Week Ahead

Trade negotiations will be in the spotlight next week, as Beijing sends a delegation to Washington for a three-day visit to sign the so called “Phase One” deal with the US. Meanwhile, key economic data to follow include the US inflation rate, industrial output, retail trade and Michigan consumer sentiment; UK monthly GDP, retail sales and inflation figures; Eurozone industrial output; China Q4 GDP and trade balance; Japan machinery orders; Australia consumer confidence; and India inflation data. The ECB will publish monetary policy meeting accounts, while central banks in Turkey and South Africa will decide on interest rates.

Chinese Vice Premier Liu He will lead a delegation to Washington early next week for a three-day visit to sign the so called “Phase One” trade deal with the US. Details have yet to be announced but reports from several sources suggest Beijing agreed to increase purchases of US agricultural products and to address some disputes over intellectual property, while the Trump administration agreed to suspend plans for new tariffs on Chinese imports and to reduce other existing ones. President Trump already announced he would later visit Beijing to start “Phase Two” negotiations.

On the economic data front, the US consumer price inflation rate will probably accelerate to 2.3 percent in December, the highest since September 2018. In addition, industrial output is seen falling in December, led by a decrease in manufacturing production; while retail sales are set to grow at a solid pace. Other notable publications are Michigan consumer sentiment; housing starts and building permits; producer and foreign trade prices; business inventories; JOLTs job openings; NY Empire State Manufacturing Index; Philadelphia Fed Manufacturing Index; IBD/TIPP Economic Optimism; NAHB Housing Market Index; overall capital flows; and the government’s budget statement.

Meanwhile, it’s a particularly busy week ahead on the UK economic calendar, with all eyes turning to the publication of monthly GDP figures, industrial and construction output, foreign trade balance, consumer and producer prices, and retail trade. Britain’s economy is seen contracting 0.1 percent in the September-November period amid Brexit-related uncertainty. Elsewhere in Europe, the ECB account of December’s policy meeting will be keenly watched, alongside the Eurozone foreign trade, industrial activity and construction output. Also, Germany’s preliminary estimate of 2019 GDP should point to a sharp slowdown in economic growth to 0.6 percent from 1.5 percent in 2018. Other important releases include Italy retail sales and trade balance, and Sweden inflation rate. The Central Bank of Turkey will be deciding on monetary policy.

All eyes will be on China’s fourth-quarter GDP growth, alongside industrial output, retail sales and fixed asset investment. The world’s second largest economy probably grew by 6 percent, the same pace as in the July-September period and the weakest rate since the first quarter of 1992 due to trade tensions, weakening global demand and alarming off-balance-sheet borrowings by local governments. The country is also scheduled to release trade figures, with markets expecting a 3.2 percent rise in exports and a 9.6 percent jump in imports, after tariffs were suspended as part of the Phase One agreement. House price index, foreign direct investment and monetary indicators will be in the spotlight as well. Meanwhile, Taiwan’s voters head to the polls on Saturday, with President Tsai Ing-wen expected to win a second term.

In Japan, key data include machinery orders, tertiary industry index, producer prices, Eco watchers survey and current account; while in Australia investors await updated figures for Westpac consumer confidence and HIA new home sales. Other highlights for the Asia-Pacific region include: India consumer and wholesale prices, and trade balance; New Zealand Business NZ PMI; Indonesia trade balance; Singapore non-oil exports; and Malaysia and South Korea unemployment rates.

In Africa, the South African Reserve Bank is seen holding rates at 6.5 percent when it meets on Thursday.

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