The Week Ahead - Rabobank

The Research Team at Rabobank offers a list of the key macroeconomic events due on the cards this week from across the globe.

Key Quotes:

“ECB: The biggest focus for the EUR this week is likely to be the ECB policy meeting on Thursday.

While a revision is likely to remove this bias, we expect the March meeting to be the more likely occasion for this.  No change in the forward guidance this month would help to temper market expectations not only regarding when the ECB will end QE but also about when the Bank is likely to hike interest rates. 

In our view, there is a risk that the market is getting ahead of itself.  We expect that ECB President Draghi will use his press conference to re-anchor expectations regarding policy and in doing so to push back against some of the recent steepening in the money market curve and the related appreciation of the EUR.

BoJ: There is also a risk that the market has been getting ahead of itself in pricing in the risk of a less accommodative policy from the BoJ going forward. This could also be addressed this week by the outcome of the BoJ policy meeting on January 23. Some of this speculation relates to concerns over the ‘reversal rate’ and a reference to this by BoJ Kuroda in November. 

Fuelling market skepticism about the outlook for BoJ policy is the strong growth backdrop.  The BoJ may revise up its forecasts for growth this week.

Brexit: The next installment of the Brexit process could be rocky. Last week, the EU Withdrawal bill was successfully passed by the UK’s House of Commons.  Its journey through the House of Lords, due to commence at the end of this month, could prove to be difficult with lawmakers threatening to impose amendments.

Economic data releases today are limited. US PMI and housing data feature later in the week while Germany’s ZEW survey, PMI, and IFO survey will also be watched.  In the UK, the release of wage data is likely to be the key data event.  

In terms of speakers, the World Economic Forum’s annual meeting in Davos, which starts on January 23 will steal the limelight.  President Trump’s appearance this year may be a response to that of China’s President Xi last year when he set himself up as a bastion of free trade.  President Macron, BoE Governor Carney, BoJ Governor Kuroda and the IMF’s Lagarde are among other speakers.”