This week has begun with major developments from the United States, where Americans woke up to a third day of a government shutdown. The bill to extend government funding until early February is expected to be voted on at noon Washington time. (1700 GMT).
On the other side of things, the markets are looking for a number of important economic data this week, especially the results of the meeting of the ECB and BOJ. Additionally, the markets will be following the World Economic Forum this week, which will be held in Davos, Switzerland. We will review the most prominent of these data releases and what is expected of them as follows:
Tuesday: Bank of Japan decision
The Bank of Japan is scheduled to announce its interest rate decision and is expected to keep it unchanged at its negative range of -0.10% and maintain its monetary policy as it is. The decision will be followed by a press conference by Hirohiko Kuroda, Governor of the BoJ. The Japanese economy is showing a marked improvement recently and there are some indications that the Bank of Japan may cut its broad stimulus program, which occurred earlier this month when it cut its purchases of government bonds slightly.
Also this week, export figures come out for December which have risen for 13 consecutive months and inflation figures which rose for 12 consecutive months.
Wednesday: European PMI / New Zealand Inflation Figures
On Wednesday morning the Eurozone Purchasing Managers' Index (PMI) data will be released which showed a marked growth recently in a sign of continued economic recovery in the region, particularly in Germany and France.
In New Zealand, quarterly inflation figures, which rose by 0.5% in the third quarter of 2017, are expected to rise by a slower pace in the last quarter of 2017 by 0.4%.
Thursday: European Central Bank decision
The ECB is expected to keep interest rates unchanged during its first meeting in the new year, and market attention will be given to Mario Draghi's press conference following the decision. The markets will be awaiting to see whether there will be further hints about a new reduction in the stimulus program as the region is recovering strongly. ECB cut bond purchases to 30 billion a month at the October meeting.
Friday: Growth data in the US and UK / inflation in Canada
The advanced reading of GDP in the United States is scheduled to release for the last quarter of 2017 on Friday and is expected to show a slowdown to 3% from 3.2%. If the data is in line with expectations, the economy will grow by 3% or more for the third consecutive quarter for the first time since 2005.
Also, the UK GDP preliminary reading for the last quarter of 2017 will be released, and the economy is expected to grow by the same amount last quarter by about 0.4%, and on an annual basis to grow by 1.4%.
Finally, inflation data is due to be released in Canada, and the CPI is expected to rise by 0.3% in December and rise by 1.9% yoy.
