Below are the most important global events likely to affect FX and bond markets in the week starting Jan. 27.
After a week of focus on U.S. politics following President Trump's inauguration, focus switches back to monetary policy, with an interest-rate decision due by the Federal Reserve as well as the European Central Bank.
U.S. economic data, including gross domestic product figures and PCE inflation data, will also be closely watched, although markets will continue to scrutinize any comments from Trump on policy plans, especially regarding tariffs.
In Asia, some key economic data out of Japan and China are in focus in a holiday-shortened week, with many markets closing for Lunar New Year celebrations.
U.S.
The Federal Reserve will outline a rate decision Wednesday. Due to evidence of a strong U.S. economy, interest rates are widely expected to be kept on hold. Focus will center on any accompanying hints about whether and when interest rates could be cut again.
U.S. money markets currently price in just under two interest-rate reductions this year, the first of which won't likely come until June.
Fed Chair Jerome Powell could sound less cautious about future rate cuts compared with December's meeting, although not to the extent of signaling urgency in resuming policy easing, strategists at TD Securities said in a note. Any resultant fall in the dollar would likely be modest, they said.
Market players will be keenly looking for any comments on how the central bank views the outlook for inflation, the labor market and for interest rates in light of Trump's policy agenda. The president has also said he favors a lower policy rate.
In terms of economic data, advance fourth-quarter gross domestic product data on Thursday are expected to show the U.S. economy remains strong.
"The U.S. economy has been growing at an impressively high and stable rate of between 2.5% and 3% per annum for around two and a half years now," LBBW analysts said in a note. "This is unlikely to have changed in the past quarter."
Friday's data on PCE inflation--the Fed's preferred measure of inflation--could make rate cuts look a little more likely if they show inflation moderating. ING economists said the PCE data could show a "relatively modest" increase, alongside a suggestion of cooling wage pressures when the fourth-quarter employment cost index is released on the same day.
On the other hand, investors will be mindful that many of Trump's policies, including plans for trade tariffs and tax cuts, are likely to be inflationary.
In that light, focus for markets will remain heavily on any updates from Trump on policy plans, particularly regarding the extent and timing of any tariffs on goods from Canada, Mexico and China.
Other U.S. economic data will be watched for further evidence on the health of the world's largest economy. New home sales for December are released Monday; followed on Tuesday by December durable goods, the Conference Board consumer confidence index for January, and the November case-Shiller house price index. Weekly jobless claims are due Thursday.
The U.S. Treasury will auction $69 billion in 2-year and $70 billion in 5-year notes on Monday and $44 billion in 7-year notes on Tuesday.
CANADA
Canadian markets will be on tenterhooks again regarding any comments from Trump about plans for punitive tariffs on Canadian goods. He recently threatened both Canada and Mexico with 25% tariffs from Feb. 1.
An interest-rate decision by the Bank of Canada is due Wednesday, on the same day as the U.S. Fed's decision. A 25 basis-point rate cut is widely expected, although the pace of rate reductions is expected to slow markedly compared with last year.
A reduction in the main policy rate to 3% this month looks likely "amidst tepid growth, benign inflation and an unemployment rate that's trending higher," ING economist James Knightley said in a note.
Until there is more clarity on U.S. trade policy towards Canada, the BOC will likely "tread cautiously." However, it is possible that the damage that U.S. trade tariffs could do to Canadian growth and jobs could increase the prospect that rates will fall by more than currently expected, Knightley said.
LATIN AMERICA
Brazil's central bank announces a rate decision Wednesday.
EUROZONE
The European Central Bank's first meeting of the year takes center stage with a 25 basis-point interest-rate cut widely expected as the eurozone economy continues to struggle to recover. The decision is due Thursday.
Investors will be watching for any clues from the statement and subsequent press conference by ECB President Christine Lagarde about the likely pace of rate reductions going forward.
The week will also see the usual end-of-month data flow, including preliminary GDP and inflation data, as well as confidence surveys.
Germany's January Ifo business climate index is due on Monday, followed by France's consumer confidence survey for January on Tuesday. Germany's GfK consumer climate survey and Italy's business and consumer confidence surveys for January are due Wednesday. Eurozone business and consumer surveys are due Thursday.
From Spain, fourth-quarter unemployment data are due Tuesday, while preliminary Spanish GDP data on Wednesday could confirm that the country's economy remains among the most dynamic within the eurozone bloc.
Germany, France, Italy and the eurozone will publish first-estimate GDP figures Thursday.
Spain releases flash estimate CPI data for January on Thursday. Flash January CPI figures are then released by France and Germany on Friday, alongside German unemployment data.
Germany will launch new March 2027-dated treasury notes, or Schatz, for 5 billion euros on Tuesday and will reopen the February 2035 Bund for 4.5 billion euros on Tuesday. Italy will conduct auctions on Tuesday and Thursday, while a Dutch auction is scheduled for Tuesday.
U.K.
There is little in the way of major data releases due in the U.K. in the coming week. Mortgage lending and credit data for December are due Thursday, as well as Nationwide's house price index for January on the same day.
Auctions of U.K. government bonds, or gilts, could attract more attention than usual. Long-dated gilt yields jumped to multi-year highs earlier this month, raising concerns about U.K. public finances, although they have since dropped back considerably.
The U.K. sells the September 2035 index-linked gilt Tuesday and a July 2033 green gilt Wednesday.
