Posted on February 6, 2015 by the XM Investment Research Desk at 2:58 pm GMT
Next week will feature some important data out of China and Australia in Asia, the Eurozone GDP and Quartertly UK Inflation Report in Europe and advance US Retail Sales. It will be interesting whether the news will continue to support the recent rebounds of majors such as the UK pound, the euro and the Australian dollar against the US dollar or if the pro-dollar momentum following the strong employment report will get a fresh boost. Movements in the price of oil as well as Wednesday’s all-important Eurogroup meeting on Greece will also have an impact.
Starting with the euro, much of the focus has been on the new crisis brewing between Greece and its European bailout partners over the terms and conditions for the continuation of the bailout. Next Wednesday’s Eurogroup meeting of the Eurozone finance ministers on Greece should set out some kind of framework over what will be discussed and the time frame for the negotiations. Specifically, the deadline which will be given for a negotiated deal between Greece and the Troika will be very important. Eurozone growth flash estimate for the 4th quarter will be released on Friday and economists expect the single currency area to be limping along with a 0.2% quarter-on-quarter expansion – an improvement over the third quarter’s 0.1% rate but still too slow for noteworthy jobs creation.
In Australia, where the Reserve Bank of Australia cut interest rates only this week, the employment report for January will come out on Thursday. The unemployment rate is expected to climb to 6.2% from 6.1% the previous month and according to the RBA, unemployment is expected to climb a little over the coming months.
In the UK, the Quarterly Bank of England Inflation Report will be released on Thursday and Governor Carney will give a regular press conference following the release of the report. The Bank of England looks to be on hold – at least until the May General Election – and its predictions about the medium-term prospects for inflation (particularly core inflation excluding energy prices) will largely determine the timing of its next interest rate move.
The US economic calendar will be relatively light, with only January’s advance retail sales to be released on Wednesday (forecast to contract again) and Michigan February preliminary consumer sentiment on Friday. Fed Governors Lacker and Fisher are also scheduled to talk.
Finally, in Asia, Chinese trade balance for January will be released on Sunday, while Tuesday will feature Chinese inflation – expected to increase by 1% year-on-year. In Japan, the Current Account for December is expected to have dropped when it is announced on Monday, while on Thursday Corporate Goods prices (the Japanese equivalent of Producer Prices) and Machinery Orders should update on price developments and industrial activity in the country.