Sun: Japanese Prelim. GDP (Q4)Mon: US Holiday (Washington’s Birthday\/Presidents
\nDay); Eurogroup Meeting; Swedish Unemployment (Jan), EZ Industrial
\nProduction (Dec)Tue: RBA Minutes (Feb); UK Unemployment\/Wages
\n(Dec), German ZEW (Feb), US ADP Weekly, Canadian CPI (Jan), NY Fed
\n(Feb), Chinese Lunar New Year (Hong Kong markets closed from 17th-19th
\nFeb)Wed: RBNZ Announcement, FOMC Minutes (Jan);
\nJapanese Trade Balance (Jan), Australian Wage Price Index (Q4), UK CPI
\n(Jan), US NY Fed (Feb), Industrial Production (Jan)Thu: Japanese CPI (Jan), Australian Employment
\n(Jan), US Trade Balance (Dec), Weekly\/Continuing Claims, Philadelphia
\nFed (Feb), Pending Home Sales (Jan), EZ Flash Consumer Confidence (Feb),
\n New Zealand Trade Balance (Jan)Fri: Hong Kong markets return from Lunar New Year;
\nECB EZ Indicator of Negotiated Wages; UK Retail Sales (Jan), PSNB (Jan),
\n EZ\/UK\/US Flash PMIs (Feb), Canadian Retail Sales (Jan),US PCE\/GDP
\n(Dec\/Q4)<\/p>\n
Japanese Prelim GDP (Sun): <\/p>\n
Q4 Q\/Q GDP is forecast to
\n have risen 0.4%, with Y\/Y growth seen at 1.6%. ING expects a more
\nmodest 0.3% Q\/Q expansion, driven by a rebound in construction as the
\nimpact of temporary safety regulations fades and firmer exports
\nsupported by robust global semiconductor demand. January trade data
\nhighlight continued strength in chip exports, with favourable calendar
\neffects and a low base likely to boost headline export growth. The
\nimpact of supplementary budget spending is expected to become more
\nevident in Q1 2026 rather than Q4, while no material effect from
\nChina-Japan disputes is anticipated in the Q4 data. Stable political
\nconditions and strong chip demand are also seen underpinning
\nmanufacturing and services activity.<\/p>\n
Canadian CPI (Tue): <\/p>\n
The Canadian inflation report
\nwill help shape expectations for BoC policy. The BoC is currently on
\nhold but is keeping its options open. Recent minutes said the policy
\nrate is on the stimulative side of the Bank\u2019s estimated neutral range,
\nand policymakers agreed that holding rates at the current level was
\nconditional on the economy evolving in line with their outlook, warning
\nthat heightened uncertainty has broadened the range of possible
\noutcomes. Members said it was difficult to predict the timing and
\ndirection of the next policy move and would continue to monitor risks
\nclosely, standing ready to respond if the outlook changes. On inflation,
\n the BoC noted that escalating tensions could disrupt global supply
\nchains and weigh on activity, posing both upside and downside risks to
\nprices. On the USMCA review, it said this posed downside risks to growth
\n and could pull inflation lower if the economy weakens, though higher
\nimport costs, potential counter-tariffs and supply chain disruptions
\ncould lift inflation. Amid the uncertainty, the BoC agreed to maintain
\noptionality in setting policy. In a speech, Governor Macklem stressed
\nthe bank must be careful not to misdiagnose economic weakness, saying
\npolicy should not attempt to offset lost supply, particularly as the
\nCanadian economy undergoes structural change. Money markets are pricing
\nno change in rates for the remainder of the year.<\/p>\n
RBA Minutes (Tue):<\/p>\n
The RBA will release minutes of
\nits meeting earlier this month, when it raised the Cash Rate for the
\nfirst time in more than two years by 25bps to 3.85%, as expected, with
\nthe decision unanimous. The bank said inflation was likely to remain
\nabove target for some time and that broad measures of wage growth
\ncontinued to be strong. It added that labour market conditions were
\nsomewhat tight and capacity pressures greater than previously assessed
\nand noted uncertainty around the outlook for domestic economic activity
\nand inflation, and the extent to which monetary policy is restrictive.
