Week Ahead – Volatility to remain

Omicron and central banks to dominate

The past week has been dominated by Omicron news as we all try to piece together the limited information we have and determine what it all means for the coming months. So much is still unknown and so the volatility and seesaw action we’ve seen this week may continue until we get a better idea of the threat posed by the new variant.

The RBA and BoC both hold meetings next week and will likely be armed with little more information than OPEC+ had on Thursday, which makes the job of providing reliable guidance extremely challenging. Even the Fed, ECB and BoE the week after will find life difficult and two of them were expected to announce tightening measures prior to the news of the Omicron variant.

And this is at a time when central banks have an incredibly tough job on their hands. They’re already being forced to tighten monetary policy before they would like to and may soon have to make much tougher choices if the Omicron news isn’t good.

Fed eyes Omicron developments after NFP miss

Lira continues to slide despite desperate CBRT attempts to support the currency

Chinese property sector facing a big week


The US economy is adding jobs at a slower pace as employers are starting to have success luring people back to the labor force. If wages continue to rise, that will be the key for companies to reach their hiring targets. 

The November employment report showed US employers added 210,000 jobs, a miss of the 550,000 consensus estimate and well below the upwardly revised prior reading of 546,000 jobs.  A headline miss with the nonfarm payroll report may be mostly attributed to seasonal factors. The underlying components make this a solid labor market report as people are coming back to the labor force, with the participation rate improving from 61.6% to 61.8%.   

Wage pressures may be slowing as average hourly earnings dipped in November from 0.4% to 0.3%, but some of that could be attributed to the weakness in lower-paying hospitality jobs. 

The Fed may view this as a positive employment report as minority unemployment improved significantly and the participation rate is now only 1.5 percentage points lower than in February 2020. Fed rate hike expectations are settling around two rate hikes next year. The headline jobs miss takes away momentum from accelerated tapering but allows them to increase the taper pace by $5-10billion. 


A relatively quiet week ahead for the euro area, with much of the headline data being revisions and ZEW figures the only notable releases. The focus is on the ECB the week after, although that will be heavily influenced by the scientific data on the new Omicron strain which will determine how the next six months will look.


Much like in Europe, the UK next week sees a number of low-level economic data releases, with GDP numbers on Friday the only outlier. Meanwhile, Deputy Governor of the Bank of England, Ben Broadbent, will appear on Monday. The BoE meeting the week after is still a live one although the odds of a rate hike have slipped significantly as a result of the Omicron variant.


Russian data next week is a little thin, with CPI on Wednesday the only release. 

The focus will remain on the buildup of forces on the border, with tensions rising in recent weeks and a resolution not looking close. Talks between Biden and Putin could take place in the coming weeks although no date has been set.

South Africa

Omicron cases are rising rapidly, with the rate of transmission believed to be faster than that of Delta. Early evidence appears to suggest that symptoms are mild although the sample size is small and contains a lot of younger people that reportedly make up a large number of the countries unvaccinated. Time will tell whether that trend continues.

On the economy, we have a few notable releases next week including GDP data for the third quarter on Tuesday.


Coming off the back of another eventful week that’s seen the Finance Minister – a vocal opponent of recent rate cuts – replaced and multiple unsuccessful FX interventions by the CBRT, there should be plenty to look forward to. Currency markets are far from stable, with the lira hitting fresh lows at the end of the week and remaining under severe pressure. Next week offers unemployment data on Friday, although this will naturally fall well down the pecking order below the rants of President Erdogan and the actions of the central bank. More volatility in the FX markets and intervention to stabilise them appear likely.


China releases its trade balance, CPI, and PPI inflation data this week. Of the three, the market focus will be on exports and PPI for evidence of slowing growth and/or rising inflationary pressures.

Data aside, it is China’s property sector that poses the most risk in the coming week. Both Kaisa and Evergrande face final payment deadlines and in the case of Kaisa, an official default is increasingly likely. Hong Kong equities are particularly vulnerable in this case, and will likely continue to face delisting nerves in the US from dual-listed Chinese giants.


A firm Non-Farm Payrolls number would have turned up the heat on emerging market currencies in the week ahead as monetary policy remains out of sync with the US. The Reserve Bank of India can alleviate some of that stress in the future by finally indicating that tighter monetary policy is on the way in 2022, even if it does not move at its policy meeting on Wednesday. India releases manufacturing, industrial production, and inflation data on Friday. A high inflation print will elevate the return of stagflationary pressures if the RBI is dovish mid-week, leaving the currency and equities vulnerable.


The Australian dollar is wallowing at 2021 lows as Fed taper nerves and omicron concerns sap risk sentiment of which the AUD is a major barometer.

The Reserve Bank of Australia has its policy meeting on Tuesday with its ultra-dovish mantra suffering credibility issues. No change in tone from the statement will deepen pressure on the currency, although local equities will continue chasing their tails in line with Wall Street volatility.

