Weekly Outlook - BoJ meeting and US companies earnings take center stage

During the week that just ended, Fed officials made clear statements on the timing of the impending rate hike cycle, igniting downside pressures on stock markets. Next week, the spotlight will turn to the BoJ’s meeting, alongside major US companies’ earnings reports and a barrage of Chinese, UK and Canadian economic data releases.

The highlights:

In Asia, the BoJ meets on Tuesday but there are no policy changes on the cards, leaving the JPY vulnerable to external forces. Moreover, Chinese GDPretail sales and industrial production will be out on Monday, with all reports estimated to indicate deceleration of the economy. AUD is likely to be affected by any surprise on those datasets.

In America, major banks such as Goldman SachsMorgan Stanley and Bank of America report their Q4 earnings next week, alongside the streaming behemoth Netflix. These announcements will probably attract much attention as investors shift their interest to ‘value’ stocks since the Fed’s hawkish pivot.

In the UK, employment numbers for November will come out on Tuesday but this data is unlikely to affect the GBP as it is outdated. Furthermore, both the UK and Canada will announce inflation and retail sales data for December, which will be of particular interest as they will assess Omicron’s impact on the corresponding economies.

In commodities, oil is heading for a fourth weekly advance, its longest streak since October, amid signs of a tighter market and less severe impact on demand from Omicron. Moreover, gold is also stronger on the week capitalizing on a softer USD despite the Fed’s ultra-hawkish stance.

Wall Street is set to close the week significantly lower as the Fed’s hawkish rhetoric triggered a sell-off in tech stocks.

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