It's going to be a week of being bombarded with data and earnings from all angles. This week will see the first reading of US Q4 GDP as well as the first FOMC statement, Payrolls and ISM print of the year. In Europe we will get a handful of confidence indicators in the earlier part of the week but the main highlight will be the Spanish and Italian manufacturing PMIs on Friday.
The coming week could see further sizeable moves in FX, mainly because investors – and policymakers – have become a lot more focused on currency markets.
On the data side, we are entering the heavy end-of-month period. As usual, US payrolls, manufacturing ISM and global PMIs will be the main focus.
Given we are still early in the quarter, the first GDP estimates for the fourth quarter will be released in a few countries, including the US, Canada, Russia, Poland and Spain.
Central bank meetings in Colombia, New Zealand, Israel, Hungary and India may be relevant for local currencies, with consensus expecting cuts in Colombia, Hungary and India. More importantly, we also have a Fed meeting where we expect the FOMC to come down squarely on the side of QE’s benefits exceeding its costs for the foreseeable future.
Finally, a few potentially interesting policy speeches are scheduled in the upcoming week. In Japan, Prime Minister Abe will likely talk in parliament about his economic policy, which could contain more comments on the BoJ and the Yen. In Germany, Buba President Weidmann will talk at the car manufacturers association and the recent sharp move in EUR/JPY may well be a subject given the competition between German and Japanese brands. Interestingly, Mr. Weidmann already mentioned the BoJ in a recent speech about global pressures on central bank independence.
The Week Ahead from Goldman:
- US Durable Goods Orders (Dec): Consensus +2.0% mom, last 0.7%, GS +1.9%.
- US Pending Home Sales (Dec): Consensus +0.1% mom, last +1.7%.
- Colombia MPC: We and consensus expect a 25bp cut to 4%.
- Japan PM Abe Policy Speech
- Also interesting: Dallas Fed manufacturing index, South Korea consumer confidence, Israel Central Bank decision (GS/Consensus: unchanged)
- US Conf. Board Consumer Confidence (Jan): Consensus 64.0 after 65.1
- India RBI rate decision: Consensus expects a repo rate cut by 25bp to 7.75%.
- Hungary MPC meeting: Given the recent personnel changes at the Hungarian central bank, it will be interesting to see just how dovish the
- outcome will be. We and consensus expect a 25bp cut to 5.50%
- Also interesting: CaseShiller home prices, German consumer confidence, South Korea business surveys, Polish GDP.
- US ADP Employment (Jan): Consensus 165k after 215k
- US GDP (Q4 advanced): Consensus +1.2% qoq ann after +3.1% in Q3. GS expects +1.5%.
- FOMC Meeting: While the potential costs of QE are worth careful consideration, Goldman expects that the FOMC will still come down squarely on the side of QE’s benefits exceeding its costs for the foreseeable future. As a result, Bill Dudley's former employer anticipates that securities purchases will continue at the current rate of $85bn / month through 2013, and at a reduced rate of $50 bn / month during 2014. However, if future analysis suggests that QE has diminishing returns, while costs may be convex, this calculus could change.
- Weidmann Speech: ECB governing council member Weidmann speaks at the German car makers association and could mention the recent
- Euro appreciation after already focusing on BoJ independence in a recent comment.
- Also interesting: Italy BTP issuance, Spain GDP, UK mortgage approvals, Korean IP, Swiss KOF leading indicator.
- NZ central bank meeting: GS and consensus expect unchanged rates at 2.5%.
- US Jobless Claims: Consensus +350k after +330k in the previous week.
- US Chicago PMI (Jan): Consensus expects 50.5 after 51.6 in December, in line with the declines seen in other regional business surveys in recent weeks. GS expects 50.6.
- Japan IP (Dec): Consensus expects a rebound by 4.1% mom after -1.4% in November.
- Also Interesting: US personal income/spending, Russia and Canada Q4 GDP, German unemployment, UK consumer confidence
- Korea Exports (Jan): As always, Korean exports will be the first “hard” number on global business activity in the previous month. Consensus expects an increase of +9.4% yoy.
- China Official and MarkIt Manufacturing PMIs: Consensus expects moderate improvement to continue as in previous months.
- Eurozone Manufacturing PMIs: The final readings are likely to confirm last week's preliminary release.
- US Non-Farm Payrolls (Jan): Consensus expects +160k after +155 in December and an unchanged unemployment rate at 7.8%. GS projects +150k and also 7.8% in the unemployment rate.
- US ISM Manufacturing (Jan): Consensus expects 50.5 after 50.7 in December.
- US U Mich Consumer Confidence (Jan final): Consensus expects 71.5 after 71.3.
- Also interesting: IMF to comment on Argentina official data quality, in particular inflation, Global PMIs, Chile and Mexico MPC minutes, Brazil trade balance.
The same as above in chart format courtesy of Socgen: