Events to Look Out for Next Week

• Manufacturing PMI (CNY, GMT 01:00 Sunday) – The Non-Manufacturing PMI is expected to slow down to 52.6 from 55.7 in January.
• Retail Sales (EUR, GMT 07:00) – German Retail Sales jumped 1.9% m/m after rising 2.6% m/m in Oct. For December, it is anticipated to drop -2.0% m/m.
• ISM Manufacturing PMI (USD, GMT 15:00) – The ISM index is expected to fall to 59.0 in January from a 2-year high of 60.7 in December, versus an 11-year low of 41.5 in April, a 14-year high of 60.8 in August of 2018, and a low of 34.5 during the last recession  in December of 2008.

Tuesday – 2 February 2021

• RBA Rate Statement & Interest Rate (AUD, GMT 03:30) – In December, RBA Governor Lowe said the RBA doesn’t expect to lift the cash rate for at least three years. Hence the RBA is expected to keep policy settings unchanged with yield target at 0.10% and the cash rate target also at 0.10%. Like other central banks world wide, the RBA could stress again that “monetary and fiscal support will be required for some time.”
• Gross Domestic Product (EUR, GMT 10:00) – German GDP is expected to have grown by 0.3% on an annualized rate in the first quarter of the year, compared to the -1.9% fall in Q4 2020.
• Labor data (NZD, GMT 21:45) –In Q4, the unemployment rate is expected to have risen to 5.4% from 5.3%.

Wednesday – 3 February 2021

• Consumer Price Index (EUR, GMT 10:00) – The Euro Area preliminary core CPI for January is forecasted to remain unchanged at 0.2% y/y.
• ADP Employment Change (USD, GMT 13:15) – Employment change is seen spiking to 49k in the number of employed people in January, compared to the -123K reading seen last month.
• ISM Services PMI (USD, GMT 15:00) –The ISM-NMI index is expected to slip to 57.0 from 57.2 in December, versus a 17-month high of 58.1 in July, an 11-year low of 41.8 in April, a 13-year high of 61.2 in September of 2018, and an all-time low of 37.8 in November of 2008. Producer sentiment has remained firm into the turn of the year as businesses scramble to rebuild inventories, despite headwinds from delays for both stimulus and vaccine distributions, alongside tightened coronavirus restrictions through the holidays.

Thursday – 4 February 2021

• Retail Sales (EUR, GMT 10:00) – Retail Sales should contract to -3.4% m/m in December, leaving the headline at 0.8% y/y.
• BOE Interest Rate & APF Decision, MPC Mins & Vote (GBP, GMT 12:00) – BoE leaders remain skeptical on negative rates. There was nothing much from BoE officials in January, but Governor Bailey and Deputy Governor Broadbent recently confirmed that the top brass at the central bank remains very cautious on negative rates, which means in the central scenario of a gradual recovery in the second half of the year, the BoE is unlikely to join the negative rate club. Still, like other central banks the BoE is not expected to be in any hurry to rein in stimulus measures and is likely to confirm a “vigilant wait-and-see stance” at next week’s meeting.
• BoE’s Governor Bailey speech

Friday – 5 February 2021

• NFP and Labour Market Data (USD, GMT 13:30) – A 100k January nonfarm payroll increase is seen, after a -140k drop in December, but gains of 336k in November and 654k in October. We assume a 30k factory jobs increase in January, after a 38k December rise. The jobless rate should hold steady from 6.7% in December. Hours-worked are assumed to bounce 0.2% after a -0.4% December decline, with the workweek ticking back up to match the 20-year high of 34.8 from 34.7 in December. Average hourly earnings are assumed to rise 0.1% in January, the 0.8% December spike is partly reversed with the big drop in low-wage workers.
• Labour Market Data (CAD, GMT 13:30) – Employment contracted -62.6k in December after the 62.1k gain in November. The decline was larger than expected (we saw a -30k drop) but not a shock given the increase in regional lockdowns during the month that accompanied the spike in virus cases. The December number was the first monthly employment decline since April. The pull-back was driven by a -99.0k tumble in part time jobs that followed the -37.4k decline in November. The unemployment rate rose to 8.6% in December from 8.5% in November, as the participation rate dipped to 64.9% from 65.1%. The contraction in the job market as lockdowns were reinstated is consistent with a reiteration of the BoC’s whatever-it-takes policy guidance.