Currency and bond investors will be eagerly awaiting the inauguration of President-elect Donald Trump on Monday for cues on the direction of U.S. policy, with executive orders potentially spelling big moves for markets.

Trump's inauguration will mark a highlight in an otherwise relatively quiet week for data. In Europe, focus will be on provisional purchasing managers' surveys for January, while in Asia an interest-rate decision is due from the Bank of Japan.

Eyes will also be on the World Economic Forum in Davos, Switzerland.


U.S.


Focus will fall on Trump's inauguration. Monday is a public holiday in the U.S. but policy announcements are widely expected to result in volatility across financial markets as investors digest their implications.

Trade tariffs will be closely watched and could hurt the currencies of the countries most affected, including the Canadian dollar, Chinese yuan and Mexican peso, as well as the euro. These, alongside other growth-friendly policies such as tax cuts, are expected to be inflationary and boost the U.S. dollar, potentially propelling it back above a recent two-year peak against a basket of currencies.

U.S. Treasury yields could also turn higher again if markets consider that U.S. interest-rate cuts look less likely following the inauguration.

Bitcoin has the potential to fly higher given that Trump is expected to announce crypto-friendly policies, including a plan to create a strategic bitcoin reserve.

"Markets await Trump's inauguration and a potential flood of executive orders," said Patrick Munnelly, market strategist at Tickmill Group.

The president-elect is also scheduled to speak virtually at the Davos Forum later in the week.

Economic data will be light, but could still attract attention as investors gauge the health of the U.S. economy and the prospects for further U.S. interest-rate cuts, particularly given recent weaker-than-expected jobs and core-inflation data.

Friday's U.S. provisional purchasing managers' surveys on manufacturing and services sector activity are likely to garner the most attention. Weekly jobless claims are also due Thursday, followed by the University of Michigan's final consumer survey for January on Friday as well as existing home sales for December.

"Friday's PMI will be interesting for the possibility of a further increase in sentiment as corporations look forward to President Trump's promises of deregulations and possibly new corporate tax cuts," analysts at SEB said in a note.

The U.S. Treasury will auction $13 billion in 20-year bonds on Wednesday and $20 billion in 10-year Treasury Inflation-Protected Securities, or TIPS, on Thursday.


CANADA


Canadian inflation data for December are due Tuesday. Attention otherwise will focus on the tariffs Trump could announce on Canadian exports into the U.S.


EUROZONE


Focus in terms of economic data will center on Friday's flash estimate purchasing manager indices for France, Germany and the eurozone as concerns remain regarding economic weakness in the region.

A renewed decline for January is expected in eurozone PMI, according to Investec.

"The scale of December's rebound in services business activity may have overstated dynamism amid what is otherwise a weakening trend," said Investec analyst Sandra Horsfield in a note.

For manufacturing, intensified focus on what a U.S. tariff hike could mean for European businesses and a general uptrend in bond yields could also dampen expectations, though the European Central Bank's willingness to continue cutting rates "may have limited the decline."

Other data include German producer prices Monday, followed by the ZEW economic sentiment indicator on Tuesday, which could signal further weakness in the outlook for Europe's largest economy.

Germany will auction EUR1 billion in 2029-dated green Bobl and EUR1 billion in 2033-dated green Bunds on Tuesday. Germany will also auction EUR1.5 billion 2041-dated and EUR500 million 2044-dated Bunds on Wednesday.

Slovakia will have an auction on Monday, while France will sell conventional and inflation-linked bonds on Thursday. The window remains open for bond syndications.


U.K.


U.K. gilt yields have dropped back after a spike in early January which took 30-year yields to their highest since 1998. This follows below-forecast data on U.K. inflation, GDP and retail sales which eased concerns about inflation remaining elevated and raised the prospect that the Bank of England could cut interest rates more than markets had previously expected.

Data Tuesday on unemployment and particularly on wage growth will be watched closely, while U.K. public finances data Wednesday could garner more attention than usual given the recent volatility in gilt markets and concern about the potential impact on public finances.