\nThe RBA also published its latest Quarterly Statement on Monetary
\nPolicy, stating that underlying inflation was higher than expected and
\nthat GDP growth had continued to pick up, with private demand
\nsurprisingly strong. It raised its trimmed mean and CPI inflation
\nforecasts and lifted its December 2025 GDP projection but lowered its
\nyear-end GDP forecasts for December 2026 and December 2027. The
\nforecasts assumed the Cash Rate at 4.2% in December 2026 and 4.3% in
\nDecember 2027. Governor Bullock said at the press conference that the
\npulse of inflation was too strong and that high inflation hurt all
\nAustralians, adding that the Board believed inflation would take longer
\nto return to target and could not allow it to get away.<\/p>\n
UK Unemployment\/Wages (Tue):<\/p>\n
November\u2019s
\nUnemployment rate came in above consensus at 5.1% (exp. 5.0%), with the
\noverall skew from the series a dovish one, as while the
\nhotter-than-expected wage figure was a hawkish impulse, it is a familiar
\n one. This week\u2019s series is expected to feature a steady unemployment
\nrate and a decline in payrolls. As a reminder, the February BoE MPR saw
\nthe peak unemployment forecast raised to 5.3% from the previous, and
\ncurrent, rate of 5.1%; i.e. the MPC expects a further deterioration in
\nthe jobs market. Note, given the remarks by BoE\u2019s Bailey in the last
\nstatement, wages are perhaps worth watching even closer than normal,
\nafter he caveated his increased confidence on the path of wage inflation
\n by adding it is less clear when the inflation downside will feed into
\nwages; i.e., a marked drop in wages could tilt him to a March cut vs
\ncurrent pricing for April. However, overall, the series will inform but
\nis unlikely to determine the timing of the next BoE cut, with the week\u2019s
\n inflation series (see below) more pertinent in that deliberation.<\/p>\n
RBNZ Announcement (Wed):<\/p>\n
The RBNZ will hold its
\nfirst policy meeting of the year next week, where it is widely expected
\nto keep the Official Cash Rate unchanged at 2.25%, with money markets
\npricing a 98% probability of no change. The meeting will be the first
\nunder Governor Breman, who took office in December. At its previous
\nmeeting in November, the RBNZ cut rates by 25bps, its third consecutive
\nreduction, bringing cumulative easing to 325bps since it began its
\nrate-cutting cycle in August 2024. The bank left the door open to
\nfurther moves, saying future changes to the OCR would depend on how the
\noutlook for medium-term inflation and the economy evolves, although its
\nprojections implied a pause through 2026. The RBNZ noted that annual
\nconsumer inflation rose to 3% in the September quarter but said spare
\ncapacity in the economy should see inflation fall to around 2% by
\nmid-2026, with risks to the outlook balanced. Then-Governor Christian
\nHawkesby said policymakers were well placed to mitigate risks and that
\nthe central projection was for the Cash Rate to remain on hold through
\n2026, while retaining full optionality with every option on the table.
\nHe later acknowledged the bank had lowered the cash rate significantly
\nand was more confident the OCR was now stimulatory, adding that the
\nhurdle for further cuts was high and that it could not keep the door
\nopen to easing indefinitely. Governor Breman has also signalled openness
\n to further adjustments, but without urgency, saying the RBNZ had made
\nsignificant progress towards its mandated objectives and was closely
\nmonitoring data, including inflation and GDP. She said there was no
\npreset course for monetary policy and that the bank would adjust if the
\ninflation outlook changed. Breman added that the economic outlook had
\nevolved broadly in line with expectations and that the forward path for
\nthe OCR published in the November monetary policy statement pointed to a
\n slight probability of another cut in the near term, though if
\nconditions evolve as expected the OCR is likely to remain at 2.25% for
\nsome time.<\/p>\n
FOMC Minutes (Wed):<\/p>\n
The Fed left rates unchanged at
\n3.50-3.75%, as expected, in a 10-2 vote, with Governors Miran and Waller
\n dissenting in favour of a 25bps reduction. Miran had previously voted
\nfor a 50bps cut in December. The January statement upgraded its economic
\n assessment, replacing \u201ceconomic activity has been expanding at a
\nmoderate pace\u201d with \u201cexpanding at a solid pace\u201d, \u201cjob gains have slowed
\nthis year\u201d with \u201cjob gains have remained low\u201d, and \u201cthe unemployment
\nrate has edged up\u201d with it having \u201cshown some signs of stabilisation\u201d.
