Dubai: The rally in US stock markets is expected to continue in the weeks ahead, analysts said, especially after strong job numbers and as the Federal Reserve readies to hike interest rates later this week.

“I expect the Santa Claus rally to carry on for the weeks ahead given no negative surprises. The jobs surge in the retail sector indicates a strong holiday season, which may continue to offer some support for the retail sector. However, it will be very interesting to see if the rotation from tech to other sectors — particularly financials — resumes this week,” said Hussain Sayed, chief market strategist at ForexTime.

Away from market performance, meetings and statements coming out of the world’s largest central banks will be the key focus for investors all the way from Europe to the United States this week.

In the US, the 25 basis point hike expected this week has been priced in, meaning that markets are not likely to react strongly once the hike is announced.

Investors, however, are likely to be keeping their eyes on the Fed’s economic projections, and the dot plot.

“It will be interesting to see if the Fed will reveal any plan on how to react to tax reforms. The European Central Bank and the Bank of England are also meeting this week. Despite no substantive monetary policy changes expected, the language might still move the euro and the pound,” Sayed said.

Brexit uncertainty

Across the pond, the European Central Bank will also hold a meeting on Thursday, where markets will be looking for hints on price stability from the bank. In the UK, the Bank of England is set to release its monetary policy summary this week that is likely to include mentions of Brexit.

After the Bank of England hiked interest rates last month, analysts do not expect to see another increase this week or any time soon considering the uncertainty created by Brexit. Analysts said, however, they will be watching the Bank’s language regarding outlook and Brexit.

Naeem Aslam, chief market analyst at London-based Think Markets UK, said he expected to see a “very well-tailored” statement coming out of the European Central Bank in order to manage expectations.

“The ECB doesn’t want the market to get ahead of itself. Yes, the growth in Germany, France, and Greece has been good ... but they don’t want the euro to become too strong. That means we’re expecting the euro/dollar range between 1.17-1.20 on the upside,” he said.

Factbox: Bitcoin

If you thought the recent spikes and plunges in Bitcoin price were a bit much, get ready for a lot more noise from Bitcoin as the CBOE Global Markets launches futures contracts for the cryptocurrency.

On Sunday, Bitcoin was trading at just above $15,500 (Dh56,885), after having crossed $19,000 late last week.

Naeem Aslam, chief market analyst at London-based Think Markets UK, said the long-term trend for Bitcoin was still skewed to the upside, with the currency likely to touch $20,000 by year-end.

“I think the launch of the futures contracts will spur the concept that now Bitcoin futures are trading within some sort of a regulatory environment, but it will also allow some hedge funds to come and start shorting prices. But I don’t think Bitcoin has reached its ceiling yet,” he said.

Aslam added that if there isn’t enough pressure on the short side, “the sky is the limit” for prices.