inflation

The latest inflation figures for China and the USA will come under close scrutiny, during the first full trading week of 2018.

Jan 4 • Extras • 711 Views • No Comments

The first full trading week of 2018 witnesses a return to traditional economic calendar events effecting our: FX, equity and commodity markets. It’s a busy week for Chinese, USA and European  data, including several inflation figures, most notably for China and the USA. The latest production figures for the U.K. will be analysed carefully, for any signs of comparative weakness in the economy as it faces Brexit in early 2019. Germany’s latest import and export figures will be published, alongside its industrial production growth, which are carefully monitored due to Germany’s portion as the engine of growth in Europe. The various PPI metrics for the USA will be revealed, which may deliver early indications regarding any increasing inflation figures in the USA economy.

 

Sunday starts the week with the latest foreign reserves figure for China, the expectation is for a slight fall to $3,115b in December. On Monday morning we receive the latest YoY foreign investment metric from China, currently at 90.7% there is little expectation for any significant change. Germany factory orders showed an encouraging annual growth figure of 6.9% up to November 2017, the expectation is for this figure to be maintained. Swiss CPI is currently running at 0.8%, a figure that is unlikely to change once December’s value is released. Combined with the latest sight deposits detail from Swiss banks, both figures may impact on the value of the Swiss franc, if the metrics miss or best forecasts.

 

A cluster of confidence readings for the Eurozone is published on Monday; consumer, industrial, business and investor, although strictly ranking as low impact, the cumulative reading is monitored closely. Retail sales in the Eurozone slumped into negative territory in November, December’s reading should be positive and have the knock on effect of rising the YoY figure, above the 0.4% recorded for November. As attention turns to the USA the key reading of the day is consumer credit; predicted to fall to $18b in November from $20.5b in October. Next month’s figure is likely to increase, due to the holiday season consumer spend.

 

Tuesday begins with house sales from N.Z., which fell by a stunning -8.9% YoY up to December. Japanese real labour cash earnings are forecast to have gone negative in November at -0.1%. With cash earnings up 0.6% YoY. Consumer confidence in Japan is forecast to rise marginally to 45. Australia’s building approvals increased dramatically YoY, up 18.4% to November, the latest figure for December is not expected to slow significantly. December’s Swiss unemployment reading is forecast to remain unchanged at 3.2%, retail sales fell significantly in Switzerland in November, down -3%, a seasonal improvement is expected.

 

German industrial production unexpectedly fell in November by -1.4%, and 2.7% YoY, an improvement is anticipated. Germany’s November trade balance and current account surpluses are forecast to improve above the approximate €18b October readings. The latest exports and imports metrics for Germany are also published. The latest Eurozone unemployment rate is currently at 8.8%, the most up to date November level is forecast to remain unchanged.

 

On Wednesday a cluster of Chinese data is published, including the loans made in Yuan in December and the latest CPI figure, currently at 1.7% the forecast is for a rise to 1.9%. High impact Chinese data is having very little effect on global equity and FX markets lately, unless the figure released is a shock. As focus shifts to the European markets’ open, the minutes for the latest ECB monetary policy/rate setting meeting are published, investors will analyse the content for any forward guidance, in relation to a reduction in the APP (asset purchase programme), over and above the commitments already made, or clues regarding potential interest rate rises in 2018.

 

It’s an extremely busy session for U.K. data on Wednesday, figures on: industrial, manufacturing and construction output may reveal and lingering Brexit doubts and damage. Various trade balance deficits for November are also published for the U.K., as is the latest December NIESR estimate for U.K. GDP growth, the previous estimate was 0.5% QoQ.

 

Wednesday is also an extremely busy day for USA economic calendar publications and events; import prices, exports prices, wholesale inventories and trade sales. The latest crude and gas inventories up to January 5th will also be published and with WTI breaching $61 per barrel for the first time since 2015, the oil inventory figure will be closely monitored. USA Fed official Bullard will deliver a speech the USA economic outlook, in St.Louis.

 

Thursday witnesses the latest available November retail sales figures for Australia published, expected to deliver a reading similar to the 0.5% growth level revealed in October. The latest Japanese bond sales will take place on Thursday morning, thereafter the leading and coincident indices for Japan are published. The German annual GDP reading for December is forecast to remain unchanged, from the latest 1.9% reading, whilst the Eurozone industrial production YoY growth figure for November should come in close to the 3.7% previously recorded. The U.K. BoE will deliver its latest credit conditions and liabilities survey, market analysts and investors will comb through the publication and listen to the content intently, for forward guidance clues as to how the central bank views the potential impact of Brexit on the U.K. economy and what measures the bank can execute to minimise any damage.

 

From the USA we’ll receive the latest, various PPI figures, indicating if the USA is building up any inflationary pressure or momentum through the increased cost of imports, thereby increasing production prices. Initial jobless and continuous jobless claims data will also be released, and late evening Fed official Dudley delivers a speech on the overall economic outlook for the USA.

 

On Friday morning, during the Asian session, China’s latest figures on: imports, exports and trade balance for December are also published. A raft of data on the USA economy is published in the afternoon, including the latest, various CPI figures, both monthly and annually. Currently running at 2.2% and 1.7% (excluding food and energy), these figures will be closely watched to determine if inflation increasing in the short term, will encourage the FOMC/Fed to raise rates earlier than predicted in 2018. Retail sales are forecast to fall to 0.3% in December, from 0.8% in November. Business inventories data will be published and the trading week closes with the Baker Hughes rig count, under increasing scrutiny, due to the rise in WTI oil prices over recent weeks.

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