\nIt also simplified \u201cinflation has moved up since earlier in the year and
\n remains somewhat elevated\u201d to \u201cinflation remains somewhat elevated\u201d. In
\n its risk characterisation, December\u2019s addition that the Committee
\n\u201cjudges that downside risks to employment rose in recent months\u201d was
\nremoved, leaving only that it is attentive to risks on both sides of the
\n mandate. The statement\u2019s tone was slightly more positive on the economy
\n and labour market and broadly unchanged on inflation. Ahead of the
\ndecision, traders looked for signals on the future policy path, but the
\nstatement offered no immediate clues and Chair Powell\u2019s press conference
\n provided little by way of new information. Powell noted that decisions
\nwill be made on a meeting-by-meeting basis, guided by the data and
\nbalance of risks. He said policy is well positioned, reiterating it is
\ncurrently within a plausible neutral range, but towards the higher end.
\nIf Fed sees goods pricing peaking over this year, that suggests the Fed
\ncan loosen policy further. Powell highlighted that data since the
\nDecember meeting has improved the outlook. Inflation remains somewhat
\nelevated. Goods and tariff-related inflation expected to peak around
\nmid-2026, with many effects already passed through. He noted that the
\nlabour market has weakened alongside solid growth, but recent data
\nsuggests stabilisation following a period of cooling. Job gains remain
\nsubdued, and while risks to employment have diminished, they have not
\ndisappeared, making it difficult to judge whether the dual mandate is
\nfully in balance. Since the January meeting, Governor Waller (voter) has
\n argued policy remains too restrictive, the labour market \u201cdoes not look
\n remotely healthy\u201d, and tariff-driven inflation should be looked
\nthrough. Governor Miran (voter) has said underlying inflation is not
\nproblematic and rates should be materially lower, warning policy may be
\npassively tightening, though he added that after this week\u2019s jobs data
\nhis concerns about the labour market have eased slightly. Governor Cook
\n(voter) stressed stalled disinflation and the need to maintain
\ncredibility. Vice Chair Jefferson (voter) described policy as well
\npositioned, expects tariff effects to fade and inflation to ease in
\n2026. Logan and Hammack (both 2026 voters), characterised rates as
\naround neutral, signalling no urgency to cut unless labour conditions
\ndeteriorate materially. Among non-voters, Musalem and Schmid cautioned
\nagainst further easing with inflation near 3%, while Daly, Barkin and
\nBostic emphasised resilience but warned inflation remains above target.
\nNote, the minutes are an account of the January 28th meeting, so it will
\n not incorporate the January jobs report and CPI data. <\/p>\n
UK CPI (Wed):<\/p>\n
December\u2019s print was
\nhotter-than-expected at the headline level, though subject to caveats
\namid Budget-driven tobacco changes and elevated airfares due to the
\ntiming of return flights over the Christmas period. Pertinently, the
\ncore Y\/Y figure was either in-line or cooler depending on the consensus
\nused; however, all services ticked higher, though by less than some
\nexpected. An unwinding of the one-off impacts in December should see the
\n headline moderate in January, with Pantheon Macroeconomics forecasting a
\n 3.0% Y\/Y print, though that is above the BoE MPC\u2019s 2.9% forecast. As a
\nreminder, the February MPR saw the inflation forecasts lowered across
\nthe next three years, and the statement remarks that the \u201coutlook for
\ninflation over the next six months is notably lower than expected in
\nNovember\u201d, primarily due to energy prices, including the impact of
\nfiscal policy. The January series will be the main factor informing on
\nwhether the BoE cuts in March (-19.5bps priced) or April (-26.9bps). The
\n language from the statement was balanced and kept the focus on the
\nmedium term. As a reminder, February was a 5-4 split with Bailey the tie
\n break; on inflation, the Governor said he expects to see \u201cquite a sharp
\n drop in inflation over coming months\u201d. If CPI prints in-line with
\nPantheon\u2019s view, that is undoubtedly a sharp drop. However, the \u201ccoming
\nmonths\u201d emphasis by Bailey skews the bias to April vs March. Overall,
\nCPI will have the main role to play in determining the timing of a cut,
\nand if we see the moderation desks are looking for in prices, along with
\n continued labour market pressures, a wage pullback and\/or soft retail
\nmetrics, then March may move towards being priced.<\/p>\n
Australian Employment (Thu):<\/p>\n
Westpac expects
\nemployment to rise by 40k (prev. +65.2k), with the participation rate
\nedging up to 66.8% (prev. 66.7%) and the unemployment rate ticking up to
\n 4.2% (prev. 4.1%). The labour market ended 2025 on a choppy note, the
\nbank says, with a weak November followed by a strong December, though
\nanalysts caution that seasonal volatility – particularly around year-end
\n and January hiring patterns – complicates the signal. Westpac judges
\nthe data reflect a solid finish to 2025 rather than a clear
\nre-tightening in conditions, with employment growth likely near its
\ntrough as care-sector effects unwind and private demand stabilises.
