By Dow Jones Newswires staff
Below are the most important global events likely to affect FX and bond markets in the week starting Jan. 19.
U.S. PCE inflation data will be watched in the coming week, alongside U.S. gross domestic product numbers, as investors continue to gauge the likely timing of the next Federal Reserve interest-rate cut following some recent signs of improvement in U.S. jobs data.
An interest-rate decision by the Bank of Japan will attract attention amid concerns about the recent weakness of the Japanese yen. Elsewhere, focus will center on fourth-quarter Chinese gross domestic product data, provisional purchasing managers’ surveys in the eurozone and inflation figures in the U.K.
The annual World Economic Forum in Davos takes place during the week, where a number of major world leaders and central bankers are due to speak, including U.S. President Trump.
U.S.
U.S. PCE inflation figures for November will be released Thursday. PCE inflation is the Federal Reserve’s preferred measure of inflation and will be closely watched, particularly after recent jobs data showed an unexpected drop in the U.S. unemployment rate.
Solid inflation data in addition to better jobs data could potentially put the lid on prospects of another interest-rate cut by the Federal Reserve this quarter.
U.S. money markets currently only fully price in another 25 basis-point rate cut in July, albeit with a strong chance of an earlier move in June, while the chances of a rate reduction in April are just 37% and much less for January and March, LSEG data show.
Analysts at Morgan Stanley now expect rate cuts in June and September, having previously anticipated earlier moves, after the recent U.S. jobs data. “Lower unemployment means inflation is likely to drive rate decisions,” they said. This puts emphasis on the PCE data.
“Our outlook has inflation pressures peaking toward the end of the first quarter of 2026 and the year-on-year rate of core PCE inflation slowing after midyear.”
Thursday will also see the release of revised third-quarter U.S. gross domestic product data. This will attract interest to see whether there are any revisions after the initial estimate revealed an unexpectedly strong annualized rate of 4.3%, another piece of data which reduced expectations for near-term interest-rate cuts.
Other data include pending home sales for December on Wednesday, jobless claims on Thursday, and provisional purchasing managers’ indexes on manufacturing and services sector activity in January on Friday.
Financial markets in the U.S. will be closed due to Martin Luther King day on Monday.
The U.S. Treasury will auction $13 billion in 20-year bonds on Wednesday and $21 billion in 10-year inflation-protected TIPS on Thursday.
Canada
Canadian inflation data for December are released on Monday.
The figures aren’t expected to change expectations that the Bank of Canada will leave interest rates on hold. However, recent jobs data were weak and if these are combined with signs of slower inflation then the prospects of interest-rate cuts could resurface.
“BOC officials are still very likely to keep rates unchanged later this month, but we continue to think slowing inflation can lead officials to feel more comfortable using more accommodative monetary policy to help close a wide output gap,” Citi analysts said in a note.
Citi expect two more 25 basis-point rate cuts this year, which would take Canada’s key rate to 1.75%. Canadian money markets only price a small chance of a rate cut during the first half of this year.
Retail sales figures for November are due on Friday.
Eurozone
Flash estimate purchasing managers’ indexes for January for France, Germany and the eurozone, which are a key measure of private-sector activity, will feature in a week otherwise quiet in terms of economic data.
Final CPI inflation data for the eurozone will be released Monday, followed by Germany’s ZEW business sentiment indicator for January on Tuesday. France will publish a monthly business survey for January on Friday.
Eurogroup finance ministers meet on Monday, followed by the Ecofin meeting of EU finance ministers on Tuesday.
The eurozone’s growth prospects remain a topic for investors this year, driven by fiscal stimulus, in particular in Germany.
“Fiscal expansion in 2026 infers that the eurozone economy may continue to grow around 1%, with Southern Europe continuing to outperform on a relative basis within the region,” BlueBay CIO Mark Dowding said in a note.
Scheduled government bond issuance is slowing, leaving room for potential syndicated transactions. Slovakia will conduct its first auction this year on Monday, tapping four bond lines. Germany will auction a combined 2 billion euros ($2.32 billion) in May 2041- and 2056-dated Bunds on Wednesday. France will sell short- and medium-term nominal bonds, known as OATs, as well as inflation-linked bonds in two separate auctions on Thursday with a total volume of 12.75 billion euros to 15.25 billion euros ($14.80 billion to $17.70 billion).