SCANDINAVIA
Sweden's Riksbank outlines an interest-rate decision on Wednesday. Another 25 basis-point rate cut is widely expected--which would bring the policy rate to 2.25%--particularly after recent low inflation data for December.
However, the Swedish economy is starting to show some signs of improvement after hefty rate cuts in recent months, ING economist James Smith said in a note.
"Following one of the most aggressive cutting cycles, rebounding sentiment and housing activity point to a more cautiously optimistic growth outlook," he said.
Norway labor-market data and Swedish trade data are due Monday, both for December. Swedish December retail sales and January consumer confidence data are due Thursday.
Sweden and Norway will conduct bond auctions on Wednesday.
SOUTH AFRICA
South Africa's central bank will set out a rate decision Thursday.
Capital Economics expects the repo rate to be cut by 25 basis points to 7.50%, citing a smaller-than-expected rise in November inflation and the recent recovery in the rand.
JAPAN
Consumer inflation data for the Tokyo metropolitan area, due Friday, is likely to give hints on whether nationwide inflation will hold above the Bank of Japan's target of 2%.
Tokyo's consumer prices excluding volatile fresh food are expected to have risen 2.4% in January from a year earlier, according to economists polled by data provider Quick. The core index increased 2.4％ in December.
December figures on industrial production, retail sales and employment are also scheduled to be released on Friday.
On Wednesday, the central bank will release minutes for its Dec. 18-19 meeting when it maintained its policy rate at 0.25%. The central bank is also slated to release transcripts from its policy meetings in July-December 2014.
That comes after the BOJ delivered a 25 basis-point rate hike at its first meeting of 2025, and repeated its promise to keep increasing rates but refrained from signaling when or by how much.
The Ministry of Finance is scheduled to auction 350 billion yen of five-year climate transition bonds on Wednesday and 2.6 trillion yen of two-year sovereign notes on Friday.
CHINA
Official PMIs due on Monday will signal if China's economy is off to a better start this year.
Economists polled by The Wall Street Journal expect the PMI to show that China's factory activity continued to expand in January, aided by Beijing's stimulus efforts. The manufacturing PMI is expected to have edged up to 50.2 from 50.1 in December, which would mark the fourth straight month that the gauge holds above the 50 mark separating expansion from contraction.
The non-manufacturing PMI will indicate if construction and service activities continued to strengthen after rebounding sharply in December.
Industrial profit figures, also due Monday, will be watched to see if government measures to support growth helped buoy revenues at industrial firms in the final month of 2024.
Markets will stay on watch for any comments from Chinese officials on trade-related issues, as the threat of higher U.S. tariffs looms large. With clarity on the direction of U.S. policy still elusive, the market mood has been swinging from hopeful to pessimistic regarding the impact of tariffs.
Chinese stocks will likely stay in "tariff limbo" for some time, split between signs of improvement in the housing market and the mixed signals on tariffs, said Danske Bank economist Allan von Mehren.
Some relief over a potential scaling back of U.S. tariffs, plus a softer dollar, has strengthened the yuan, but Von Mehren said the currency will again come under pressure whenever tariffs become a reality.
AUSTRALIA & NEW ZEALAND
Australian bond traders will focus exclusively on the release of fourth-quarter inflation data on Wednesday, which will make or break the case for the Reserve Bank of Australia to start cutting interest rates in February.
While core inflation is expected to still be slightly above the RBA's 2% to 3% target band, there has been a clear trend lower over recent quarters and the central bank in December indicated its growing confidence about the prospect of sustainably lower inflation in the future.
Financial markets are pricing in a 70% probability of a cut at the RBA's policy meeting on Feb. 18, which would bring it in line with global counterparts for the first time in the current easing cycle.
Still, many economists expect the RBA to hold rates until later in the year given that unemployment remains extremely low as employment growth outpaces just about all expectations.
There is also some momentum in consumption supported by income tax cuts delivered in mid-2024, and rising employment.
In addition, the issue of a falling Australian dollar may be more significant by the time the RBA board makes its decision in just under a month's time.
Meanwhile, all eyes are on the Trump administration in the U.S., with any steps to lift tariffs on China also likely to factor into the RBA's thought process.
PHILIPPINES
The Philippines will release fourth-quarter economic growth data on Thursday, which will show if it has managed to keep expanding at a rate of more than 5%.
The Southeast Asian economy's growth has been underwhelming over the past quarters, pressured by tight monetary policy and slowing export growth, as well as sluggish household consumption.
The central bank has cut its policy rate three times in 2024 to boost the economy, saying in December that any unexpected surprises in upcoming data may influence the direction of monetary policy. Philippines officials target full-year growth at 6% to 6.5%, which would be up from 5.6% the prior year.
Citi economists expect GDP growth to slightly miss the government's target for the quarter, but remain relatively strong.
Consumer goods imports and household credit growth at above pre-pandemic levels points to a rebound in private consumption growth in the fourth quarter, said ANZ Research analysts in a note.
SINGAPORE
On Monday, Singapore publishes employment data for the fourth quarter of 2024, which will show if the labor market outperformed last year.
Singapore's Ministry of Manpower has said the labor market did well during the year, with the workforce expanding, labor underutilization remaining low, and both nominal and real incomes rising.
Any references to days are in local times.
- Additional reporting by Megumi Fujikawa, James Glynn, Amanda Lee, Ronnie Harui, Xiao Xiao, Emese Bartha, Renae Dyer, Miriam Mukuru and Dominic Chopping
Write to Jessica Fleetham at jessica.fleetham@wsj.com and Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com
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