Market movers ahead

  • Retail sales and inflation (CPI) figures for December are due in the US. We expect to see a modest increase in inflation (CPI) of 0.2% m/m – equivalent to 2.9% y/y. The rise is mainly attributable to substantial increases in energy prices in the past year.
  • The ECB Governing Council meeting next Thursday will be a rather dull event compared to the exciting December meeting. Policy rates should be kept unchanged and it is unlikely that we will get any new information on the withdrawal of nonstandard measures.
  • In Denmark, current account and trade balance data are due for November. We expect the modest pick-up in exports to continue. November’s industrial production numbers are also due for release. Industrial production has disappointed in recent months, and we expect to see a slight decline here.

Global update

  • The global recovery appears to be on track, and the economic data released since Christmas has been positive. Leading indicators continue to look strong globally, although some indicators like OECD leading indicators currently give an early warning of a growth peak in Q1 10
  • Mixed data in the US but growth momentum remains good going into 2010. Housing market data seem to be improving and the ISM manufacturing index for December registered a stronger-than-expected reading, indicating that the economy continued to accelerate into 2010.
  • Unfortunately, Euroland data have disappointed. Industrial orders declined more than expected and retail sales in November slipped back 1.2% m/m.
  • In Japan, economic data released since Christmas have generally been encouraging and suggest that Japan will not slide into a double-dip recession – although growth will slow in Q1 10.

Focus

  • We consider the risk of core inflation in the US sinking below zero. Our general expectation is that the fragility of the economic turnaround combined with still low core inflation will make the FED cautious about future rate hikes.
  • We take a close look at the dollar. Has the tide finally turned, so that we will see the dollar strengthening going forward?