U.K.
In a busy week for U.K. data, CPI inflation data for December on Wednesday could be a key indicator for when the Bank of England next cuts interest rates.
Annual inflation fell more than expected to 3.2% in November, giving investors confidence that inflation is slowing sufficiently to allow the Bank of England to cut rates further.
However, inflation remains well above the central bank’s 2.0% target and U.K. money markets aren’t fully pricing in another rate cut until June, LSEG data show, particularly after recent better-than-expected U.K. gross domestic product data.
Analysts expect that inflation could have edged up in December, largely due to base effects, although the overall trend over the coming months is expected to be for lower inflation. December producer price data are also released on Wednesday.
Another important piece of data will be Tuesday’s jobs data. These are expected to continue to point to a weak labor market alongside gradually slowing wage growth, albeit from a high level.
Public finances figures for December are released Thursday. Concerns about the health of U.K. public finances have diminished since November’s budget, even as public borrowing figures for November were higher than expected.
Retail sales data for December are released Friday, alongside provisional purchasing managers’ surveys on U.K. manufacturing and services sector activity in January.
Investec economists expect the PMI data to show increased expansion in both manufacturing and services activity at the start of 2026.
“This would fit with our expectation that momentum in GDP growth in the first quarter may be stronger than it looks to have been in the fourth quarter,” Investec’s Sandra Horsfield said in a note.
GfK’s U.K. consumer confidence index for January is also released on Friday.
The U.K. plans to re-open the January 2041 gilt via syndication during the week, while it also plans to sell May 2029 gilts via an auction on Wednesday.
Scandinavia
Norway’s Norges Bank announces a rate decision on Thursday, where it is expected to leave its key rate unchanged at 4%, likely reiterating that the rate will probably be reduced later this year.
Elevated inflation will likely prevent the central bank from cutting rates for now, “despite lingering growth concerns,” Citi analysts said in a note.
Denmark will launch a new two-year government bond with an initial issue volume of 6 billion Danish kroner ($932.3 million) on Wednesday.
Turkey
Turkey’s central bank announces a rate decision on Thursday and is expected to reduce rates from their current level of 38%.
ING analyst Muhammet Mercan forecasts a rate cut of 150 basis points, although he notes there is a possibility that the reduction will be lower than this, potentially only of 100 basis points. “Early indicators point to strengthening pricing pressures in the food group this month and recent data signal a recovery in domestic demand,” he said.
Japan
The Bank of Japan is expected to hold its policy rate steady at 0.75% on Friday as it examines the effect of its last interest-rate increase in December. Focus will also be on the central bank’s quarterly outlook report, where it will give its latest growth and price forecasts.
Other indicators on deck include trade data and consumer price figures for December, set to be released on Thursday and Friday, respectively.
Focus will be on the yen as well, after Japan’s finance minister said she is ready to act against excess depreciation, putting traders on watch for a potential intervention. Yen weakness has been a source of concern for policymakers, and markets are monitoring to see if authorities will step in.
On Wednesday, the BOJ is scheduled to make outright purchases of four sectors of Japan’s government-bond market. These will include sovereign securities with tenors of more than five years and up to 10 years, and those with tenors of more than 25 years. The purchases will likely support the domestic bond market.
The ministry of finance is scheduled to auction about 800 billion yen of 20-year JGBs on Tuesday. The auction might garner more attention than usual owing to a local media report that Japanese Prime Minister Sanae Takaichi plans to hold a press conference on Monday to explain her thinking on a potential dissolution of the lower house.
“The 20-year JGB auction on [Jan. 20] will serve as a key gauge of how investors perceive fiscal risks after the election,” Barclays FICC Research analysts said.
Australia / New Zealand
The week ahead in Australia will be dominated by December employment data due Thursday, with economists expecting the labor market to remain relatively tight. With the unemployment rate expected to remain low at 4.3%, the case for the Reserve Bank of Australia to resume interest-rate rises as early as next month will strengthen.
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01-18-26 1614ET