RBC Capital Markets

Week ahead: ECB President Lagarde will appear before theEuropean Parliament today to discuss the ECB’s annualreport. Beyond today, the week’s highlights are Fed ChairPowell’s speech (Wednesday), US CPI (see USD), UK Q4 GDP(see GBP), and the Riksbank meeting (Wednesday). TheLunar New Year holiday will fall across East Asia on Friday.

EUR: A week of relatively sparse European data, withGermany industrial production today and Germany finalCPI (Wednesday) among the highlights.

USD: We look for January headline and core CPI(Wednesday) to come in at 0.3% and 0.1% m/m,respectively. This would move the y/y rates for both to 1.5%.Gasoline prices should help to boost topline inflation, aspump prices jumped more than 7% on the month. Theenergy seasonal factor anticipates only a modest increasehere, which means that a significant advance in theseasonally adjusted energy component is in the offing. Weestimate an approximately 3% gain. However, that is likelyto be the only major source of inflationary pressure. Giventhat January was still subject to Covid-related shutdowns,we expect to see net disinflation beneath the surface. Thatsaid, our expectation for 2021 is that inflation will acceleratenotably, as demand is likely to perk up significantly once theeconomy’s reopening starts in earnest.

GBP: We already have two-thirds of the Q4 GDP (Friday) data. GDP grew by 0.6% m/m in October before contracting by 2.6%m/m in November as the effects of the second lockdown tookhold. Our expectation is for December GDP to have advancedby 1.5% m/m. That, in turn, gives us a Q4 estimate of 0.7% q/q.For 2020 as a whole, it gives us GDP growth of -9.9%. However,as has been the case since the onset of the pandemic, eventshave already moved on from the period covered by the officialdata releases. The UK entered lockdown again in earlyJanuary, and this lockdown is having a bigger impact than theone in November.

CNY: China CPI (Wednesday) will be released this week, as willChina January credit and financing statistics, which does nothave a fixed release schedule but will be out sometime in thecourse of the week.NOK/SEK: The Riksbank policy meeting (Wednesday),Norway CPI (Wednesday) and Norway Q4 GDP (Friday) are ontap this week.

CAD: There are no major data releases scheduled in Canadathis week, with only Friday's December wholesale trade salesreport on the docket (no consensus, prior +0.7%m/m).Trendline resistance drawn from the March highs at 1.2815remains in place as the hurdle for a greater correction toward1.2952, with 1.2738 and 1.2682 serving as support.

Citi

Asia has seen a relatively subdued start to the week for FX, with the majority of the G10 and EM FX complex trading flat vs the NY close. Equities continue to fare better though following further US fiscal snippets over the weekend, with US Treasury Secretary Yellen urging the need for a robust fiscal package to quicken the return to full employment. Looking ahead, headline noise may pick up with Germany IP, and central bank speak in GBP (Bailey), EUR (Lagarde) and USD (Mester). In EM, we await CZK industrial output and TWD trade. CLP lastly looks to CPI and trade data too

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