WEEKLY MARKET SNAPSHOT 29/1-2/2| USA data comes into sharp focus, as the FOMC meet to decide interest rate policy, whilst analysts expect an improvement in the January NFP job numbers

Jan 26 • Is The Trend Still Your Friend • 94 Views • No Comments

In a week packed with high impact economic data releases, France and the Eurozone deliver their latest GDP figures on Tuesday, the expectation is for both to remain unchanged, whilst the main inflation reading (CPI) for the Eurozone is also expected to remain unchanged at 1.4%. The latest USA confidence reading will be revealed, in a week that sees the FOMC announce the latest interest rate decision, thereafter the committee will hold a conference discussing future monetary policy. The latest NFP numbers will be delivered on Friday, as the unemployment rate is expected to remain unchanged. Analysts will also focus on Canada’s latest GDP figure, given the economy’s impressive 3.4% growth in 2017.

There’s a raft of PMIs published this coming week, the first series of the year is often an indication of the current levels of optimism displayed by purchase managers. Likewise the ISM readings, specifically for the USA, are also excellent leading indicators of where both sentiment and in turn hard data economic readings, may be headed over the short to medium term.

Monday begins with the latest import index reading from Germany, followed by the latest weekly information from the Swiss central bank, regarding the level of deposits. Personal income and expenditure in the USA will be closely observed for signs that the USA consumer is still spending, income is forecast to show a rise of 0.3% for December, with expenditure falling to 0.5% in the month, for the same period. The USA Dallas manufacturing reading closes off the news for America on the day, forecast to fall to 25.3 for January. Attention then turns to New Zealand’s economy; imports, exports and trade balance. Japan’s jobless rate is expected to remain at or close to the 2.7% level, with household expenditure YoY (up to December), forecast to remain at 1.7%, retail trade is forecast to remain at 2.2% annual growth.

Tuesday witnesses France publish its last Q4 GDP reading for 2017, the expectation is for a reading of 0.5%, resulting in a forecast of 2.2% YoY. Exports, imports and watch sales/exports are revealed for the Swiss economy. From the U.K. we’ll receive the latest data on: consumer credit, secured lending, mortgage approvals and money supply. Several soft data confidence readings for the USA are published, including industrial and services confidence readings. The latest GDP YoY reading for the Eurozone will be revealed, expected to remain at circa 2.6%. Germany’s latest CPI reading will be revealed, forecast to remain close to the 1.7% reading recorded in December. The various Case Shiller house price readings will be delivered for the USA, as will the latest consumer confidence reading for January, predicted to come in marginally higher at 123. The day’s economic calendar events for Tuesday closes off with Japan’s industrial production figures.

Wednesday morning we’ll receive the latest Australian CPI data, currently at 1.8% there is little expectation for any change. With China recently declaring a slight rise in GDP to 6.3%, analysts will monitor the latest manufacturing PMI for January to gauge if there’s any systemic issues with purchasing managers, the last reading came in at 51.6. Various bond purchases by the BOJ will be scrutinised for indications that monetary easing is potentially being tapered, housing starts and construction orders data from Japan will also be carefully analysed. As attention turns to Europe Germany’s latest January unemployment figures are forecast to show no change, from the current 5.5% level, the Eurozone’s unemployment level is expected to remain at 8.7%. The euro area’s CPI is forecast to remain at its current 1.4% level.

North American data begins with weekly mortgage applications; predicted to fall due to seasonal factors, the ADP employment growth figures are forecast to fall to 183k jobs created, versus the 250k in December. Canada’s latest GDP figure is predicted to reveal that growth has been maintained at 3.4% YoY. Various USA data readings including; energy inventories and home sales, prefaces the latest interest rate announcement from the FOMC, forecast to remain at 1.5%.

On Thursday the latest Australian imports and export index readings will be published, as will be the building approvals, both month on month and year on year. China’s Caixan manufacturing PMI is expected to remain at a similar figure to December’s 51.5. As European markets open the latest Swiss retail figures will be revealed, expected to improve on the -0.2% YoY figure published for December. The manufacturing PMI for the Swiss is predicted to remain at circa 65.2. There’s a cluster of February manufacturing PMIs published for several of Europe’s leading economies; Italy, Germany, France, U.K. and the wider Eurozone area. Germany’s reading is forecast to come in at 63.3 for February, always closely watched, given Germany’s position as the engine of growth in the area. Canada’s manufacturing PMI will also be published.

As focus moves to the USA the latest weekly jobless claims data will be revealed, both the Markit PMI and ISM reading for manufacturing will be published; the ISM reading is expected to fall to 58.9. Construction spending in the USA is forecast to have fallen to 0.4% in December.

Friday’s main economic calendar news event involves the latest NFP job numbers report, December’s NFP print disappointed markets coming in at 148k, the prediction is for an improvement to 165k. The unemployment rate in the USA is forecast to remain unchanged at 4.1%, with average hourly earnings forecast to fall to 0.2% growth, which may impact on the current annual growth rate of 2.5%. Factory orders are predicted to fall to 0.6% for December, from the 1.6% recorded in November. Durable goods orders and the various monthly university of Michigan reports, together with the latest Baker Hughes rig rate count, ends the week’s economic data.

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