\nJanuary data will be closely scrutinised by the RBA amid renewed
\ninflation pressures, with attention on participation dynamics,
\npopulation re-benchmarking and “marginally attached” workers, which have
\n distorted recent January prints. Westpac expects a flatter employment
\nrecovery through 2026 and a gradual drift higher in unemployment over
\nthe year.<\/p>\n
Japanese CPI (Thu):<\/p>\n
Japan\u2019s CPI is expected to slow
\nsharply, with headline inflation seen at 1.5% Y\/Y (prev. 2.1%),
\naccording to ING. The deceleration is largely attributed to government
\nenergy subsidies and stabilisation in food prices. ING expects inflation
\n to moderate further in the coming months, reinforcing expectations that
\n price pressures may remain contained in the near term. From a BoJ
\nperspective, the central bank held rates steady in January to assess the
\n impact of previous hikes and await key data from the Shunto spring wage
\n negotiations.<\/p>\n
UK Retail Sales (Fri):<\/p>\n
Barclay\u2019s consumer spending
\nreport for January showed a modest increase in car spending during one
\nof the wettest months on record, with online and entertainment
\nexpenditures bolstered as a result. However, the weather would
\ntheoretically have had an impact on footfall to stores. Despite that,
\nBarclays\u2019 report showed retail spending rebounded 1.7% Y\/Y after a
\nrelatively flat December, supported by January sales and online
\nactivity. On the point of footfall, the BRC report showed in-store sales
\n having the \u201chighest growth\u201d in over six months, despite the poor
\nweather. Overall, the series should be robust and broadly in-fitting
\nwith the December print of 0.4% Y\/Y.<\/p>\n
EZ Flash PMIs (Fri):<\/p>\n
Expectations are for Services
\nto edge up from the prior reading, with some analysts seeing the
\nManufacturing component return to expansionary territory. As such, the
\nComposite is expected to rise to 51.7 from 51.3. Taking a look at other
\nactivity figures, EZ Retail Sales fell 0.5% in December from +0.1%
\npreviously, while German Industrial Production missed forecasts by a
\nwide margin, underscoring the uneven nature of the country\u2019s recovery.
\nThis PMI report is unlikely to have a material impact on monetary
\npolicy, with the ECB reiterating that the Bank remains in a \u201cgood
\nplace\u201d. February\u2019s ECB statement said growth is resilient and recent
\ncommunication has largely reiterated a data-dependent approach. Recent
\ndata has been broadly in line with staff projections, with increased
\nfocus on the stronger EUR and trade and geopolitical developments. The
\nJanuary report printed slightly below expectations, although the overall
\n trend has been sideways. In the prior reading, HCOB said the \u201cgrowth
\ntrajectory can be described as decent\u201d, though not yet \u201ccomfortable\u201d.
