GEMFOREX - weekly analysis

As we enter the fourth week of February, here are 5 things to be on the lookout for this week.

1.Fed minutes

On Wednesday the Federal Reserve will publish the minutes of its January meeting, when it dialed back the rate of interest rate hikes to 25 basis points, after a year of bigger increases.

Since then, data has shown the decline in the annual rate of inflation has stalled, while producer prices increased by the most in seven months.

Together with a strong U.S. jobs report for January, the data has made investors reevaluate expectations for how high the Fed will raise rates. 

Federal funds rate can now be seen peeking above 5.2% in July, according to interest-rate futures.

The minutes may give investors some insight into the intention for a larger hike at the Feds March meeting, after the move was supported by some policymakers.

2.U.S. data

The U.S. is to release personal income and spending data on Friday, which contains the Feds favored inflation gauge - the core personal consumption expenditures price index.

The economic calendar also includes releases on both new and existing home sales for January, along with revised data on fourth-quarter gross domestic product and the weekly report on initial jobless claims.

Meanwhile, New York Fed president John Williams is to speak about inflation at an event on Wednesday.

3.Retail earnings

As an underwhelming fourth-quarter earnings season comes to an end, results from major retailers will give an insight into the strength of consumer spending amid increasing prices, which is a critical topic for investors.

Walmart (NYSE:WMT), the world's largest retailer by sales along with home improvement titan Home Depot (NYSE:HD) are set to report on Tuesday.

JPMorgan analysts rate Walmart shares “neutral” and Home Depot as “overweight.”

Discount retailer TJX Companies (NYSE:TJX) will report on Wednesday, COVID-19 vaccine maker Moderna (NASDAQ:MRNA) and e-commerce firm eBay (NASDAQ:EBAY), will also report in the week to come.

4.Eurozone PMIs

The highlight of the week in the Eurozone will be Tuesdays flash PMI data for February, which will show how well the economy is performing after unexpectedly expanding in Q4 of 2022.

If improving business conditions are contributing to rising price pressures, this could boost expectations for the European Central Bank to keep raising interest rates, given inflation that is remaining at high levels.

Germany‘s Ifo Business Climate Index on Wednesday will show how the Eurozone’s largest economy is enduring the energy crisis, with economists expecting signs of recovery to continue at low levels.

Final inflation figures for January will be released on Thursday, which will be in focus after delayed German data was omitted from the first estimate.

5.Bank Of Japan testimony

The leadership of the BOJ will be handed to academic Kazuo Ueda, who is expected to succeed current Governor Haruhiko Kuroda, when his second five-year term ends in April.

The incoming BOJ governor is to testify, along with his two would-be deputies, to the lower house of parliament on Friday.

While Ueda is a dove, investors expect his tenure to end yield curve controls. The trillion-dollar question for the Japanese bond market, though, is when？

His testimony should offer some insights and will be closely watched. His upper house testimony will take place following the Monday.

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