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Week Ahead – A valentine’s day treat

Started by PocketOption, Feb 15, 2023, 11:44 am

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Week Ahead - A valentine's day treat

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US


The Valentine's Day inflation report is the main event of this week.  Disinflation trends will get tested here and we could potentially have a major turning point with Wall Street's expectations on how high the Fed will have to take interest rates. The January inflation report is expected to show headline CPI from a month ago rose 0.5%, up from the -0.1% reading in the prior month.  Inflation from a year ago is expected to improve from 6.5% to 6.2%.  The core readings on a monthly basis are expected to keep the 0.3% pace, while on an annual basis is expected to improve from 5.7% to 5.4%.  If pricing pressures come in hotter-than-expected, this could be an inflation reckoning report that might drive Fed rate hike expectations above 5.25%. 


Investors will pay close attention to Fed speak after the January inflation report. Fed's Logan, Harker, and Williams will speak shortly after the Tuesday inflation data.  On Thursday, we will hear from Mester, Bullard, and Cook.  Friday contains appearances by Barkin and Bowman. 


Earnings seasons continues with key updates from AIG, Analog Devices, Applied Materials, AutoNation, Barclays, Barrick Gold, Biogen, Coca-Cola, Deere, Devon Energy, DraftKings, Fidelity, Heineken, Hermes International, Hyatt Hotels, Kraft Heinz, Nestle, Orange, Pernod Ricard, Restaurant Brands International, Shake Shack, and Shopify


Eurozone


Not the most thrilling week but there is a scattering of data points, many of which the ECB won't ignore even if they aren't as impactful as the headline inflation numbers. GDP and employment on Tuesday fall into that category as we see how the bloc coped with the early winter period. That aside, central bank speak as ever remains key with President Lagarde on Wednesday the standout.


UK


The situation in the UK is very intriguing. The economy is basically drifting at the moment, fluctuating around zero growth, unable to recoup pandemic losses, and expected to remain near the bottom of the growth table. At the same time, its inflation problem has been among the worst and even now it's only a little shy of 10% (and its peak). And yet, markets are pricing in only one more 25 basis point hike, the MPC is confident inflation will be below 4% by the end of the year and two policymakers even voted to hold at the February meeting.


GDP figures Friday confirmed the UK avoided recession by the finest of margins, a fact that could be easily revised out in the coming months. Next week we'll get retail sales, labour market, and most importantly, inflation data. Last month it fell faster than the BoE expected; could we be in for another positive surprise or will Wednesday bring us back down to earth with a bang?



No major economic events next week. Focus remains on the war in e.


South Africa


Inflation is edging ever closer to the SARB's target range of 3-6%, with CPI data next week expected to show it falling from 7.2% to 6.9%. That may allow the central bank to take its foot off the break and ease the pressure on the economy.


Turkey


No major economic announcements or events next week. 


Switzerland


With the SNB determined to get inflation back to target below 2%, attention will be on the CPI release on Monday. Chair Jordan has been adamant that getting a grip on inflation is their absolute priority and markets are convinced, pricing in a 56% chance of 50 basis points next month, and a 44% chance of 25. 


China


Amid rising optimism about China’s reopening, economic momentum is growing. Strong capital inflows into China may continue, especially as the country resumes work after the Chinese New Year holiday. 


The recent strengthening of the Fed’s hawkish stance and a slight tightening of overall risk sentiment, combined with heightened US-China tensions has also led to a wave of declines in regional equities. 


Next week, there will be no critical data. Investors are awaiting the work report of Premier Li Qiang in March, among other key policy events, which may include measures to boost consumption and stimulate economic growth. The People’s Bank of China may also cut its benchmark interest rate to boost credit demand for the private sector amid the grand economic resurgence.


India


Inflation is within the RBI 2-6% range and yet the central bank raised rates again last week by 25 basis points to 6.5%. It's clearly concerned about the stubbornness of core inflation and fears under-tightening in the longer term over the alternative. The inflation data next week will help determine whether those are well-founded or not. Either way, further hikes look unlikely with two of the six RBI policymakers voting against the last hike.


Australia & New Zealand


Recent CPI data indicate that the RBA may have underestimated the stubbornness of Australian inflation. Policymakers may have little option but to reconsider the possibility of more significant interest rate increases.


Changes in the external environment, such as the weakening of the US dollar, the reopening of China, and improved China-Australia relations are supportive for the economies of Australia and New Zealand.


