Proactive Investors - Economic news will be a little thinner on the ground in the coming week but there is still a key US inflation number and a rate decision by the Bank of Canada for macro fans to look forward to.
In the UK, producer price inflation figures are due, with consensus expectations for a monthly fall in output prices to 14.6% from 17.2% and input prices to 18.7% from 19.5%.
Preliminary PMI figures for the UK, US and other major economies are also scheduled for Tuesday, with flash composite, manufacturing and services readings. The overall figure is expected to inch higher to 49.1 from 49.0 – still in contraction territory.
UK public sector borrowing numbers will also be released on Wednesday, with producer price inflation on Thursday.
In the US on Thursday, all eyes will be on the Federal Reserve's favoured measure of inflation, the core personal consumer expenditure deflator.
Economists at ING expect a relatively benign 0.2% month-on-month core PCE reading, which would confirm the easing trend in price pressures.
US data has continued to soften over recent weeks, the economists noted, with weak manufacturing and service sector ISM readings, a fall in retail sales and industrial production while residential construction has posted six consecutive monthly declines.
Despite this, on the same day fourth quarter US GDP report is expected to show that the economy expanded at a rate in excess of 2% on an annual basis, ING said, with the growth largely “focused on net trade and inventory building.”
ING's James Knightley declared “this is not “good” growth” and predicted growth figures over the next few quarters “will be much weaker.”
Aside from the GDP and PCE figures durable goods orders data will be reported and they should be strong given Boeing (NYSE:BA) received orders for 250 aircraft in December up from 21 in November.
But ING said after stripping this one-off story out, “the underlying picture is significantly weaker”.
There will be no scheduled Federal Reserve speakers as this is self-imposed blackout period ahead of the upcoming FOMC meeting at the start of next month.
North of the border, the Bank of Canada (BoC) is expected to increase interest rates by 25 basis points from the current 4.25% to 4.5% on Wednesday and Knightly thinks this will be the final hike.
“The BoC will likely characterise this as a pause, but we expect it to mark the peak as global recessionary forces are increasingly felt within Canada and inflation numbers continue to subside,” he said.
Neil Wilson at markets.com said: "after hiking rates seven times to 4.25%, the central bank is likely to pursue at least another hike."
"A strong December jobs report means another hike to 4.5% is likely, though not a 100% done deal," he added.
"Inflation is cooling but I see no reason for the BoC to stand pat and expect a hike."
In Asia, on Thursday there will be the latest core Tokyo CPI inflation print, which leapt to 4.0% from 3.6% in the prior month.
Wilson suggested: "The Tokyo figures could nudge higher still when the next set is released this week – will it do anything to nudge the BoJ to alter course?"
Elsewhere, Australian and New Zealand inflation updates are due early on Wednesday.
The surprise drop in Australian employment in December has, according to Rabobank forex team, "fed the flames of the debate regarding the outlook for RBA interest rates and underpinned the view that policymakers may be close to a pause".
The Aussie dollar has fallen back against its US counterpart, with profit-taking this week removing it from top place of G10 currencies in the year to date.
"Relative to one month ago, implied market rates have shifted to reflect a change in expectations regarding both the peak in RBA policy rates and the timing of the anticipated pivot in policy. Now the market is expecting rates to fall modestly before the end of this year with a peak close to 3.6%, which is far lower than a peak around the 4% level that was expected in mid-December," the currency analysts said.
As for the NZD, it has been impacted by the surprise resignation of PM Jacinda Ardern.