WEEKLY MARKET SNAPSHOT 22/1-26/1|USA and U.K. GDP growth figures will come under close scrutiny next week, as will the ECB when it meets to discuss and decide on the Eurozone’s interest rates

Jan 19 • Is The Trend Still Your Friend • 2303 Views • No Comments

The ECB will reveal its latest decision with regards to interest rates, the key rate is at 0.00% and there is no expectation for a rise. However, the accompanying narrative from ECB president Mario Draghi will be carefully monitored, given recent protestations from various ECB officials suggesting that; the value of the euro is too high and that the APP scheme may continue for longer than previously stated. U.K. GDP growth will also come under focus next week, the annual figure is expected to remain at 1.7%, a fall from previous figures of circa 2.5% over recent years, that can’t be blamed on Brexit, given the U.K. hasn’t left the E.U. yet.

Focus will be on the latest USA annualised GDP figure next week, a fall from 3.2% to 3% is forecast, could an impressive 3% growth be regarded as an early judgment of Trump’s first year presidency, or did he inherit momentum and growth from Obama’s administration? Canada’s CPI is currently running at 2.1%, having just raised rates to 1.25% this figure will be closely watched, as will future CPI figures in the short to medium term, to discover if the BOC were perhaps correct, or too hasty, in raising rates so aggressively over the past eight months.

Monday starts the week in quiet fashion with condo and convenience store sales data from Japan. As Europe’s markets open Swiss metrics on banking deposits and money supply will be released. Attention then turns to North America; Canada’s wholesale trade figures are published, as is the Chicago Fed national activity index. Late evening New Zealand’s latest performance services index data is revealed.

Tuesday morning in the Asia session Japan’s central bank the BOJ will announce its decision on interest rates, the overwhelming prediction is for a hold of the -0.1% rate. The BOJ will also publish its latest outlook report to accompany the decision, both events could see increased activity in the yen at or around the time of release. Japan remains the focus of attention with Tokyo store sales, nationwide store sales, machine tool orders and the all industry activity data all published.

From the U.K. we receive the latest government borrowing figures, whilst the CBI trade body will publish trend data on: sales, confidence and orders. Various ZEW surveys for Germany and the Eurozone are published, covering sentiment and expectations, the latest (January) Eurozone consumer confidence reading will also be delivered. The only significant news from the USA involves the publication of the latest Richmond manufacturing index reading for January. Late evening Japan’s latest trade balance figures (surplus) are released, often an indicator of the health of Japan’s manufacturing and export sectors.

On Wednesday morning Germany’s import price index figures are published, then focus quickly turns to Japan’s manufacturing PMI, later in the morning Japan’s leading and coincident indices are delivered. December credit card data for New Zealand may reveal seasonal spending activity. As European markets open a raft of: services, manufacturing and composite PMIs are published for: Germany, France and the wider Eurozone. Various hard data statistics for the U.K. including employment and unemployment will be released in the morning, current earnings growth is at 2.3%, analysts will monitor this figure closely, due to U.K. inflation currently running at 3%.

U.S. economic data begins with weekly mortgage applications and the latest monthly house price index, previously at 0.5% November’s figure is forecast to fall to 0.4%. Markit PMIs for the USA will be delivered; services, composite and manufacturing, the forecast is for manufacturing to fall to 55 from 55.1. Existing home sales are predicted to show a (seasonal) fall of -2.8% in December, from a rise of 5.6% in November. The day’s key economic calendar events ends with New Zealand’s CPI YoY figure for Q4 2017, the expectation is for little change, from the current annual rate of 1.9%.

Thursday begins with concentration on German data; the various IFO business readings and GfK consumer confidence readings. The U.K. banks publish their latest metrics on home loans. The ECB will reveal their latest interest rate decisions, the anticipation is that the key borrowing rate will remain at 0.00%, with the deposit rate at -0.4%.

As focus turns to North America Canada’s latest retail sales data is published, as are the USA retail and wholesale inventories, together with the latest advanced goods trade balance figure; expected to fall to -$68.8b, from November’s reading of -$69.7. On Thursdays the latest USA weekly jobless claims and continuous claims data is always published, the latest monthly home sales figure will also be released, the December figure is forecast to fall to -8.9%, from 17.5%.

Late evening focus turns to Japan’s economy; CPI YoY up to December is predicted to remain at circa 0.6%, shortly after this release, the minutes from the latest BOJ monetary policy meeting will be revealed.

Friday continues with Japanese data; the bond purchasing data could reveal the government and BOJ ongoing fiscal and monetary policy. Various low impact data from the U.K. will be published, before the latest GDP figure is revealed by the ONS; expected to maintain the current 1.7% annual growth figure, with the final quarter of 2017 coming in between 0.4%-0.5%. A cluster of Canadian inflation data is published, including the key CPI figure, forecast to remain at 2.1% which will come under focus in relation to CAD, given that the BOC recently raised the interest rate to 1.25%. Annualised Q4 YoY GDP figures for the USA are forecast to reveal a fall to 3% from 3.2%. The week ends with the latest Baker Hughes rig count data, of particular interest lately, due to the rise in the price of WTI oil.

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