New Zealand’s inflation rate rose less than the RBNZ forecast in the fourth quarter. This has led to a slight reduction in expectations for the February meeting, although the market is still pricing in a 50 basis point hike. 


Australia's labour market figures are released on Thursday, while appearances by Philip Lowe, Governor of the RBA, will be eyed.


Japan


There is growing speculation in the market that the BoJ is about to shift its policy after widening its yield target range last December. Some market participants believe that a new BoJ leadership would be the ideal catalyst for a policy shift. The Japanese government is expected to present its nominee for the next Governor of the Bank of Japan next week, with Kazuo Ueda the reported choice.  


Japan’s preliminary fourth-quarter GDP eyed on Tuesday.


Singapore


GDP data is the only notable release on Monday.




Economic Calendar


Saturday, Feb. 11


Economic Data/Events


China FDI


ECB's Visco addresses the Warwick Economics Summit in Coventry, UK


Labor protests expected in France of proposed pension reforms


Sunday, Feb. 12


Economic Data/Events


The Kansas City Chiefs and the Philadelphia Eagles play in Super Bowl LVII


Regional elections in Lombardy and Lazio, Italy


Berlin holds repeat vote for regional parliament and district councils


Monday, Feb. 13


Economic Data/Events


India CPI


New Zealand performance services index


Singapore GDP


Turkey current account


Euro-area finance ministers meet in Brussels to discuss energy markets and other topics


Fed's Bowman speaks at the American Bankers Association National Conference for Community in Orlando, Florida


ECB's Centeno speaks at a London School of Economics event on "Challenges and new approaches to European monetary policy"


The United Arab Emirates hosts the World Government Summit


Norwegian PM Gahr Store meets Lithuanian President Nausėda in Oslo


Tuesday, Feb. 14


Economic Data/Events


US CPI


Eurozone GDP


Hungary GDP


Norway GDP


Japan GDP 


Australia consumer confidence


France unemployment


India wholesale prices


Japan industrial production


Mexico international reserves, inflation expectation


New Zealand food prices, house sales


UK jobless claims, unemployment


Fed's Logan takes part in a moderated discussion hosted by Texas A&M University in Prairie View, Texas


Fed's Williams gives the keynote speech at an event hosted by the New York Bankers Association


Fed's Barkin discusses inflation in an interview with Bloomberg Television


EU finance ministers meet to discuss the impact of 's war


Singapore releases 2023 budget


Wednesday, Feb. 15


Economic Data/Events


US business inventories, industrial production, retail sales, empire manufacturing


India trade


Poland CPI 


UK CPI


China medium-term lending


Canada housing starts, existing home sales


Eurozone industrial production


Japan tertiary index


South Africa retail sales, CPI


RBA Governor Lowe appears before the Senate Economics Legislation Committee


Thursday, Feb. 16


Economic Data/Events


US housing starts, PPI, initial jobless claims


Australia unemployment, household spending, consumer inflation expectations


China property prices, Swift global payments


Italy trade


Japan machinery orders, trade, department store sales


New Zealand net migration


Spain trade


New Zealand government releases financial statements for six months to Dec. 31


ECB's Panetta speaks at a Center for European Reform conference focused on "Monetary policy after the energy shock" in London


ECB's Nagel lectures on "Reforms for greater stability and prosperity" at the German Institute for Economic Research


ECB's Lane delivers the NIESR Dow lecture on "The Euro area hiking cycle"


Norges Bank Q1 expectations survey. Governor Wolden Bache gives annual address to the Supervisory Council of Norway's central bank


BOE chief economist Pill has a "fireside chat" on the UK economy at the Warwick Think Tank


Fed's Mester speaks at an event hosted by the Global Interdependence Center in Florida. Mester later discusses the economic outlook at a meeting of Financial Executives International of Northeast Ohio and ACG Cleveland


Fed's Bullard discusses the US economy and monetary policy at an event hosted by the Greater Jackson County Chamber in Jackson, Tennessee


Friday, Feb. 17


Economic Data/Events


France CPI


, Thailand GDP


Singapore trade


Thailand foreign reserves, forward contracts, car sales


RBA Gov Lowe appears before House Economics Committee


Fed's Barkin speaks on labor market at an event hosted by the Rosslyn Business Improvement District in Arlington, Virginia


Sovereign Rating Updates


Poland (S&P)


Switzerland (Moody's)


Source: Week Ahead - A valentine's day treat