Calm after the storm
After two long and stormy weeks, now it is time to pause a bit with a light week and try to digest the published data. Last week we were surprised several times by central banks` decisions in the United Kingdom and Eurozone and Employment data from the United States. The week ahead, US CPI and British GDP will be watched closely, while we will have several important speeches as well. Let`s review the most important events of the week.
Caixin PMI - Monday
Monday, Service and Composite Purchasing managers` index from China will give us a much better idea of Chinese economic improvement. Service PMI specialty will be more watched because with Chinese New Year Holidays and celebrations service sector could be much more active. Therefore positive number expectation is more likely. These positive expected numbers are supposed to help the overall bullish trend of the Oil and generally energy market.
US Trade Balance - Tuesday
Minus $83.4 billion Trade balance for December is not far than expectations. Exports increased by 0.2% in December, while imports surged 4.6%. Domestic demand and consumption have been increasing before New Year`s Eve, and it has increased the import much more than helping the export. For the next months, demand is still expected to increase, and it will help the import data to be seen at much higher levels. Weaker than expected trade balance, will not be in favor of the US Dollar, and a bit of pressure before inflation numbers on the US dollar is likely.
New Zealand inflation - Wednesday
New Zealand as one of the best examples to control the pandemic and fast economic recovery also, facing inflation concerns, same as others. Expected inflation for the fourth quarter is above 3%, and with a 3.2% unemployment level in this country, these data can open the doors for a bit more tightening policy from the next meeting of the Reserve Bank of New Zealand and can lift the Kiwi against its crosses.
US inflation - Thursday
December`s 0.5% inflation rise was slower than November to decrease the fears and concerns, however with another fast wage increase and oil prices continuing to grow, to see the consumer prices rising again, is likely. At the same time, supply still struggling to keep up with domestic demand, and Omicron`s emergence, paused the fast recovery. Therefore up 7.2%, year-over-year inflation should not be a surprise. If we see inflation much higher than market expectations, then the US dollar again can increase and put more pressure on Stock Markets.
UK GDP - Friday
The quick and intense reaction of the UK government to the Omicron variant, paused a stronger than expected economic recovery. Monthly GDP data for November with a positive surprise increased the hopes, a bnd the December slowdown paused the way. However, last quarter`s data still must confirm the upward progress in 2021. BoE increased the rates last week, and now, if the overall positive economic improvement will be confirmed, it can slow down the GB100 bears in the chart.
