Are market participants being overly optimistic about predicting rate cuts by major central banks?
Upcoming data releases will shed more light on the real economic situation. Here’s a glance at key economic indicators scheduled for this week:
Economic Indicators in Focus:
UK Employment and Inflation Data
Bank of England officials are particularly attentive to wage and services inflation. This week’s Consumer Price Index (CPI) and labour market data will be under close scrutiny.
On January 16 (Tuesday) at 7:00 am GMT, the UK is expected to report a slight decrease in its December unemployment rate, from 4.3% to 4.2%, alongside the creation of approximately 80,000 jobs (vs. 50K in November). Average earnings over three months might slow from 7.3% to 6.8%. Jobless claimants are anticipated to decrease significantly.
Service sector inflation remained high in December, but overall inflation might see a minor decline on January 17 (Wednesday) at 7:00 am GMT, reflecting lower oil and gasoline prices. Both headline and core inflation are expected to slow on an annualized and monthly basis.
Slower wage growth and reduced inflationary pressure might lead the Bank of England to maintain higher interest rates, while sustained high inflation could postpone any rate cuts.
China’s Economic Performance
January 17 (Wednesday) at 7:00 am GMT, China will release its Q4 economic growth data. Annual growth is forecasted at 5.3%, with a slight deceleration in quarterly growth. December’s retail sales, fixed asset investment, industrial production, and unemployment rate are also due, providing insights into China’s economic recovery and global risk sentiment.
U.S. Retail Sales
Following recent CPI and PPI reports, U.S. retail sales data on January 17 at 1:30 pm GMT could indicate the Federal Reserve’s potential for interest rate cuts. Retail sales, a significant component of consumer spending in the U.S., are expected to show a slight decrease in annual growth, with mixed results in core retail sales.
Strong retail activity could fuel speculations of interest rate cuts, affecting the U.S. dollar and riskier assets.
Speeches by FOMC Members
Upcoming speeches by Federal Open Market Committee (FOMC) members could provide clarity on the Fed’s monetary policy direction.
Speeches are scheduled from Christopher Waller (Jan. 16, 4:00 pm GMT), Michael Barr (Jan. 17, 2:00 pm GMT), Michelle Bowman (Jan. 17, 2:00 pm GMT), John Williams (Jan. 17, 8:00 pm GMT), Raphael Bostic (Jan. 18, 12:30 and 4:30 pm GMT), and Mary Daly (Jan. 19, 9:15 pm GMT).
Their comments could influence market expectations about interest rate cuts and impact the U.S. dollar’s performance against other major currencies.
Source : forexfactory.com | fxstreet.com
