Week Ahead – Nearing the end of rate hikes?


Now that Wall Street has had enough time to process the dovish FOMC decision and another robust nonfarm payroll report, the focus shifts predominantly to Fed speak and economic data that should support the disinflation process.  Traders will pay close attention to initial jobless claims and the  University of Michigan sentiment report. Other notable economic releases include trade data, consumer credit, and the monthly budget statement.

Fed speak will resume on Tuesday as Chair Powell speaks in Washington and Barr discusses financial inclusion.  Wednesday contains appearances by Williams, Cook, Barr, and Bostic. On Friday, both Waller and Harker speak at a Crypto Conference.  

It will be a busy week for the White House as President Biden will deliver the State of the Union address.  

Earnings season remains busy as Wall Street will get results from AbbVie, Activision Blizzard, AstraZeneca, BNP Paribas, BP, British American Tobacco, Brookfield, Brookfield Asset Management, CDW, Centene, Chipotle Mexican Grill, Credit Agricole, CVS Health, Deutsche Boerse, Equinor, Fiserv, Fortinet, Fujifilm, Gartner, Hilton Worldwide, KKR, L’Oreal, Linde, Motorola Solutions, Neste, Nintendo, PayPal Holdings, PepsiCo, Philip Morris International, Prudential Financial, S&P Global, Semiconductor Manufacturing International, Siemens, SoftBank Group, TotalEnergies, Toyota Motor, Walt Disney, Yum China, and Yum! Brands.  


We learned a lot this past week about the position the euro area economy is in, the ECBs perception of it, and the market’s trust in the central bank. Inflation is falling and at a decent rate but unfortunately, it’s primarily driven by energy prices reflected by the fact that core inflation remained unchanged at its highs. The ECB thinks there’s further to go on interest rates in order to deal with inflation including more super-sized rate hikes and the market is giving it the Fed treatment. Markets view the next decision on 16 March as a coin toss between 25 and 50 basis points with the peak in rates coming in July, 75-100 bps above where it now lies. Unfortunately for the ECB, central banks don’t have a good record of being right these past 18 months. Next week offers a number of data points but nothing overly significant. 


The standout event next week is the monetary policy report hearing on Thursday when policymakers from the BoE will be grilled by the Treasury Select Committee. This event often isn’t overly market moving but it is an opportunity to get a more in-depth insight into how the MPC sees inflation and interest rates moving which always has the potential to do something. That aside, we have a few others BoE appearances throughout the week and GDP data on Friday. 


The CBR is expected to leave the Key Rate unchanged at 7.5% when it meets on Friday, with inflation expected to fall a little further in January to 11.5%. That’s the lowest it will have been since Russia invaded Ukraine, sending markets and the ruble into a tailspin. Unemployment data will also be released on Wednesday. 

South Africa

Very little of note on the economic calendar next week, with the business confidence survey on Wednesday and manufacturing production on Thursday.


The highlights next week include labour market and industrial production data on Friday. The official inflation data for January fell to 57.7% which may soon incentivize the CBRT to start cutting rates again, a policy that would no doubt have the backing of President Erdogan who pledged to go further in recent days.


A relatively quiet week for Switzerland, with unemployment the only release of note on Tuesday. SNB Chairman Thomas Jordan talked up the potential for further rate hikes this past week, stating that they can’t be ruled out. Markets are currently pricing in a roughly 50/50 chance of 25 or 50 basis points next month. 


China is likely to begin a more meaningful recovery after the New Year, with service consumption tending to recover strongly as life returns to normal. The PMI showed an improvement in new orders in the manufacturing, construction and especially service sectors on a year-on-year basis. Business optimism about the future has improved significantly.

The upcoming week contains January inflation data that should show a rise in pricing pressures that was supported by the lifting of the zero covid policy.  Credit growth should improve as aggregate financing recovers.  


Investors will pay close attention to both what evolves with the pressure hitting the Adani Group and the RBI rate decision.  The RBI is expected to raise rates by 25bp to 6.50%, which might be the last hike in this tightening cycle.  

Australia & New Zealand

China’s COVID reopening has supported both Australian and New Zealand dollars significantly. As long as investors remain convinced that China will post decent economic growth this year, the Aussie dollar and kiwi could have some underlying support.  

