This Week – The ECB decision with data from UK and US

Friday Recap

Friday the 13th was not that bad luck after all. European markets were in the green, ahead of key bank earnings data from the United States, as global markets attempt to recover from Thursday's Trump-induced stumble.

Positive news for U.S markets too, as Friday was the day major U.S. banks posted their earnings. Bank of America announced that it sees its interest net income growing further in the current quarter after it reported earnings per share (EPS) of $0.40 in the quarter ending December 2016. Meanwhile, BlackRock said its Earnings per Share rose to $5.14 and its board of directors approved a 9% rise in the quarterly dividend to $2.50 from $2.29. JPMorgan Chase and Wells Fargo also announced their earnings.

This Week

For the euro area, the markets will turn their attention towards Frankfurt next Thursday, when the European Central Bank announces its latest monetary policy decision, which will carry plenty of weight. After last month’s decision to extend the QE timeline while cutting the monthly purchase amount, ahead of challenging political headwinds over the coming months, no major changes are expected, but keeping in mind potential changes to inflation forecasts.

In England, the key event of the week will be the speech from Prime Minister Theresa May, which could have impacts for currency pairs such as GBP/USD and EUR/GBP. UK data such as Consumer Price Index, unemployment and retail sales may pale in comparison, but will still be important gauging the likelihood of a monetary policy change. The unemployment forecast in the UK seen to rise from 4.8% to 4.9% or as some analysts, forecast to hold steady. Finally, UK retailers will continue to report trading updates for the Christmas period, while further information on Rio Tinto, Burberry and Cairn Energy are also due.

U.S. earnings season moves into high gear, as other U.S. banks report, plus Netflix, General Electric and Schlumberger. The U.S. will release its manufacturing output for December which should likely increase with improving survey data and following a November rise by only 0.1% on an annual basis. Updates on capacity utilisation and industrial production data will also offer clues to the health of the US goods-producing sector.

In China, analysts are anticipating GDP growth for the fourth quarter to remain broadly unchanged from the expansion in the previous quarter. However, the Purchasing Managers Index pointed to stronger expansions in manufacturing and services. Updated industrial output data and retail sales indicators will also give clues to the strengths of Asia’s largest economy.