Focus on UK inflation and US Retail Sales

The UK and Eurozone inflation reports and retail sales data coming from the US and the UK are expected to be in the spotlight next week. Whilst rising gold spot prices drew investors’ and traders’ attention last week, the World Economic Forum in Davos and several reports regarding some of the major economies will offer a stream of valuable financial data.

On Friday Jan.13th gold spot prices climbed above the $1,900 mark for the first time since May 2022. In the US, the Department of Labor (DoL) published December’s CPI inflation report which showed a decrease of 0.1% on a month-to-month basis. Commenting on the report, economists suggested that the Federal Reserve (Fed) of the United States may slow down the pace of rate rises.

These are some of next week’s most important financial data releases:

Monday January 16th 

On Monday Jan.16th US markets will be closed due to Martin Luther King Day. More than 2,500 world leaders such as politicians, investors, bankers and financial analysts will be already in Davos, Switzerland, for the World Economic Forum’s (WEF) annual meeting for the first time after 3 years. A report published by the WEF this week noted that the increase in living costs is a significant short-term risk for the global economy, with WEF’s analysts forecasting high energy and food inflation for the next two years.

Another WEF report stresses that the current energy crisis puts a strain on economic growth, adding that short-term backward steps like increasing electricity output produced from coal and energy consumption subsidies are risky.

Tuesday January 17th

The National Bureau of Statistics in China will publish data regarding the country’s GDP growth in the fourth quarter of 2022. According to the median forecasts of 49 economists polled by Reuters, the Chinese GDP rose by 1.8% in the last quarter of 2022, on an annualised basis, down from the 3.9% growth seen in the third quarter as anti-virus regulations tightened. The same survey by Reuters showed that the Chinese GDP likely grew by just 2.8% in 2022 as lockdowns weighed on activity and confidence.

Market analysts also expect the Chinese December retail sales report. November’s retail sales data disappointed investors and traders as it showed a 5.9% drop on a year-to-year basis, much worse than the anticipated –3.7% figure. It should be noted that the Chinese government decided to lift many of its Covid-19 restrictions at the beginning of January, a move that may affect retail sales across the country.

In the UK, the Office for National Statistics (ONS) is expected to publish its unemployment rate data for the 3 months to November 2022. The UK’s unemployment rate stood at 3.7% in October, whilst the number of vacancies remained at historically high levels despite five successive quarterly declines.

Statistics Canada will be publishing December’s inflation (CPI) data. Canada's consumer-price index in November 2022 rose 6.8% from a year earlier, after holding steady at 6.9% the previous two months. The Bank of Canada (BoC) governing board has said that it will be focusing on such data to decide whether to increase borrowing costs.

Wednesday January 18th

The Bank of Japan’s governing board is expected to announce its decision on interest rates. A Reuters survey showed that most economists expect the BoJ to leave its benchmark interest rates unchanged. However, 4 out of 10 participants forecast moves either in April, when a new governor will be appointed or in June.

Eurostat will publish the Eurozone’s December CPI inflation final report. On January 6th, preliminary data showed that the euro-bloc's annual inflation rate softened from 10.1% to 9.2%, lower than the 9.7% figure anticipated by economists.

Market analysts will also be focusing on the UK’s December CPI inflation report released by the ONS. November’s data showed that UK inflation stood at 10.7%, close to a 40-year high, with rising living costs making the headlines and limiting citizens’ available budgets. The UK’s government has vowed to reduce inflation to a much lower level by the end of 2023, whilst the Bank of England has hiked interest rates to the higher level seen in the last 14 years.

The US Census Bureau is expected to publish December’s retail sales report. Retail sales in the US fell at a stronger pace than expected in November, recording a 0.6% drop on a month-to-month basis. The fall came despite accelerating employment and earnings figures. Some economists suggest that declining retail demand could force producers to cut prices of goods and services.

Thursday January 19th

The Australian Bureau of Statistics (ABS) will publish the country’s December unemployment report. Australia's seasonally adjusted unemployment rate stood at 3.4% in November 2022, unchanged from October's 3-month low and in line with market expectations. Analysts at Commonwealth Bank said that whilst the jobs market had been in favour of employees in 2022, it is likely to become more balanced in 2023.

Investors and traders will scrutinise Japan’s National CPI inflation data for December. November’s report had shown that core inflation stood at 3.7%, the highest reading recorded since 1981. Japan has one of the lowest inflation rates in the world and the country’s central bank has kept its ultra-loose monetary policy to boost the economy.

Friday January 20th

December’s UK retail sales data released by the ONS will be in the spotlight on Friday morning. With the country’s economy struggling due to high inflation and rising interest rates, economists are expected to review the retail sales figures, which will include purchases made during Christmas. A similar report published by the British Retail Consortium (BRC) on January 10th showed that British retailers benefitted from a sales boost (+6.9% y/o/y) in December.

Just before the Chinese New Year celebrations start, the People’s Bank of China (PBoC) will announce its decision on interest rates. According to a Reuters economists’ survey published on January 13th, the central bank will likely keep its benchmark interest rates on hold for a fifth straight month.

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.