\nRegionally, Germany, Italy and Spain have continued to expand since
\nSeptember, while France has been affected by the \u201cdifficult political
\nsituation\u201d. Since the last report, the political backdrop has stabilised
\n in the short-term after Prime Minister Lecornu forced an amended 2026
\nbudget through.<\/p>\n
UK Flash PMIs (Fri):<\/p>\n
Investec forecasts the UK
\nComposite PMI at 53.6, marginally below the prior 53.7, with slight
\ndownticks expected in both Manufacturing and Services, suggesting a
\nmodest loss of momentum after the upward trend of recent months. Recent
\nactivity data have included a subdued December GDP report, alongside
\nweak Manufacturing and Industrial Production figures. The report will be
\n closely watched by policymakers at the BoE, which kept rates unchanged
\nat 3.75% at its January meeting. The 5-4 vote split was more dovish than
\n the expected 7-2. Governor Bailey described activity as \u201csubdued\u201d,
\nwhile Lombardelli called it \u201cweak\u201d. Ramsden and Dhingra, who dissented
\nin February, also took a downbeat view of the activity environment. The
\nBank cut its growth forecasts for Q1\u201926 and Q1\u201927. Money markets
\ncurrently assign a 76% chance of a cut in March and have fully priced in
\n a move by April. ING said that if recent weakness in growth and the
\nlabour market persists alongside easing wage growth, a March cut is
\n\u201chighly likely\u201d.<\/p>\n
UK PSNB (Fri):<\/p>\n
December\u2019s PSNB came in at GBP
\n11.6bln, around GBP 2.5bln below the consensus figure, however, still at
\n an elevated level and the 10th highest December print on record, with
\nthe FY to December tally the 3rd highest on record. January\u2019s data
\ncaptures capital gains and self-assessment payments ahead of the
\nend-January deadline, and as such the series can be volatile and subject
\n to significant and often one-off swings. As a reminder, the OBR expects
\n receipts from capital gains to increase substantially over the next few
\n years; a factor that may be seen in the January figure if participants
\nelected to sell-off assets ahead of the 2025 Autumn Budget. An increase
\nin such payments (potentially sparking a negative borrowing figure)
\nwould be welcome by the Treasury and would, if only temporarily, provide
\n a welcome positive headline on the UK economy for the Labour government
\n at the moment.<\/p>\n
US PCE (Fri):<\/p>\n
PCE prices, the Fed\u2019s preferred
\ninflation gauge, will be critical for policymakers and markets in
\nassessing the future path of interest rates. Consensus expects December
\nPCE to show firmer price pressures than recent CPI prints, with measures
\n such as food and producer prices pointing to upside risks. Analysts
\nnote that the \u2018wedge\u2019 between CPI and PCE could produce a hotter PCE
\nreading, partly because PCE places greater weight on categories where
\nprices are rising more sharply. At his press conference following the
\nFOMC\u2019s January meeting, Chair Powell said estimates based on CPI data
\nindicate headline PCE rose 2.9% Y\/Y in December, up from 2.8%, while
\ncore PCE, excluding food and energy, likely rose 3.0% Y\/Y from 2.8%. He
\nsaid the elevated readings largely reflect goods inflation boosted by
\ntariffs. The Fed\u2019s December projections pencilled in one additional cut
\nfor 2026, though policymakers have recently indicated this depends on
\nfurther progress towards the inflation target, given the labour market
\nhas outperformed expectations. Powell reiterated that decisions will be
\ntaken on a meeting-by-meeting basis, guided by data and the balance of
\nrisks. He said inflation has evolved broadly as expected but remains
\nsomewhat elevated, with no progress on core PCE last year as the
\novershoot was driven mainly by goods prices, tariffs and one-off factors
\n rather than demand. Goods and tariff-related inflation are expected to
\npeak around mid-year, with many effects already passed through. Powell
\nsaid that if tariff effects on goods prices peak this year, it would
\nsignal scope to loosen policy. Short-term market-based inflation
\nexpectations have fully retraced since \u201cLiberation Day\u201d, while
\nlonger-term measures indicate confidence that inflation will return to
\n2%.<\/p>\n
US GDP (Fri): <\/p>\n
The preliminary Q4 GDP estimate is
\nexpected to show US growth cooling from Q3\u2019s 4.4% annualised pace. The
\nAtlanta Fed\u2019s GDPNow tracker models growth at 3.7%, revised down after
\nsofter core retail sales in December and downward revisions to November,
\n pointing to moderation in consumer spending from the prior quarter\u2019s
\n3.5% pace. Activity nevertheless appears resilient. In its December SEP,
\n the Fed projected 2026 growth at 2.3%, upgraded from 1.8% in its
\nSeptember forecasts; in January, the FOMC described the economy as
\nexpanding at a \u201csolid pace\u201d, while Chair Powell said growth is on a firm
\n footing despite trade policy changes, cautioning that quarterly GDP can
\n be volatile. Vice Chair Jefferson has struck a cautiously optimistic
\ntone on 2026, expecting growth slightly above trend. He highlighted the
\npossibility that productivity gains, including from AI investment, could
\n allow faster expansion without reigniting inflation, though he stressed
\n it is too early to assess their durability. Some analysts say focus
\nwill be on whether Q4 confirms a controlled slowdown rather than a
\nsharper loss of momentum, and the implications for policy. The Fed\u2019s
\nrate path appears to hinge on further progress towards its 2% inflation
\ngoal, with most policymakers seeking clearer evidence of disinflation
\nbefore backing lower rates.<\/p>\n