment Tuesday as market players expect the index to reach 117.6 percent this month, which would be the highest level attained in the country. If data confirm the forecasts, we expect growth in the euro and a rise in German stocks.

5. Official Canada GDP in Q3
Canada will release monthly economic growth figures on Tuesday. Data are expected to show that the economy grew 0.2% in October, after rising 0.2% a month earlier.
In addition to the GDP report, top-level data on inflation and retail sales also attract the attention of investors.

Source: Bloomberg Pro Terminal

Jr Trader Petar Milanov

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