Looking ahead, we have a lineup of significant events:
Monday will see the People’s Bank of China (PBoC) announce its Loan Prime Rate (LPR), keep an eye on the US Presidential Inauguration Day, the Bank of Canada (BoC) Business Outlook Survey, and New Zealand’s Services PMI.
Tuesday brings the UK Employment report, Germany’s ZEW economic sentiment index, Canada’s Consumer Price Index (CPI), and New Zealand’s Q4 CPI.
Thursday we’re watching Canada’s Retail Sales and the US Jobless Claims.
Friday concludes with Japan’s CPI, the Bank of Japan’s (BoJ) Policy Decision, and Flash PMIs from Australia, Japan, the Eurozone, the UK, and the US.
Monday:
Anticipation is high that the PBoC will maintain the LPR at 3.1% for one year and 3.6% for five years. Despite promises of robust fiscal and monetary support from Chinese authorities in 2025, the economic recovery remains constrained by deflationary pressures and high real interest rates.
Tuesday:
The UK is expected to report an addition of 35,000 jobs in the three months leading up to November, a noticeable dip from October’s 173,000, with the unemployment rate steady at 4.3%. There’s a forecasted increase in Average Earnings including Bonuses to 5.6% from a previous 5.2%. The BoE remains cautious due to unsustainably high wage growth, yet markets are calling for four rate cuts by year’s end, expecting an 82% chance of a 25 bps cut at the next meeting.
Switching focus to Canada, expectations are that the Y/Y CPI will sit at 1.8% down from 1.9%, with the M/M measure declining to -0.4% from 0.0%. While the Trimmed Mean CPI and Median CPI Y/Y are also predicted to decrease slightly. Despite a previous 50 bps rate cut, the BoC hints it might ease the pace of cuts moving forward.
In New Zealand, the Q4 CPI Y/Y is forecasted at 2.1%, a marginal drop from 2.2%, with Q/Q figures expected at 0.4%. With a recent 50 bps rate cut by the RBNZ, the market is betting on a 61% likelihood of a similar cut in February.
Thursday:
US Jobless Claims are a crucial weekly indicator of labor market health. Initial Claims are predicted to hover around 218,000, a slight uptick from the previous 217,000, while Continuing Claims remain high at 1,861,000.
Friday:
Expected Friday morning in Japan is a 3.0% rise in the Core CPI Y/Y, slightly up from last month’s 2.7%. This data precedes the BoJ’s policy decision, which is critical as the central bank is anticipated to raise interest rates by 25 basis points. Governor Ueda’s recent hints have fueled market expectations for a hike, leading to heightened sensitivity to any deviations from this anticipated rate move.
Stay tuned as these developments could set the stage for significant market movements this week!
