Weekly Outlook: Feb 01 - 05

Last week, Fed left the monetary policy unchanged and shifted to the wait-and-see mode for their next gradual rate hikes. The week ahead promises to keep traders attention undiminished with important fundamental updates from various countries. The U.S. job report will be released while the Bank of England and the Reserve Bank of Australia will have their policy meetings. Moreover, the ECB President Mario Draghi will speak twice during the week.

On [B]Monday[/B], the Markit Manufacturing PMIs for January for various countries will be out. In UK, the manufacturing figure is expected to decrease marginally to 51.8 from 51.9 before while in Eurozone as a whole and in Germany, no changes are expected. They currently stand at 52.3 and 52.1 respectively. The UK mortgage approvals for December is also coming out.

In the second half of the trading day, the U.S. Markit Manufacturing PMI for January will be released – no forecasts are available. The ISM Manufacturing PMI is expected to show an improvement to 48.5 from 48.2 before.

The personal spending is forecasted to show an increase just by 0.1% in December from 0.3% the last month as well as the personal income is predicted to rise just by 0.2% from 0.3%. The construction spending in December is forecasted to have increased by 0.6% from a contraction of -0.4% before.

The ECB President Mario Draghi will speak in Strasbourg, France. The president is expected to comment on the economic situation. The text of the press conference will be available on the ECB’s website and will be scrutinized for further clues regarding March’s monetary easing.

Overnight, the Reserve Bank of Australia has its interest rate decision, no changes to the monetary policy are expected. However, the RBA rate statement will capture significant attention.

Early at [B]Tuesday [/B]morning, the German unemployment rate will be released. The market predicted it to remain unchanged at 6.3% and the unemployment change to come out -10K in January from -14k before. Eurozone’s unemployment is also expected to remain unchanged at 10.5% for December.

Late in the afternoon, the New Zealand’s employment report for Q4 will be released. The unemployment rate is forecasted to rise to 6.1% from 6.0% while the employment change to have risen by 0.8% versus a contraction of -0.4% before. A couple of hours after the job report, the RBNZ Governor Graeme Wheeler will give a press conference.

On [B]Wednesday[/B], the Markit Services PMI for January is expected to remain stable in most of the countries, like Eurozone, Germany and UK. The European Commission will release the economic growth forecasts. A while later, the attention turns to U.S. The Markit services PMI will be out as well as the ISM Non-Manufacturing PMI. The services sector is forecasted to remain stable at 53.7 while the Non-Manufacturing to decline at 55.1 from 55.8 before. The ADP employment change for January is expected to come out at 220k from 257k before, two days ahead of the NFP report.

On [B]Thursday[/B], the Economic Bulletin will be published an hour after ECB President Mario Draghi’s press conference. The highlight of Thursday is the Bank of England policy meeting. No changes are expected to the monetary policy neither at the Monetary Policy Committee voting pattern. The traders will closely eye the speech of the BoE Governor Mark Carney which will follow.

In U.S., no heavyweight economic indicators are expected. The weekly jobless claims will be out as usual. Overnight, the RBA will publish the monetary policy statement.

On [B]Friday[/B], the U.S. Non-Farm Payrolls report will be out! The U.S. economy is expected to have added 210k non-farm jobs in January from the surprisingly strong number of 292k in December. The unemployment rate is expected to have remained at 5%. The average hourly earnings are expected to have risen by 0.3% from a flat month prior.

At the same time, the Canadian report will be out. The unemployment rate is expected to have increased in January to 7.2% from 7.1% before while the participation rate is predicted to remain stable at 65.9%.