Risk markets are generally lower as the week starts with Asian equity indices in red. That lifted the Japanese yen mildly higher against other major currencies. But the gains are so far limited. The forex markets are rather steady elsewhere with dollar stuck in tight range against European majors and commodity currencies. Investors shrugged off the G-20 meeting held in Sydney although financial ministers pledged to create more than USD 2T in additional output over 5 years. Policymakers' anticipation that "the economy would expand at a moderate pace in coming quarters" suggested that Fed' tapering schedule would stay in progress.
In the G-20 communiqué, financial ministers pledged to, "develop ambitious but realistic policies with the aim to lift our collective GDP by more than 2% above the trajectory implied by current policies over the coming 5 years", with plans to achieve this goal based on "the comprehensive growth strategies and the Brisbane Action Plan". Central banks' monetary policy would "continued to be "carefully calibrated and clearly communicated". Policymakers would also be "mindful of impacts on the global economy" when setting policy.
ECB president Draghi's comments after the G-20 meeting were quoted in press. Draghi said there was no evidence of "people postponing their expenditure plans with a view to buying the same thing at lower prices." That is, ECB didn't see "what is defined to be deflation." He insisted that medium term inflation expectations are "firmly anchored at 2%". Nonetheless, he also pledged to be "ready to act" is there is "worsening in the medium-term outlook for price stability".
The economic calendar is rather light today. German Ifo business climate is expected to unchanged at 110.6 in February. The current assessment gauge is expected to improve to 112.9 but the expectation gauge is expected to drop to 108.2. Eurozone will release inflation data and CPI is expected to drop to 0.7% yoy in January.
Looking ahead, a major focus is EU's economic forecasts to be released on Tuesday. Other key events including GDP revision from Germany, UK and US. Here are some highlights of this week's data release:
- Tuesday: Germany GDP; EU economic forecasts; US consumer confidence
- Wed: German Gfk consumer sentiment; UK GDP revision; US new home sales
- Thursday: New Zealand trade balance; Swiss GDP; German CPI, unemployment; US durable goods orders, jobless claims
- Friday: Japan CPI; Swiss KOF; EU CPI flash; Canada GDP; US GDP revision, Chicago PMI