Top events that will move the global markets

In the US, the week is relatively quiet in terms of economic data, with most of the impact expected from housing sector reports in the country. With the little economic data expected this week, financial reports will take over the markets, focusing on reports from Wall Street bank leaders. Monday remains a day off in the US, which is why we expect weak volatility in the markets.

In Europe, investors will expect monthly inflation figures to assess how quickly the ECB will cut QE. At the same time, traders in the United Kingdom will focus on consumer price data to assess Bank of England's next decisions.

Here the details and what to expect:

1. US Housing data
On Tuesday we expect the data on the initial housing construction and on Thursday the data on the building permits. Expectations are negative, with residential construction expected to decline by 1.7% and building permits declined by 1.0%. This will strengthen the negative sentiment along the dollar, and it is possible to observe lower values ​​after the data is published.

2. China Q4 GDP 
Market participants expect the data to confirm the slowdown in the second-largest economy in the world. The news from China will have a strong impact on the shares of emerging economies as well as on AUD and NZD. The likelihood of data to be better than expected is low, and if it gets worse, investors will react sharply, and we may see a fall in Asian benchmarks and the currencies directly linked to the Chinese economy - AUD and NZD. The slowdown in China remains one of the main risks to global growth.

3. CPI in the Eurozone
The eurozone will release the final inflation data for December on Wednesday. The report is expected to confirm that consumer prices have risen 1.4%, 0.1% slower than in the previous month. The final inflation figures for Germany and Italy are also expected this week.

The December ECB Debate minutes published last week showed that politicians could reconsider their position in early 2018, causing speculation that the bank is preparing to cut its huge program of monetary stimulus.

The ECB should hold its next policy meeting on 25 January.

4. CPI of the UK
Analysts expect the annual consumer price index to fall to 3.0% from the 6-year high from 3.1% in November. Inflation is expected to slow slightly from 2.7% to 2.6%.

In addition to the inflation report, traders will focus on monthly retail sales figures on Friday as additional indications of the continuing effect Brexit's decision on the economy.

Despite the negative rumors of hard Brexit in recent days, we expect the upward trend in the GBP to remain.

5. Bank Of Canada interest rate decision
The Bank of Canada Baseline Interest Rate Decision is expected on Wednesday, and most experts believe the bank will raise interest rates by 25 basis points to 1.25%. We expect caution in CAD before the decision and strong volatility afterwards. As far as the direction of traffic is concerned, we do not expect a strong CAD appreciation, since the probability of a promotion is over 80% as of January 5th. Most likely, the Canadian has accumulated these expectations in its price.

Source: Bloomberg Pro Terminal

Jr Trader Petar Milanov

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