Main Macro Events This Week

• Europe: Markets are returning from the holiday period to a very full data calendar this week. The calendar starts with the final readings of Eurozone December PMI, with the manufacturing number (Monday) expected to be confirmed at 53.1, and the services reading (Wednesday) at 53.9, which should leave the composite at 54.0. Data continues to point to ongoing expansion, not just across both sectors, but in all four major Eurozone economies, with France continuing to trail behind. The Eurozone ESI economic confidence indicator (Thursday) also remains at high levels and the December number is seen little changed at a robust 106.0 (median same), down from 106.1 in the previous month.

• United States: The main event this week is the U.S. Non-Farm Payroll report due out on Friday. The U.S. economic calendar in the first week of 2016 is rather full and starts off with the Markit manufacturing PMI (Monday), along with December ISM forecast to tick up to 49.5 (median 49.0) from 48.6 previously, while construction spending is set to increase 0.5% for November (median 0.5%) vs 1.0%. Vehicle sales roll out (Tuesday) and are expected to edge up 0.3% to an 18.1 mln unit pace for December. Mid-week (Wednesday) MBA mortgage applications after the holiday break last week, followed by the ADP employment survey seen rising 190k in December vs 217k. The trade deficit is forecast relatively steady at -$44 bln in November, with ISM Non-Manufacturing index set to rise marginally to 56.0 in December from 55.9 and factory goods order seen unchanged in November vs +1.4%. EIA energy inventories are also on tap. Initial jobless claims provide the last clue (Thursday) ahead of payrolls, forecast to rise 3k to 270k. Also out after payrolls (Friday) are the wholesale trade and consumer credit.

• Canada: The Canadian calendar is very busy next this week, with November IPPI, November Trade, December Ivey PMI and December employment and a speech from Governor Poloz. Employment (Friday) is the top report this week, with jobs expected to improve 10.0k in December after the 35.7k drop in November. The unemployment rate is seen holding steady at 7.1%. The trade report (Wednesday) takes nearly equal billing with employment this week, and analyst expect a narrowing in the deficit to -C$2.6 bln in November from -C$2 .8 bln in October. The key will be exports, which fell 1.8% m/m in October to the disadvantage of the BoC outlook for export driven growth. The industrial product price index (Tuesday) is seen falling 0.3% m/m in November after the 0.5% drop in October. The Ivey PMI (Thursday) is projected to drop to a seasonally adjusted 55.0 in December from 63.6 in November, in a largely seasonal swing as Ivey continues to refine the seasonal adjustment process. Building permits (Friday) are expected to fall 2.0% m/m in November after the 9.1% surge in October.

• Japan: The December auto sales are due Tuesday, followed by November preliminary leading and coincident indices on Friday, which are seen down 0.5% m/m from up 1.8% for the former, and down 0.7% m/m from up1.5% for the latter.

• China: December Caixin/Markit manufacturing PMI (Monday) dropped from 48.9 to 48.2 December services PMI (Wednesday) is forecast at 51.0 from 51.2. The December trade surplus (Friday) is expected to narrow to $50 bln from $54.1 bln in November. December CPI and PPI (Saturday) are penciled in at 1.6% y/y from 1.5%, and -5.7% y/y from -5.9%, respectively.

• Australia: The trade deficit (Thursday) is seen improving to -A$3.0 bln in November from -A$3.3 bln in October. Building approvals (Thursday) are expected to drop 3.5% m/m in November after the 3.9% bounce in October. Retail sales (Friday) are projected to expand 0.5% m/m in November, matching the gain in October. The RBA takes its customary intermission from appearances or events during January, with the February 2 meeting the next event on their calendar. The RBA left rates at 2.00% in the December 1st meeting, and our base case is for steady policy to begin the New Year. As expected data this week would be supportive of no change in policy at the February meeting.

• United Kingdom: The December version of the Markit manufacturing PMI survey and the BoE’s monthly report on lending activity (both Monday). The manufacturing report is expected to inch higher, to a 53.0 headline reading (median 52.8) after the 52.7 outcome in November. The sector has been the weak link in the UK’s economic recovery, reflected by the low 50s PMI readings that indicate modest expansion. The BoE lending report should see consumer credit come in at a near base trend reading of 1.3 bln (median same) and mortgage approvals rise to 70.0 (median 69.8) from 69.6. The December construction and services PMI (Tuesday and Wednesday, respectively) are expected at 56.0 and 55.6, up from 55.7 in the case of the former and up from 55.9 in the case of the latter. November trade data rounds out the week (Friday ), which is expected to show the goods deficit shrink to GBP 10.b bln and the overall deficit drop to GBP 2.7 bln.

• Switzerland: The Swiss calendar this week features December data on manufacturing (Monday), labor (Friday) and inflation (also Friday). The SVME manufacturing PMI is expected to lift back above 50.1 (median same) from 49.7. The unemployment rate is expected unchanged at 3.4%. Headline CPI is expected to lift to -1.2% (median same) from -1.4%. Further rises in CPI are likely once the base effect impact of last January’s sudden appreciation of the franc (when the SNB abandoned its peg against the euro) roll out of y/y data.

Janne Muta

Chief Market Analyst

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