Week Ahead

The US Fed, ECB, BoE and BoJ will be meeting to discuss monetary policy next week, with investors eager to hear if policymakers will be updating forward guidance amid concerns over the Omicron variant and mounting inflationary pressure. Elsewhere, December flash PMIs for the US, UK, Eurozone, Japan and Australia will give an insight about the state of the global economy, while other important releases include US and China retail sales and industrial output, UK inflation and labor market data, Eurozone industrial production, and Japan’s Q4 Tankan survey.

The US Federal Reserve will likely announce a faster unwinding of pandemic-era stimulus plans at the end of its two-day meeting on Wednesday, as well as signal a speedier and larger tightening of monetary policy over the next three years, as consumer inflation hit a three-decade high and the labor market consolidated its recovery. Chair Powell told Congress in November it would be appropriate to consider normalizing ultra-accommodative monetary policy at the December meeting, citing a strong economy and escalating inflation pressures.

On the economic side, retail sales and industrial production numbers for November are seen pointing to solid increases in both domestic trade and factory activity. Other publications to watch for are the flash Markit PMI survey, producer and foreign trade prices, building permits and housing starts, homebuilder sentiment, business inventories, NY Empire State Manufacturing Index, Philadelphia Fed Manufacturing Index, and overall net capital flows.

Elsewhere in America, important data to follow include Canada inflation, housing starts, ADP employment change and the final estimates of manufacturing and wholesale sales; Brazil monthly economic activity; Argentina third-quarter GDP and inflation rate; and Peru monthly GDP and unemployment rate. Central banks in Mexico and Chile will probably hike interest rates, to curb rising inflation.

Across the Atlantic, the Bank of England will probably leave monetary policy unchanged, as policymakers take a wait-and-see approach following the imposition of tougher restrictions against COVID-19 in England due to the rapid spread of the Omicron variant, coupled with disappointing GDP data and a spike in inflation. On the other hand, the European Central Bank is widely considering a temporary increase to its bond purchase plan amid concerns over the bloc’s economic recovery. Policymakers in Switzerland, Norway, Turkey, Russia and Hungary will also be deciding on monetary policy.

Meanwhile, Europe’s economic calendar is also packed with key updates on the Eurozone Markit PMIs, industrial output and trade balance; Germany business morale, wholesale and producer prices; the UK inflation data, labor market indicators, retail trade and Markit PMIs; France industry confidence; and Turkey industrial production.

In the Asia-Pacific region, the Bank of Japan is expected to maintain its ultra-easy policy next week and provide further details about policymakers’ views on inflation and growth, as well as the bank’s monetary policy path. Also, the BOJ’s closely-watched “tankan” survey is likely to show an improvement in big manufacturers’ sentiment during the fourth quarter. Other data to follow include foreign trade, machinery orders and flash Jibun Bank Markit PMIs. Elsewhere, all eyes turn to China’s industrial production, retail sales, unemployment rate, fixed asset investment and house price index for November.

In Australia, investors will turn their attention to NAB business confidence and Westpac consumer confidence, as well as employment figures and the flash readings of Markit PMIs. Across the Tasman sea, New Zealand will provide updated figures for third-quarter GDP and current account, and ANZ business morale and Services NZ PSI.

Other highlights include India consumer and wholesale prices, Indonesia trade balance, and South Korea jobless rate. Central banks in the Philippines, Indonesia and Taiwan will be deciding on interest rates.

Categories: Markten