The end of November nears, and you can already feel the smell of holidays in the air. Every year after Thanksgiving, Christmas comes so fast that people often forget that there is one month between the two.

December is not the best month for trading financial markets. It all comes down to the holiday season and the fact that many traders take a long vacation ahead of the new year. Also, investors close the books for the year, meaning it does not make sense to carry risk over the holiday season.

We can all agree, therefore, that December is a short trading month. However, it won’t be dull, as all investors have an eye on four market-moving events:

• November NFP report
• US CPI – December 13
• FOMC Meeting – December 14
• ECB Meeting – December 15

The first piece of economic data to watch in December is due at the end of this week. The November NFP report will give us a clue about the US jobs market, how tight it is, and if there are any reasons for the Fed to slow down the pace of its interest rate hikes.

The market expects the unemployment rate at 3.7% and 200k new jobs in November.

Inflation slowed down to 7.7% in October. It is the lowest level since January and the reason why stocks (and the dollar) reversed their 2022 trend.

If inflation declines for another month, the Fed will turn less hawkish.  

The FOMC Statement and the Fed’s press conference will move financial markets one day after the inflation report. Again, it is all about the inflation report released on December 13, as it directly impacts the Fed’s tightening cycle.

Finally, on December 15, the heat turns to Europe as the ECB Meeting looms large. Some of the Governing Council’s members favor a 75bp rate hike in December, and others, a 50bp rate hike.

Also, the press conference and any guidance are essential too.

All in all, volatility should increase until December 15 and gradually decline as the holidays are near. Expect a slow December trading environment by the time the ECB Meeting is behind.

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