Holidays in Asia, Earnings in the US
In the week ahead and because of Lunar New Year, China’s markets will be closed for a whole week. South Korea, Malaysia, and Japan on Mondays and Tuesdays will be closed. In general, it can be said that Asians will not be very active in the coming week. However, Earnings in the US, several PMI and GDP reports, and BoC rate decisions and policy statements will be in the spotlight.
1- US Leading Economic Index – Monday
The Leading Economic Index is an American leading indicator intended to forecast future economic activity, calculated and published by the US Conference Board. For the ninth consecutive monthly decline, LEI dropped 1% in November. For December, we expect the LEI to decrease by 0.8%, extending the recent streak of declines. Recently published data from the US were mixed and confusing. Weaker data can raise recession fear and, in a reverse reaction, can increase the USD demand.
2- PMI day – Tuesday
The second half of last year was challenging, but 2023 will likely still be a tough year for the global economy. Germany, France, Eurozone, the UK, and the US will publish their Purchasing Manager’s survey data on Tuesday. While we expect signs of an improving outlook for the Eurozone, even with Service PMI back above the 50 expansion level, numbers are still supposed to show slower growth in other areas.
3- Bank of Canada – Wednesday
Like other economies, recently published data from Canada also have been mixed, and inflation started to slow down. December CPI slowed noticeably to 6.3% year-over-year. Though inflation remains high, this deceleration in prices, and the weakness in other sectors, can be convincing for softening monetary policies. We expect another 25bps rate hike to see the Bank of Canada’s rates at 4.5% at the end of its monetary policy meeting later this Wednesday. The expected decision can put more pressure on Loonie against its rivals.
4- US GDP and Durable goods orders – Thursday
Retail sales and personal spending have been acceptable in recent months and can support the final GDP numbers. The GDP should grow by 2.7% annually in quarter 4 of 2022. This positive progress could also be seen in Durable goods orders, with 2.6% expected growth in December, especially after a -2.1% fall in November. These desired data once again increase the market uncertainty and risks.
5- Earnings of the week
This week’s earnings calendar will be so busy and significant. Microsoft, J&J, Verizon, and Union Pacific will report on Tuesday. We have a Tesla, NextEra Energy, AT&T, IBM, and Boeing earnings call on Wednesday. Visa, Louis Vuitton, and Intel will release their earnings report on Thursday. Finally, we have to watch the Chevron and American Express earnings call on Friday.