New Zealand

The NZD/USD, a risk sentiment barometer for global markets like AUD/USD, is also testing 2021 lows and remains vulnerable to stronger US data increasing Fed-taper nerves, as well as risk aversion flows via NZD/JPY on omicron. 

Friday’s Business PMI could negatively impact the currency if it is higher than forecast, increasing the noise that the RBNZ is falling further behind New Zealand’s rapidly escalating inflation problem. 

New Zealand’s government has eased Covid-19 restrictions in Auckland and brought in a new system of freedoms/restrictions across the country. A large spike in delta cases (the prevailing variant) could negatively impact the currency and stock market.


The Japanese Yen has rallied 250 points this week versus the US Dollar on omicron haven flows, also recording impressive gains via the Yen crosses. Yen’s rally is entirely based on omicron, and an easing of those tensions and firmer US data could see USD/JPY’s rally resume. 

Japanese equities continue to show a high correlation to Nasdaq moves and we expect volatile, but directionless trading to continue as the Nasdaq and Nikkei bounce around on omicron headlines. No significant data.

Key Economic Events

Saturday, Dec. 4

China central bank Governor Yi Gang and Guo Shuqing, chairman of the country’s financial regulator speak at the International Finance Forum in Guangzhou.

France’s Republican party is expected to announce its presidential candidate

Germany’s Social Democrats (SPD) to announce its ministry posts and votes on the deal for the incoming coalition government.

Economic Data/Events

Thailand consumer confidence

Sunday, Dec. 5

Economic Data/Events

World Petroleum Congress starts in Houston.

Germany’s Free Democrats (FDP) vote to approve the incoming government’s coalition deal.

Monday, Dec. 6

Russia President Vladimir Putin visits New Delhi  

BOE’s Broadbent speaks at Leeds University about the outlook for growth and monetary policy.

Sweden’s Riksbank publishes the minutes of its Nov. 24 meeting.

Turkish President Recep Erdogan travels to Qatar for a regular bi-lateral visit

Economic Data/Events

Germany factory orders, construction PMIs

Greece GDP

New Zealand construction work value, ANZ commodity prices

Australia inflation gauge, ANZ job advertisements

Italy retail sales

Turkey effective exchange rate

UK construction PMIs

Tuesday, Dec. 7

Greek PM Mitsotakis visits Russia to meet President Putin.

Economic Data/Events

US Trade

China Trade

Eurozone GDP: Eurozone

South Africa GDP

Sweden GDP

Australia rate decision: Expected to keep cash rate target at 0.10%

Australian consumer confidence, house price index

South Korea BoP

Taiwan CPI

Japan cash earnings, household spending, leading index

Philippines CPI, unemployed

Singapore foreign reserves 

China foreign reserves 

Australia foreign reserves 

Switzerland foreign reserves 

Germany ZEW survey expectations, industrial production

Mexico international reserves

South Africa gross and net reserves

Turkey cash budget balance

Wednesday, Dec. 8

Olaf Scholz becomes German chancellor.

ECB President Lagarde speaks at the Fifth ESRB annual conference.

Economic Data/Events

Canada Rate decision: Expected to keep Interest Rate unchanged at 0.25% 

Poland Rate decision:  Expected to raise rates by 50 basis points to 1.75%

India Rate decision: Expected to keep Repurchase Rate unchanged at 4.00%

Russia CPI

Hungary CPI 

Japan bank lending, BoP, GDP, bankruptcies

South Africa retail sales, SACCI business confidence

Bank of France industry sentiment indicator

EIA crude oil inventory report

Thursday, Dec. 9

Fed’s Kashkari speaks

Reserve Bank of Australia Governor Philip Lowe speaks at Payments Summit 2021.

Economic Data/Events

US wholesale inventories, initial jobless claims

Hungary Rate decision: The central bank is expected to deliver another 20bps rate hike.   

Germany Trade

Hungary Trade

China CPI, PPI, money supply, new yuan loans, aggregate financing

Japan money stock, machine tool orders

Thailand foreign reserves, forward contracts

Mexico CPI

New Zealand ANZ heavy traffic index, manufacturing activity

South Africa manufacturing production, current account, mining, gold, and platinum production

Turkey non-resident bond holdings, foreigner net stock invest

Russia gold and FX reserves

UK RICS house price balance

Norway GDP

Friday, Dec. 10

Economic Data/Events

US Nov CPI M/M: 0.7%e v 0.9% prior; Y/Y: 6.7%e v 6.2% prior, University of Michigan Consumer Sentiment: 68.0e v 67.4 prior

G-7 foreign ministers meet in Liverpool, UK

Germany CPI

UK GDP, BOE inflation attitudes survey, Industrial Production

India Industrial production

Mexico Industrial Production

New Zealand card spending, manufacturing index, home sales

Japan PPI

China FDI

Russia trade, money supply

Turkey unemployment, expected inflation for next 12 months

Sovereign Rating Updates

Czech Republic (Fitch)


United Kingdom (Fitch)


Netherlands (Moody’s)

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.