Markets: What is most important in the week ahead? – Nordea Markets

Martin Enlund, chief FX strategist at Nordea Markets, points out that the coming week starts off with a raft of Chinese statistics, which will be more interesting than usual given the market’s focus on the Chinese slowdown.

Key Quotes

“Retail sales, industrial production as well as GDP are all due on Monday. We note that it’s not always the case that M1 growth leads to GDP growth, as evidenced by the past few years. Maybe we’ve reached peak China worries, near-term?”

“Euro-area sentiment indicators will receive even more attention, starting with Germany’s ZEW expectations on Tuesday and French business confidence on Wednesday.”

“Euro-area preliminary PMI figures are due on Thursday, here we expect some modest and further deterioration. Thursday also brings rate decisions from Norges Bank (which will likely be a non-event – no new rate path, and an outlook not substantially changed), as well as a decision by the ECB. We think the ECB is set to formally become somewhat more gloomy.”

“While there are a few of US data releases planned for the week, large amounts of data are being held back by the ongoing shutdown of the Federal government. If the government re-opens, a raft of data releases may come during the week (including a likely robust retail sales figure for December). President Trump’s approval rate has recently declined, which may add pressure on him to reach a deal with the Democrats to reopen the government. However, his approval rates are still higher than in 2017, and the next election isn’t until 2020, so he might not be in a hurry.”

“As for the UK, the market is awaiting the government’s “plan B” for Brexit, which must be delivered no later than Monday 21 January – a plan which may then be voted on Tuesday 29 January. A request to postpone the 29 March deadline is likely, possibly until summer – or beyond.”