Investors To Focus On ECB's Forward Guidance

Some economic releases across various economies are also on the cards, making it a somewhat busy week.

The Bank of Japan will be holding its meeting on Wednesday this week. No changes from the BoJ as it continues to bide time until October when the proposed sales tax hike will be introduced. In the meantime, officials are likely to maintain the status quo with the likelihood of references to the recent strength in the Japanese yen.

The ECB meeting is due later in the week on Thursday. No changes on the radar from the ECB to its monetary policy. Speculation is high that the ECB could come out with a dovish statement given the deteriorating conditions in the economy.

On the economy front, data from the U.S. will see the release of the durable goods orders report and retail sales data for December. Other data points over the week include housing data such as building permits, housing starts, and existing and new home sales report.

Australia will be reporting its monthly employment figures this week. New Zealand will be releasing its fourth quarter inflation data.

From the UK, the monthly ILO labor market data will be coming out while China will be releasing its GDP numbers for the fourth quarter of 2018.

ECB to remain on the sidelines

The European Central Bank will be holding its first monetary policy meeting of the year this week on Thursday. No changes from the central bank as far as the key rates are concerned.

Given that the ECB ended its QE program as recently as December, the focus is likely to turn to the economic performance of the region.

With the most recent data suggesting that the Eurozone economy overall could experience another slow pace of growth in the fourth quarter of 2018, Draghi is likely to come out with a dovish and a cautious statement on monetary policy.

The markets have pushed back expectations of a rate hike from the middle of this year until next year. The December ECB minutes showed that officials also discussed re-introducing the targeted long term refinancing operations for the European banks. It is likely that Draghi could mention this as well.

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