Highlights
It's a quieter week after US employment surged well above expectations in the January report, productivity gained above forecast in the fourth quarter, wage pressures continued and the Fed left rates unchanged, as expected. Both the US and Canadian central banks have softened their hawkish tones, but a rate cut from either of them is seen unlikely at least for a few months amid sticky inflation and resilient economic growth in the US and its spillover effect north of the border.
This week, some Fed officials will speak on economic topics including the labor market. Bank of Canada Governor Tiff Macklem will discuss the effectiveness and limits of monetary policy on Tuesday after testifying in parliament last week that the bank is trying to balance the risks of over- and under-tightening. Canada's jobs data for January due Friday is likely to show slower employment growth with a steady or slightly higher unemployment rate.
Both the Reserve Bank of Australia and the Reserve Bank of India are also expected to leave their respective policy rates unchanged this week as they continue to monitor the effects of their past rate hikes. That would follow no change in policy by the Federal Reserve and the Bank of England last week.
On Monday, the final readings of the PMI composite indexes in Europe are expected to show sluggish economic conditions in the region.
In Germany, December's goods trade balance is expected to narrow to a €17.5 billion surplus versus a surplus of €20.4 billion in November.
Eurozone producer prices are expected to fall 10.2 percent on the year in December, which would compare with 8.8 percent contraction in November.
The US purchasing managers index data is expected to show no change at the mid-month's 52.9 is the consensus for the services PMI's January final. This index ended December at 51.3.
US services sector business activity measured by the Institute for Supply Management is expected to stay in positive territory for a 13th straight month in January, with the ISM index forecast to rebound 1.5 points to 52.1 after unexpectedly falling 2.1 points to a seven-month low of 50.6 in December, hit by a seasonal drop in employment and slower new orders. That would follow last week's report that the ISM manufacturing index rose 2.0 points to 49.1 on a surprise jump in new orders and stable production, staying on course toward growth from being in a trough.
At 2 p.m. EST (1900 GMT), Atlanta Federal Reserve Bank President Raphael Bostic will give welcome remarks before the virtual"Uneven Outcomes in the Labor Market" conference hosted by the Federal Reserve Board of Governors and the Federal Reserve Banks of Atlanta, Boston, Cleveland, Philadelphia, San Francisco, and St. Louis.
Japan's real household spending is forecast to post its 10th straight drop on the year in December, down 2.1 percent, after slumping 2.9 percent in November, as consumers remain frugal amid elevated costs for daily necessities. Excluding volatile items like home maintenance/repairs and vehicles, the core measure fell just 0.9 percent in November. On the month, expenditures are forecast to dip 0.3 percent for a third drop in a row after a 1.0 percent drop in November. Demand for winter clothing and heaters stabilized after a cold snap triggered a surge in the previous month, vehicle sales slowed and easing inflation trimmed values of foodstuffs and fuels.
The Reserve Bank of Australia will release the outcome of its policy meeting at 2:30 p.m. AEDT Tuesday (10:30 p.m. EST Monday/0330 GMT Tuesday).
The RBA is widely expected to leave its policy rate at 4.35 percent for a second straight meeting after raising it by 25 basis points to 4.35 percent from 4.10 percent in November and having left rates on hold at its previous four meetings. The December minutes showed board members agreed that whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend on how the incoming data alter the economic outlook and the evolving assessment of risks.
This week, some Fed officials will speak on economic topics including the labor market. Bank of Canada Governor Tiff Macklem will discuss the effectiveness and limits of monetary policy on Tuesday after testifying in parliament last week that the bank is trying to balance the risks of over- and under-tightening. Canada's jobs data for January due Friday is likely to show slower employment growth with a steady or slightly higher unemployment rate.
Both the Reserve Bank of Australia and the Reserve Bank of India are also expected to leave their respective policy rates unchanged this week as they continue to monitor the effects of their past rate hikes. That would follow no change in policy by the Federal Reserve and the Bank of England last week.
On Monday, the final readings of the PMI composite indexes in Europe are expected to show sluggish economic conditions in the region.
In Germany, December's goods trade balance is expected to narrow to a €17.5 billion surplus versus a surplus of €20.4 billion in November.
Eurozone producer prices are expected to fall 10.2 percent on the year in December, which would compare with 8.8 percent contraction in November.
The US purchasing managers index data is expected to show no change at the mid-month's 52.9 is the consensus for the services PMI's January final. This index ended December at 51.3.
US services sector business activity measured by the Institute for Supply Management is expected to stay in positive territory for a 13th straight month in January, with the ISM index forecast to rebound 1.5 points to 52.1 after unexpectedly falling 2.1 points to a seven-month low of 50.6 in December, hit by a seasonal drop in employment and slower new orders. That would follow last week's report that the ISM manufacturing index rose 2.0 points to 49.1 on a surprise jump in new orders and stable production, staying on course toward growth from being in a trough.
At 2 p.m. EST (1900 GMT), Atlanta Federal Reserve Bank President Raphael Bostic will give welcome remarks before the virtual"Uneven Outcomes in the Labor Market" conference hosted by the Federal Reserve Board of Governors and the Federal Reserve Banks of Atlanta, Boston, Cleveland, Philadelphia, San Francisco, and St. Louis.
Japan's real household spending is forecast to post its 10th straight drop on the year in December, down 2.1 percent, after slumping 2.9 percent in November, as consumers remain frugal amid elevated costs for daily necessities. Excluding volatile items like home maintenance/repairs and vehicles, the core measure fell just 0.9 percent in November. On the month, expenditures are forecast to dip 0.3 percent for a third drop in a row after a 1.0 percent drop in November. Demand for winter clothing and heaters stabilized after a cold snap triggered a surge in the previous month, vehicle sales slowed and easing inflation trimmed values of foodstuffs and fuels.
The Reserve Bank of Australia will release the outcome of its policy meeting at 2:30 p.m. AEDT Tuesday (10:30 p.m. EST Monday/0330 GMT Tuesday).
The RBA is widely expected to leave its policy rate at 4.35 percent for a second straight meeting after raising it by 25 basis points to 4.35 percent from 4.10 percent in November and having left rates on hold at its previous four meetings. The December minutes showed board members agreed that whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend on how the incoming data alter the economic outlook and the evolving assessment of risks.
Definition
Market Focus details key factors in the coming day that will impact the economic outlook and the financial markets. These include central bank events, economic indicators, policymaker speeches as well as expected political and corporate developments.
Description
Keeping up-to-date with event schedules and the economic calendar is key to understanding the global financial system. Econoday's Market Focus allows investors and policymakers to carefully track what will be making news and moving the financial markets in the coming day.
