Weekly Fundamental Bulletin: ECB Minutes & US Retail Sales

The unchanged unemployment rate puts an end to 7 consecutive monthly declines.

Despite the lower than forecast jobs data, the markets continued to be spurred on by hopes of new stimulus under the Biden administration.

US services sector activity unexpectedly rises in December 2020

The US services sector activity posted a surprise increase in December, marking a faster pace of expansion.

Official data from the Institute for Supply Management showed that the services PMI rose to 57.2 in December. This comes following a headline print of 55.9 in the previous month.

The median forecasts pointed to a decline in the index to 54.6. The services sector composite index grew for the seventh consecutive month following a decline in April and May.

The gains in the services sector come following an uptick in the increase in the business activity index which rose to 59.4 in December from 58.0 in November.

Upcoming Economic Events

China exports set to rise, albeit at a slower pace

The week ahead will kick off with data from China covering exports and inflation.

On the exports front, data is likely to show that the recovery continued into the year-end. Another double-digit growth is forecast in exports.

Following an increase of 21.1% previously, export data for December is set to rise by 13%. Meanwhile, inflation is also likely to improve.

After falling 0.5% on the year in November 2020, headline consumer prices are forecast to decline by just 0.1%, marking a modest improvement from the previous month.

Similar trends are expected in the producer prices index as well. PPI is forecast to fall by 0.8% following a 1.5% decline on the year in November.

ECB to release the December monetary policy meeting

The European Central Bank will be releasing its meeting minutes from the December monetary policy meeting.

The central bank announced an increase in its bond purchases in December. However, investors will be keen to see the deliberations.

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