A Week in the Market: Chinese Statistics and Oil Forecasts (16-20 January)
There will not be much statistical data this week. The Monday holiday in the US and the anticipation of the Fed meeting at the beginning of February create the conditions for saving strength, and the currency section can take advantage of this.
The key publications of this five-day period are the release of the US retail sales and industrial production for December 2022. In both cases, a deterioration of the economy is expected, which could lead investors to seek refuge from risk, e.g. in the USD. This could strengthen the position of the American currency.
The UK will release a block of price reports – the general inflation statistics for December 2022 and its main components. In addition, the market awaits information on the employment sector. The consumer price index is likely to adjust after soaring to 10.7% y/y. The labour market will also remain neutral, but there will be little support for GBP in this.
The Bank of Japan in its meeting is likely to decide to keep interest rates unchanged, and comments on interventions will be made. Cash injections are keeping the yen strong, but this is temporary; once the interventions stop, the JPY will revert to a devaluation strategy.
The commodity market awaits the updated oil forecasts from the IEA and OPEC. In the most recent forecast from the US Department of Energy, the average Brent price in 2023 was lowered. If data and expectations are cautious, the price of Brent could accelerate the correction.
China: all risks
China has been a key newsmaker recently, by opening its borders and easing covid restrictions, it created conditions for increased oil consumption. This week, China will release its retail sales and industrial production statistics for December 2022, as well as its GDP figures for the fourth quarter. The economy, according to average expectations, grew by 1.8% y/y – this has the potential to spoil the mood for risk-linked assets.