Week Ahead

It will be a very busy week with central banks meetings in US, UK, and Euro Area and US non-farm payrolls report taking central stage. Also, investors will follow inflation and GDP growth rates for major European economies including Germany, France, and Italy. Finally, it will be worth following fresh PMI readings for the US, China, Canada, India, Australia, and South Korea.

The upcoming week brings a lot of news for investors to digest, among them the highly anticipated Federal Reserve’s interest rate decision and the nonfarm payrolls report. Inflation has shown signs of cooling, fuelling hopes that the Federal Reserve would slow down the pace of its monetary policy tightening by delivering a smaller 25 bps rate hike on Wednesday. Aside from the Fed, the US nonfarm payrolls report will be crucial in January the economy likely added 175K positions, while unemployment is set to edge up to 3.6%. The average hourly earnings are seen increasing at the same pace as in the previous period, with an expected 0.3% m/m outcome. Additionally, investors will pay close attention to the ISM manufacturing and non-manufacturing PMI’s, which likely confirm the factory activity contracted in January, but the services sector returned to growth. Other first-tier economic pieces are JOLTs Job Openings, ADP private payrolls, and S&P Global PMIs. Also, the earnings season will provide further insight into corporate America. AMD, Meta Platforms, Alphabet, Amazon, Apple, and Qualcomm are the most prominent companies to report. Elsewhere in America, Canada will publish the latest monthly GDP data.

In Europe, the European Central Bank and the Bank of England are expected to move forward with their aggressive campaign on inflation and raise interest rates by 50 bps on Thursday. On the macro front, key reports on growth, inflation, and unemployment will be released for the Euro Area, Germany, Italy, France, and Spain. The currency bloc, alongside Germany and France, likely have avoided negative growth in Q4 as warmer weather helped ease the energy crisis, while Italy’s GDP probably slipped into contraction. Regarding cost pressures, inflation in the Eurozone as a whole is forecasted to continue slowing in January. In Germany, however, prices are set to rise at a faster 9.2%. Other data to keep an eye on include the Euro Area business survey and producer prices; Germany’s domestic and external trade; Bank of England’s monetary indicators and Nationwide Housing Prices; Switzerland’s KOF leading indicators, retail sales, and consumer confidence; and Turkey’s inflation rate. January’s manufacturing and services PMIs will also be updated.

In Asia, all focus is on Chinese PMI data for the first gauge of the world’s second-largest economy since the government transitioned away from its zero-Covid policy at the start of the month. Meanwhile, in Japan, a busy week of releases is headlined by January consumer confidence figures and December housing starts, industrial production, retail sales, and unemployment rate. In India, investors await the Union Budget for the 2023 financial year, as previous pledges of conservative spending clash with recent concerns of slower growth in the government’s final year in office. Both India and South Korea will post January PMIs, with the latter also providing inflation and trade data.

A packed week of releases in Australia covers the Ai Group Manufacturing Index for January and retail sales, housing credit, and building permits for December. Lastly, New Zealand is set to divulge the December trade balance and fourth-quarter labor market figures.