This week is packed with economic events and releases. Both the BoJ and the ECB hold their first meetings for 2018. However, neither Bank is expected to alter its policy. Canada’s CPIs for December, as well as Q4 GDP data from the US and the UK will also be in the spotlight. In Davos, the 48th meeting of the World Economic Forum takes place.
Monday appears to be a relatively quiet day. The only noteworthy release is Canada’s Wholesale sales for November. Expectations are for a slowdown to +1.0% mom from +1.5% in October.
On Tuesday, during the Asian session, the BoJ will conclude its two-day monetary policy meeting. No change in policy is expected at this gathering something we agree with. Following the Bank’s decision to buy less long-dated JGBs on the 9th January, there was increased speculation that the Bank may start scaling back accommodation sooner than previously anticipated. However, we stick to our guns that with inflation well below the Bank’s objective of 2%, it is too early for the Bank to start thinking of something like that, let alone at this gathering. After the Bank adopted its yield curve control policy, it has occasionally tweaked its bond operations, with officials saying that these changes aim at keeping yields in line with the Bank’s policy and not to hint future changes. What’s more, in his latest remarks, Governor Kuroda, although he expressed a positive view on the economy, he reiterated the Bank’s commitment to continue with its current policy. Therefore, given that no change is anticipated, we expect attention to fall on the statement accompanying the decision, which we expect to reflect Kuroda’s upbeat view on the economy, and the press conference thereafter.
Read the full financial markets weekly outlook on JFD Research.