Asian equities are generally higher today following the extended rebound in the US last Friday. The Nikkei is trading up nearly 250 pts, or 17% at the time of writing. The yen crosses are firm as recoveries continue while the dollar remains soft against European majors. The economic data is rather light today and traders would look through today's data towards the major events this week. That firstly include the new Fed chairman Yellen's inaugural testimonies before the House Financial Services Committee tomorrow and the Senate Banking Committee on Thursday. it's not likely for Yellen to bring new insights on the central bank's policy changes. Yet, she would probably discuss options the FOMC might use regarding the forward guidance, such as lowering the threshold on the unemployment rate and adding an inflation floor. Moreover, last week's employment report should not do much to change the Fed economic assessment as January's data should indeed be derailed by extreme weather during the month.
Another major focus is the BoE's quarterly inflation report to be released on Wednesday where it will release new projection on growth, inflation and unemployment. It's widely expected that BoE would update its forward guidances. Currently BoE said it will keep interest rates lower at least until employment hit the 7% threshold level. But unemployment was already at 7.1% in the quarter through November. It's speculated that BoE could move away from dependence on a single indicator unemployment to a broader range of variables. But after all, the key message that market would look for is the BoE's pledge to keep rates low further despite recent improvements in economic outlook.
Other events to watch include:
- Tuesday: Australian house price index; China trade balance
- Wednesday: Swiss CPI, BoE inflation report
- Thursday: Australia employment; Swiss PPI; US retail sales, jobless claims
- Friday: China CPI, PPI; Eurozone GDP; US industrial production, U of Michigan confidence