For Australia, the economic calendar contains the release of December trade data and the RBA rate decision. The RBA is expected to deliver its last rate hike in this cycle, with a 25bp rate rise that will take the cash rate target to 3.35%.  The bank might suggest that more hikes could be needed, but disinflation trends should support a hold very soon. 

The New Zealand economic calendar contains the January release of ANZ Commodity prices, manufacturing PMI, card spending total, and REINZ house sales.   


In Japan, traders will look to see how high labor cash earnings recovered during the bonus season. Wages might post the strongest increase in over 26 years, but the BOJ might still shrug this report off.  

Investors will focus on the January PPI report which should show a gradual slowing. On a monthly basis, PPI is expected to rise 0.3%, down from the 0.5% pace in the prior month.   


It will be quiet on the data front with one release on foreign reserves.

Economic Calendar

Sunday, Feb. 5


Presidential election in Cyprus. If no candidate secures 50% of the vote, a runoff will be held a week later

The EU ban on seaborne imports of refined oil products from Russia comes into effect, two months after the bloc banned most crude oil from Russia

Monday, Feb. 6

Economic Data/Events

Australia inflation gauge, retail sales ex-inflation

Eurozone retail sales

Germany CPI, factory orders

Indonesia GDP

Thailand CPI

RBA Governor Holzmann and BOE’s Mann speak at the “Lamfalussy Lectures” conference in Budapest hosted by Hungarian central bank Governor Matolcsy

President Biden announces planned US budget for 2024

Saudi Arabia Oil Minister to speak at India Energy Week conference    

Tuesday, Feb. 7

Economic Data/Events

US trade

Australia foreign reserves 

China foreign reserves

Singapore reserves

Australia trade

RBA rate decision: Expected to raise cash rate by 25bp to 3.35%

France trade

Germany industrial production

Japan household spending, leading index

Spain industrial production

Fed Chair Powell interviewed by David Rubinstein at the Economic Club of Washington

US President Joe Biden delivers the State of the Union address before Congress

ECB’s Schnabel participates in webinar on monetary policy at times of pandemic and war

UK Chancellor Hunt takes questions in the House of Commons

BOE’s chief economist Pill and deputy governor Ramsden speak at UK Women in Economics Network launch event

Wednesday, Feb. 8

Economic Data/Events

US wholesale inventories

India rate decision: Expected to raise repurchase rate by 25bp to 6.50%

Japan BoP

Mexico international reserves

Poland rate decision: Expected to keep rates on hold at 6.75%

Russia CPI, unemployment

Fed’s Williams is interviewed at Wall Street Journal live event in New York

ECB Supervisory Board press conference in Frankfurt

Thursday, Feb. 9

Economic Data/Events

US initial jobless claims

Australia heavy traffic index

China aggregate financing, money supply, new yuan loans

Japan M2 money stock, machine tool orders

Mexico rate decision: Expected to deliver one more rate hike

Mexico CPI

South Africa manufacturing production

Sweden rate decision: Expected to raise rates by 50bp to 3.00%

Thailand consumer confidence

EU leaders summit in Brussels

BOE Gov Bailey appears before Treasury Committee

South African President Ramaphosa delivers the State of the Nation address

Friday, Feb. 10

Economic Data/Events

US University of Michigan consumer sentiment

Canada unemployment

China PPI, CPI, BoP

India industrial production

Italy industrial production

Japan PPI

Mexico industrial production

New Zealand PMI, card spending, house sales

Russia rate decision: Expected to keep rates steady at 7.50%

Thailand forward contracts, foreign reserves

Turkey industrial production

UK industrial production, GDP

Fed’s Waller speaks on digital assets and Fed’s Harker delivers the keynote address at Global Interdependence Center crypto-focused conference

RBA releases quarterly updates of economic forecasts and policy outlook

BOE’s Pill is a panelist at the SUERF/BIS workshop on “gauging disinflation pressures”

Sovereign Rating Updates

Denmark (S&P)

Switzerland (S&P)

Germany (Moody’s)

Ukraine (Moody’s)

Spain (DBRS)

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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam