A new trading week may see a number of important US economic data releases, but the US dollar started the week with a significant decline, achieving the target of the head and shoulders pattern which we mentioned earlier at the 90 levels, the lowest level over three years.
Below are highlights of the week's data and their impact on markets:
On Tuesday, will inflation continue to rise in Britain?
The UK CPI is expected to be released in December, and expectations are that it may slow to 3% after hitting a 6-year high of 3.1% last month. Also, on Friday markets will be eager to see how much Brexit would affect the economy when retail sales are released.
On Wednesday, the Bank of Canada is expected to raise rates again
Most market expectations are for the Bank of Canada to raise interest rates for the third time in the recent past, following up two hikes in the second half of 2017 for the first time in seven years. Interest rates are expected to rise by 25 basis points to 1.25%, with positive economic data helping to give a strong impression of the Canadian economy. The decision will be accompanied by a press conference by Stephen Poloz, Governor of the Bank of Canada.
The markets will also be looking at European inflation data. The CPI is expected to rise by 1.4% in December after rising by 1.5% last month. The results of the ECB meeting were published last week and gave the market hints of a potential reduction of Monetary stimulus, prompting the EUR to rise to levels of 1.2295 earlier this week, the highest level against the US dollar since mid-December 2014.
Thursday, Australian employment data / growth data in China
Australia's labour market data is expected to continue growing for the 15th month in a row and the economy will add about 15.2 thousand jobs in December, after adding 61.6 thousand jobs in November, and unemployment will stabilize at 5.4% over the last 4 years.
The markets will be monitoring growth data in China as well, with gross domestic product expected to rise by 6.7% in the fourth quarter of 2017, after growing by 6.8% in the previous quarter. Industrial production data will also be released alongside growth data.
