Top 5 things to watch in markets in the week ahead By

© Reuters

By Noreen Burke — Wednesday’s Federal Reserve meeting minutes will be the main highlight of a holiday-shortened week, with investors on the lookout for any indication that the pace of rate hikes may slow. The most important shopping period of the year kicks off on Friday in what will be a key test for U.S. retailers. The latest world economic forecasts from OECD on Tuesday along with global PMI data will give an important insight into the health of the world economy. Meanwhile, China may step up economic support measures and there are signs king dollar may be about to lose its crown. Here’s what you need to know to start your week.

  1. Fed minutes

The Fed is set to publish the of its November meeting on Wednesday with investors eager for any sign that policymakers may be considering slowing the tightening process after hiking rates more rapidly this year than any time since the 1980s.

Fed Chair Jerome Powell and other policymakers have signaled that the central bank could shift to next month to avoid tightening more than necessary and sending the economy into recession.

At the same time, Powell has said rates ultimately may need to go higher than the 4.6% that policymakers thought in September would be needed by next year.

The economic calendar for the coming week also includes the , , for October and data for November.

  1. Black Friday

Against a background of soaring inflation and rising interest rates, a key test of consumer demand arrives on Nov. 25, when retailers launch “Black Friday” sales – traditionally one of the year’s strongest shopping days.

Recent data showed that U.S. retail sales rose more than expected in October, indicating that consumers may be on more solid footing heading into year-end. Consumer spending accounts for more than two-thirds of U.S. economic activity.

Retailers have offered mixed results in the most recent earnings season. Last week, Walmart (NYSE:) raised its annual sales and profit forecast as demand for groceries was expected to hold up despite higher prices, while Target (NYSE:) forecast a surprise drop in holiday-quarter sales after warning of “dramatic changes” in consumer behavior that were hurting demand.

Amazon (NASDAQ:), the world’s biggest online retailer, said on Oct. 27 it was preparing for slower growth because “people’s budgets are tight” due to inflation.

  1. OECD forecasts/PMI data

The OECD will publish its latest forecasts for the global economy on Tuesday and this along with preliminary readings of business activity in November from a number of countries will give a snapshot of the health of the world economy.

The OECD’s most recent forecasts, made in September, already pointed to a worsening outlook for next year with the U.S. economy expected to fall into a recession.

PMI data from the , the and the U.S. on Wednesday may add to the gloom. In most European countries, PMIs are below the 50 marker that separates expansion from contraction.

Britain is already facing a lengthy recession. Eurozone economic growth has held up better than expected and labor markets remain relatively robust. But recession risks are still looming amid energy shortages and elevated inflation.

  1. Dollar past the peak?

The peaked at a 20-year high of 114.78 in September and has been falling ever since. With the currency on track to post its biggest quarterly loss since the second quarter of 2017 investors are now asking whether it has passed the peak.

The rise of the dollar has been a dominant trading theme of 2022, thanks to the Fed’s rapid rate hikes, giving the currency an edge over its peers among investors.

But analysts from Goldman Sachs said Friday that a dollar top would still appear to be “several quarters away,” noting it does not expect the Fed to embark on easing until 2024. It added that U.S. growth is not expected to bottom out soon.

  1. China

The Chinese central bank’s pledge to step up supportive policy measures should be on display on Monday, when key loan prime rates are set.

The People’s Bank of China is expected to keep key loan prime rates unchanged for the third straight month, with policymakers reluctant to drive the lower by further easing monetary conditions.

Authorities are looking for ways to prop up economic growth without triggering financial instability.

Other regional central banks will also be holding policy meetings during the week. The is expected to deliver a jumbo 75 basis point hike on Wednesday, while the Bank of Korea is seen tightening again, but possibly only by a quarter of a point.

–Reuters contributed to this report