Global financial markets will focus on this week’s Federal Reserve policy meeting, which will be the last under the leadership of Janet Yellen before she hands the chairmanship over to Jerome Powell.
There are also some major data releases in the coming week, as the calendar rolls to February from January, with Friday’s monthly employment data in the spotlight.
Meanwhile, in Europe, investors will await monthly inflation data to assess how fast the European Central Bank will start unwinding its asset purchase program.
In the UK, traders will focus on a pair of reports on activity in the manufacturing and construction sectors for further hints on the health of the economy and the likelihood of the Bank of England raising interest rates this year.
Elsewhere, market participants will be looking ahead to monthly data on China’s manufacturing sector amid recent signs that momentum in the world’s second largest economy remains strong.
Ahead of the coming week, Investing.com has compiled a list of the five biggest events on the economic calendar that are most likely to affect the markets.
1. Federal Reserve Rate Decision
The Federal Reserve is not expected to take action on interest rates at the conclusion of its two-day policy meeting at 2:00PM ET (1900GMT) on Wednesday, keeping it in a range between 1.25%-1.50%.
The central bank will release its post-meeting statement as investors look for any change in language which could point more clearly to a rate hike in the months ahead.
This week’s meeting will be the last under the leadership of Janet Yellen, before she is replaced by Fed Governor Jerome Powell.
The majority of economists believe that the Fed will hike rates in March, followed by another hike in June, with a third move higher arriving in December.
2. U.S. Employment Report
The U.S. Labor Department will release its January nonfarm payrolls report at 8:30AM ET (1330GMT) on Friday.
The consensus forecast is that the data will show jobs growth of 180,000, after rising by 148,000 in December. The unemployment rate is forecast to hold steady at 4.1%. Most of the focus will likely be on average hourly earnings figures, which are expected to rise 0.3% after gaining 0.3% a month earlier.
This week’s calendar also features reports on personal income and spending, which includes the personal consumption expenditures inflation data, the Fed’s preferred metric for inflation.
Data on consumer confidence, ADP private sector payrolls, pending home sales, ISM manufacturing sector growth, weekly jobless claims, construction spending, auto sales and factory orders will also be on the agenda.
Meanwhile, for the stock market, more than a fifth of the S&P 500 companies release earnings, with reports from tech heavyweights Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT) and Alibaba (NYSE:BABA) likely to garner most of the attention.
Results from Dow components Boeing (NYSE:BA), AT&T (NYSE:T) and McDonald’s (NYSE:MCD) as well as big oil firms ExxonMobil (NYSE:XOM) and Chevron(NYSE:CVX) will also be in focus.
On the political front, another headliner this week will be President Donald Trump’s State of the Union address on Tuesday. The theme of Trump’s address will be “building a safe, strong and proud America,” a senior administration official told reporters on Friday.
According to the White House, the speech will focus on five main policy areas: jobs and the economy, infrastructure, immigration, trade and national security.
3. Euro Zone Flash Inflation
The euro zone will publish flash inflation figures for January at 1000GMT (5:00AM ET) Wednesday.
The consensus forecast is that the report will show consumer prices rose 1.3%, slowing slightly from 1.4% in December, remaining short of the European Central Bank’s target of just below 2%. Perhaps more significantly, the core figure, without volatile energy and food prices, is seen inching up to 1.0% from 0.9% a month earlier.
Germany, France, Italy and Spain will produce their own CPI reports throughout the week.
In addition to the inflation data, the euro zone will publish a preliminary report on fourth-quarter economic growth on Tuesday, which if they remain strong could push the European Central Bank another step closer to ending its mass stimulus program.
The region’s economy is forecast to expand 0.6% in the June-Sept. period, equivalent to an annualized 2.7%.
The ECB reiterated last week that it will keep its €2.5 trillion stimulus program in place for as long as needed and stated that there are “very few chances” that it will change interest rates this year. Despite those remarks, market players remain convinced that easy monetary policy in the region is coming to an end sooner rather than later.
The central bank cut its monthly bond purchases from €60 billion to €30 billion back in October, but extended the program until the end of September 2018, citing muted price pressures.
4. U.K. PMI’s
The U.K. will release readings on January manufacturing sector activity at 0930GMT (4:30AM ET) on Thursday, followed by a report on the construction sector on Friday.
The manufacturing PMI is forecast to ease up to 56.5 from 56.3 a month earlier, while construction activity is expected to weaken slightly to 52.0 from 52.2.
Data released last week showed Britain’s economy unexpectedly picked up speed in the last three months of 2017, revealing that Brexit was still weighing on the economy, but not as heavily as once feared by investors.
Politics is also likely to be in focus, as market participants keep an ear out for any news regarding the ongoing Brexit negotiations.
The Bank of England raised interest rates for the first time in more than ten years in November, but said it sees only gradual rises ahead as Britain prepares to leave the European Union.
5. Chinese Manufacturing PMI
The China Federation of Logistics and Purchasing is to release data on January manufacturing sector activity at 0100GMT on Wednesday, amid expectations for a modest downtick to 51.5 from a reading of 51.6 in December.
The Caixin manufacturing index, which focuses more on small and mid-sized firms, is due at 0145GMT Friday. The survey is expected to dip by 0.2 points to 51.3.
The purchasing managers’ index (PMI) is seen as a good indicator of economic conditions and it is even preferred by some analysts to gross domestic product, which might be affected by poor seasonal adjustment and is prone to revisions.
Anything above 50.0 signals expansion, while readings below 50.0 indicate industry contraction.
China’s economy grew 6.8% in the fourth-quarter from a year earlier, helped by a rebound in the industrial sector, a resilient property market and strong export growth.