GEMFOREX - weekly analysis

Here is an overview of the coming week for some of the major economies:

The US

It will be a busy week filled with a variety of economic indicators, lots of Fed speak, and earnings season is picking up momentum. Wall Street will now not just focus on inflation statistics, but also on how quickly the economy can soften.

Earnings season continues with more bank earnings, the airlines' report, Procter & Gamble (NYSE: PG) earnings will include insights on pricing trends, and Fastenal (NASDAQ: FAST) reports.

News releases to watch out for:

• Empire manufacturing index, 

• Retail sales, 

• Producer Price Index

• Industrial production, 

• NAHB housing market index

• Weekly jobless claims

• Existing home sales

• Crude Oil Inventories

The EU

The follow-up to the February ECB meeting is going to bring great focus on incoming data and central bank speak, with investors having hope that global interest rates may nearly be at their peak, and perhaps not as high as feared even a couple of weeks ago. 

It is worth noting that the Markets are still pricing in three 50-basis point hikes at the upcoming meetings but that could be dialed back.

President Christine Lagarde and other ECB members will be commenting towards the end of the week, and there will be month-on-month and year-on-year CPI announcements.

The UK

It seems that the UK may have just about avoided a technical recession in 2022 thanks to the World Cup. 

The GDP data for November showed unexpected growth which, when combined with the 0.5% gain in October makes it unlikely that the economy will have fallen into a recession after all.

The cost-of-living crisis is squeezing the economy and will likely further intensify this 

year, potentially tipping the economy into recession, anyway.

There will be a lot more data this week including:

• Claimant count change

• CPI – year on year

• Retail sales – year on year

• Inflation data

Turkey

The CBRT meets this week and given their recent moves it is very hard to make any type of prediction. 

Official inflation fell from 84.39% to 64.27% in December which the central bank could look to capitalize on, despite previously stating that it was done with its latest easing cycle.

Switzerland

The World Economic Forum takes place in Switzerland this week.

On Friday, SNB Chair Thomas Jordan will be one of many central bankers that will be attending.

China

To start the week, the PBOC is expected to cut its one-year MLF rate by 10 basis points to 2.65%. 

On Tuesday, we will be able to see the impact Covid had on GDP, industrial production, retail sales, and fixed asset investment, through the relevant news releases

Fourth quarter GDP is expected to drop from 3.9% to 1.5%, while Decembers retail sales fall from -5.9% to -12.0%. 

At the end of the week, China is expected to cut its loan prime rates.

Much focus will remain on Chinas Covid situation and whether the economic outlook continues to improve given the recent reopening trends.

Australia & New Zealand

Chinas reopening momentum has been good news for both Australia and New Zealand. 

The relationship has been constructive so far. The main economic release for Australia will be the December employment report. Hiring is expected to slow down from 64,000 to 15,000.

For New Zealand, traders will pay close attention to the REINZ House Sales data, Food prices, and manufacturing PMI.

Japan

The Bank of Japans monetary policy decision is expected to keep rates on hold. 

Traders are still digesting the surprising decision to adjust its government bond yield curve control. 

BOJ watchers are looking for hints that they could soon move toward normalization by the end of July.

Next week will also see news releases on:

• Japan PPI, 

• Machine tool orders,

• Tertiary industry index, 

• Core machine orders, 

• Industrial production, 

• Trade data.

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