In the upcoming week, China's trade balance, consumer price index and industrial production are scheduled for release, Swiss National Bank libor rate and monetary policy statement are to be announced (the SNB has kept the target range of zero to 0.25 percent for the Libor rate and median forecasts indicate that it will stay at this level until at least mid-2016), the Reserve Bank of New Zealand's official cash rate is to be announced next week (the RBNZ has kept the benchmark rate steady at 3.5 percent since July), the next sale of the long-term refinancing operation (LTRO program) is scheduled to start on Dec. 11.
China takes over the US as the world’s largest economy
The major news that shook the world this week was that China took over the US as the world’s largest economy, according to the latest
report published by the International Monetary Fund.
The report estimated that by this year’s end, China’s produce will reach $17.6 trillion, beating USA’s $17.4 trillion. This implies that China will now contribute 16.5 percent to global economy (when measured in real purchasing power terms) as compared to 16.3% contributed by the US.
“For the first time since Ulysses S. Grant was president, America is not the leading economic power on the planet”, MarketWatch noted.
In the upcoming week, China’s trade balance, consumer price index and industrial production are scheduled for release.
Swiss libor rate
On November 30, the “Save Our Swiss Gold” referendum which would have made Switzerland go towards gold standard was rejected by the Swiss voters. Around 78 percent of the voters voted against the referendum. The proposal required the Swiss National Bank to hold at least 20 percent of its total reserves (from the current 7.8 percent) and stop any further selling of Swiss gold.
Next week Swiss National Bank libor rate and monetary policy statement are to be announced. The SNB has kept the target range of zero to 0.25 percent for the Libor rate and median forecasts indicate that it will stay at this level until at least mid-2016.
RBNZ official cash rate
Data released this week showed that whole milk powder price continued to decline in the latest global dairy trade overnight auction further pressurizing Fonterra Cooperative Group Ltd. to cut its forecast milk payout to farmers.
As the dairy sector is one of the major contributors to New Zealand’s GDP (around 7 percent), the auction results influences the New Zealand dollar. Moreover, the payouts to farmers are expected to fall sharply, which would directly impact consumer spending in the country.
Also, a strengthening US economy along with falling dairy prices caused the NZD to trade at its lowest levels in almost a month. The NZD/USD traded at 0.7760 as of 01.46 EST, slightly recovering from yesterday’s low of 0.7728.
The Reserve Bank of New Zealand’s official cash rate is to be announced next week. The central bank has kept the benchmark rate steady at 3.5 percent since July.
Euro LTRO to start
In the ECB meeting held on 4th December, the central bank decided to keep the interest rates at the historic low of 0.05 percent.
“Early next year the Governing Council will reassess the monetary stimulus achieved, the expansion of the balance sheet and the outlook for price developments," Draghi said.
Data released last week showed that inflation fell to 0.3 percent in November, keeping the ECB under pressure to act soon.
“Should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council remains unanimous in its commitment to using additional unconventional instruments within its mandate,” Draghi said.
The next sale of the long-term refinancing operation (LTRO program) is scheduled to start on Dec. 11.
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