Weekly Analysis (22-26 January)

In the United States, the focus is on the advanced estimate of Q4 GDP growth, which is projected to have grown at a slower annualized rate of 1.8% compared to the 4.9% increase in the previous quarter. This slowdown highlights a cooling of economic activity. Additionally, December's core PCE prices are expected to show a modest rise of 0.2%, slightly higher than November's 0.1% increment. Personal spending and income for the same month are expected to increase by 0.2% and 0.3%, respectively. Durable goods orders for December are forecasted to see a 0.5% uptick, a significant pullback from the strong 5.4% surge seen in November, the most pronounced since July 2020. Investor attention will also be drawn to the flash S&P Global PMI survey, residential sales data, the Chicago Fed National Activity Index, and initial figures for wholesale inventories and the goods trade balance.
In the northern neighboring country, the Bank of Canada is anticipated to maintain its current interest rate stance as inflation continues to overshoot targets and the job market shows signs of cooling. Canadian housing prices and Mexico's foreign trade and unemployment data will also be closely followed.
Turning to Europe, the European Central Bank (ECB) is expected to leave interest rates steady, with investors parsing the accompanying statement for clues on the economic outlook and future policy directions. Flash PMI data is set to indicate a milder contraction in the Eurozone's economy, with Germany and France showing less pronounced declines in manufacturing and services. Consumer confidence in the Eurozone is forecasted to hit its highest mark since February 2022. Germany's Ifo business climate index may experience a marginal rise, whereas GfK consumer confidence could retreat slightly from a five-month peak. French consumer sentiment is likely to reach a near two-year apex, with business confidence holding stable at a five-month high. In the UK, the latest Flash PMI surveys suggest that there may be a smaller contraction in manufacturing and the strongest expansion in services for the past 7 months. The CBI's assessments of factory orders, business optimism, distributive trades, and the country's public sector net borrowing will also be examined.
The Bank of Japan is expected to maintain its key interest rate, with recent inflation data supporting a steady policy approach. Market participants are expecting trade balance data for December and January's PMI figures. In Australia, the focus will be on December's NAB business confidence index and January PMI data, while New Zealand will publish its Q4 CPI data. People's Bank of China is expected to keep its loan prime rates on hold.