Flash estimate purchasing manager indices for January are due Friday, providing a first insight into U.K. economic activity in 2025.

The U.K. is due to sell March 2028 gilts on Thursday.


SCANDINAVIA


Norway's Norges Bank announces a rate decision Thursday and is widely expected to keep its main policy rate on hold at 4.50%. The central bank has yet to start cutting interest rates and will likely reiterate a forecast that the policy rate will probably be reduced in March.

Denmark will hold a bond auction on Wednesday.


JAPAN


The Bank of Japan's policy board will discuss whether to lift the policy rate from the current 0.25% at a two-day meeting ending Friday.

Governor Kazuo Ueda has said that wage trends in Japan and the outlook for U.S. economic policies are the key points to consider before raising rates. Comments from company executives and information collected by BOJ branches suggest that annual wage negotiations will result in strong pay increases, Ueda said.

The Japanese central bank is also set to release its quarterly outlook report for growth and inflation.

Ahead of the BOJ's closely-watched rate decision, nationwide consumer inflation data for December will likely show persistent price rises. The consumer price index excluding fresh food is expected to have climbed 3.0% in December from a year earlier, according to a poll of economists by data provider Quick. That compares with a 2.7% rise in November.

With the yen's continued weakness posing risk of higher import prices, comments by ?Japan's top currency official, Atsushi Mimura?, are likely to garner attention. Mimura is slated to speak at an event in Tokyo on Tuesday, and could give hints on how close the government is to intervening in the foreign-exchange market to prop up the yen.

Machinery orders data for November are also due Monday, while trade figures for December are scheduled to be released on Thursday.

The Ministry of Finance is scheduled to auction 700 billion yen ($4.49 billion) of 40-year JGBs on Tuesday, with the government securities slated to be a reopening of the May 2024 issue. The auction method is Dutch-style-yield-competitive at intervals of 0.5 bps, the ministry said.

This ultra-long-dated bond auction could attract demand from investors such as insurance companies and pension funds because of the bonds' extremely high returns.


SINGAPORE


Singapore watchers have much to look forward to in the coming week, with the country's December consumer inflation data due Thursday and the central bank's quarterly monetary-policy decision following on Friday.

Market participants will monitor whether the city-state's core inflation eased further in December after slowing to 1.9% on year in November. Any signs of a slowdown in inflation could add to the case for the Monetary Authority of Singapore to ease policy settings on Friday.

Core inflation is expected to have stayed below the 2% mark in December from a year ago due to the high base effect, Goldman Sachs analysts said in a note.

While the MAS doesn't have a set target for inflation, it views core inflation of just under 2% on average as consistent with overall price stability in the economy.

Economists are split on whether the Monetary Authority of Singapore will ease its policy settings. The central bank's monetary policy is centered on the exchange rate, which is considered to be a more effective tool for maintaining price stability, given the small and open domestic economy.

The MAS has little need to rush to ease its policy, OCBC strategists said in a note. However as disinflation has made good progress, they think it now has the option to ease slightly.

Meanwhile, CIMB analysts reiterated their call for the MAS to keep its policy unchanged until April. Although inflation appears to be easing, the central bank will likely err on the side of caution, they said in a note. The MAS may want to wait to assess the impact of U.S. President-elect Donald Trump's policies first, they added.

Eyes will also be on Singapore's December industrial production data due out Friday. The market will be looking to see if the electronics sector, which accounts for nearly half of Singapore's manufacturing output, continued to expand from November.


CHINA


A calm week is in store for China observers, who will be weighing the implications of the raft of broadly strong end-of-year economic data.

On Monday, the central bank will announce benchmark loan prime rates tied to the bulk of corporate and household loans in the country.

While the shift to a "moderately loose" monetary policy announced in December suggested more easing down the road, economists at Barclays see reduced prospects of the People's Bank of China cutting policy rates in the near term if the yuan remains under pressure.

The PBOC has taken several measures to help lift the currency and prop up tumbling bond yields, casting some doubt about whether it will opt to ease significantly until there is more market stability and certainty over external risks.

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01-19-25 1614ET