UPCOMING EVENTS:
- Monday: US/Canada Holiday, Canada PPI.
- Tuesday: RBA Meeting Minutes, PBoC LPR, Canada CPI, New Zealand PPI.
- Wednesday: Australia Wage data, FOMC Meeting Minutes.
- Thursday: Australia/Japan/Eurozone/UK/US Flash PMIs, ECB Minutes, Canada Retail Sales, US Jobless Claims, New Zealand Retail Sales.
- Friday: Japan Holiday, German IFO.
Tuesday
The PBoC is expected to keep the LPR rates unchanged at 3.45% for the 1-year and 4.20% for the 5-year. The MLF decision is generally a precursor for the LPR change and the PBoC decided to keep the rate unchanged at 2.50% on Sunday. The central bank surprised recently by cutting the RRR by 50bps vs. 25 bps expected and sparked a rally in the stock market (although most of the gains were erased in the following weeks). There’s a very low chance of a cut at this point and if the market was positioned for such an outcome, then we might see the disappointment already on Monday.
The Canadian CPI Y/Y is expected at 3.2% vs. 3.4% while the M/M measure is seen at 0.4% vs. -0.3% prior. The BoC is focused on the underlying inflation measures (common, median and trimmed mean) and although the rates are getting closer to the 1-3% target range, the central bank wants to see more progress both on inflation and wage growth fronts. As a reminder, the last inflation report went in the opposite direction with the underlying figures reaccelerating.
Wednesday
The Australian Q4 Wage Growth Y/Y is expected at 4.1% vs. 4.0% prior, while the Q/Q measure is seen at 0.9% vs. 1.3% prior. The RBA is expecting wage growth to ease as the labour market comes into better balance. The last week’s ugly labour market report is indeed pointing into that direction.
Thursday
Thursday will be the Flash PMIs day for many major economies, but the market will likely focus on the US ones:
- Eurozone Manufacturing PMI 47.1 vs. 46.6 prior.
- Eurozone Services PMI 48.7 vs. 48.4 prior.
- UK Manufacturing PMI 47.1 vs. 47.0 prior.
- UK Services PMI 54.4 vs. 54.3 prior.
- US Manufacturing PMI 50.2 vs. 50.7 prior.
- US Services PMI 52.0 vs. 52.5 prior.
The US Jobless Claims continue to be one of the most important releases every week as it’s a timelier indicator on the state of the labour market. Initial Claims keep on hovering around cycle lows, while Continuing Claims remain firm around cycle highs. This week the consensus sees Initial Claims at 217K vs. 212K prior, while there’s no consensus for Continuing Claims at the time of writing although the last week’s data showed an increase to 1895K vs. 1865K prior.
