The key events this week are have non-farm payrolls (consensus 181K) and unemployment rate (consensus 6.7%). There is also going to be a number of speeches given by Fed policymakers. Production surveys from the US (ISM) and other parts of the world are due Monday. We also get trade balance updates from the English-speaking economies – US, UK, Australia and Canada. Finally, keep track on inflation data from Italy and Turkey: the latter is important to track given current high correlation among ‘fragile’ EM currencies.
Monday, 3 February
- Australia MPC: Consensus has policy rate unchanged at 2.50%
- US ISM Survey (Jan): Consensus 56.0, previous 56.5
- US Construction Spending (Dec): Consensus flat, previous +1.0%
- Euro Area Manufacturing PMIs (Jan, final): Consensus 53.9, previous 53.9 (flash)
- UK Manufacturing PMI (Jan): consensus 57.1, previous 57.3
- Sweden Manufacturing PMI (Jan): Previous 52.2
- Switzerland Manufacturing PMI (Jan): consensus 55.0, previous 53.9
- Turkey CPI (Jan): Consensus +7.4%yoy, previous +7.4%yoy
- Brazil Trade Balance (Dec): previous USD+2.65bn
- Also interesting: US Motor Vehicles Sales (Jan), UK HBOS House Prices (Jan), Indonesia Trade Balance (Dec)
Tuesday, 4 February
- US Fed speakers: Lacker (FOMC non-voter), Evans (FOMC non-voter)
- Romania MPC: Consensus expect a cut of 25bps in policy rate to 3.50% and, along with it, the rate on the NBR’s standing deposit facility to 0.50% (the deposit rate is currently the binding policy rate, given excess banking sector liquidity)
- US Factory Orders (Dec): consensus -1.6%, previous +1.8%
- UK Construction PMI (Jan): consensus 61.5, previous 62.1
- Italy Harmonized CPI (Jan): consensus +0.8%yoy, previous +0.7%yoy
Wednesday, 5 February
- US Fed speakers: Plosser (FOMC voter), Lockhart (FOMC non-voter)
- Poland MPC: Consensus has policy rate unchanged at 2.50%. We also expect MPC to offer the same, neutral rate guidance, that is repeat that rates will remain on hold at least until the end of 2014H1
- Hungary MPC minutes
- US Non-manufacturing ISM Survey (Jan): Consensus 53.7, previous 53.0
- US ADP Employment Change (Jan): consensus 190K, previous 238K
- Euro Area Services PMIs (Jan, final): Consensus 51.9, previous 51.9 (flash)
- Euro Area Composite PMIs (Jan): previous 53.2 (flash)
- Euro Area Retail Sales (Dec): consensus +1.6%yoy, previous +1.6%yoy
- Japan Nominal Cash Wage (Dec): Est +1.6%yoy
- UK Services PMI (Jan): consensus 59.1, previous 58.8
- UK Composite PMI (Jan): Previous 59.2
Thursday, 6 February
- US Fed speakers: Rosengren (FOMC non-voter)
- Euro Area MPC: Consensus sees the main policy tools – depo, MRO and MLR – unchanged at 0.00%, 0.25% and 0.75% respectively
- UK MPC: Consensus has main policy tools – policy rate and asset purchases – unchanged at 0.50% and GBP375bn respectively. GS expects revisions to the guidance framework to be announced by its alumnus alongside the publication of the February Inflation Report. Of the various options discussed, the most likely is that the MPC will replace the existing framework with one based on a broader range of variables, perhaps with a greater emphasis on wage developments. Adopting a more flexible forward guidance framework need not blunt the message that the MPC wishes to send about the future direction of policy, and we expect the committee to signal that, despite the sharp fall in unemployment, official rates are likely to remain on hold for some time.
- Czech Republic MPC: Consensus has policy rate unchanged at 0.05%. In addition, we think the CNB Board will repeat its commitment to the peg and the need for a weaker Koruna
- Philippines MPC: consensus has policy rate unchanged at 3.50%
- US Unit Labour Costs (Q4, prelim.): Consensus -0.5%, previous -1.4%
- US Initial Jobless Claims: consensus 335K, previous 338K
- US Trade Balance (Dec): Consensus USD-36.0bn, previous USD-34.3bn
- Germany Factory Orders (Dec): consensus +6.2%yoy, previous +6.8%yoy
- Also interesting: US Nonfarm Productivity (Q4, final), Canada International Merchandise Trade (Dec), Australia Trade Balance (Dec), Switzerland Trade Balance (Dec), Czech Republic Trade Balance (Dec)
Friday, 7 February
- US Non-farm Payrolls (Jan): Consensus 181K, previous 74K
- US Unemployment Rate (Jan): Consensus 6.7%, previous 6.7%
- US Average Earnings (Jan): consensus +0.2%, previous +0.1%
- Australia Statement of Monetary Policy
- Germany IP (Dec): consensus +3.1%yoy, previous +3.5%yoy
- UK IP (Dec): Vonsensus +2.4%yoy, previous +2.5%yoy
- UK Trade Balance (Dec): consensus USD-3.0bn, previous USD-3.2bn
- Brazil Inflation IPCA (Jan): Consensus +5.67%yoy, previous +5.91%yoy
- Also interesting: US Consumer Credit (Dec), Canada Unemployment Rate (Jan), Spain IP (Dec), Sweden IP (Dec), Russia FX Reserves (Jan), Mexico INPC Inflation (Jan), Hungary Trade Balance (Dec, prelim.), Malaysia Trade Balance (Dec)
In conclusion, here is SocGen with its summary of top issues for the week ahead:
MORE POSITIVE SIGNALS FROM EUROPE
A broader batch of country PMIs this week are expected to confirm improving economic conditions in the euro area, consistent with solid GDP growth in Q1. However, both France and Spain are expected to remain just below the 50 mark, suggesting that the recovery is still uneven and fragile. Later in the week, we expect German factory orders and industrial production to confirm the positive sentiment in Germany. MARKET ISSUES: The recent string of positive data in Europe may well lead to higher growth forecasts in the coming months. However, we would caution against excessive optimism, as only Germany has the conditions for a full cyclical recovery.
CENTRAL BANKS ON HOLD
This week, we expect the central banks of Australia (Tuesday), Poland (Wednesday), the Bank of England (Thursday) and the ECB (Thursday) to all remain on hold. The ECB will be the closest call, while the BoE should signal an update to its Forward Guidance policy. In Australia, the easing bias may be on the way out.
MARKET ISSUES: We should have got used to early action by the ECB by now, but headline inflation may not be the ECBs main concern this time, rather money market tensions and inflation expectations. Expect lots of questions on deflation, and ECBs possibilities to act. In the UK, the BoE will again struggle to find the right level on its unemployment threshold to anchor short-term rate expectations.
US DATA
In the US, the ISM manufacturing gauge is expected to climb to 56.8 In January, thus confirming that the pace of the US recovery is quickening. Non-farm payrolls will be the highlight ending the week. Again, we expect an above-consensus rise of 270 thousand, with the unemployment rate dropping to the FOMC’s 6.5% threshold. This puts high expectations on the March meeting on what to do with forward guidance (see Aneta’s note).
MARKET ISSUES: With markets wary of any acceleration of tapering in the US, the market impact of the US labour market data is likely to be high, affecting emerging markets more than the US and Europe.
Source: Goldman, BofA, SocGen
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