Monday begins quietly, with U.S. markets closed for Presidents’ Day. In China, markets will also be affected by the Spring Festival holiday.
On Tuesday, the U.K. will release the claimant count change, the average earnings index 3m/y, and the unemployment rate. In Canada, the focus will be on inflation data.
Wednesday brings the RBNZ monetary policy announcement in New Zealand, while the U.K. will publish its latest inflation figures.
On Thursday, Australia will release employment change and the unemployment rate, and the U.S. will report weekly unemployment claims.
Friday will see the release of flash manufacturing and services PMIs for the Eurozone, the U.K., and the U.S. In addition, the U.K. will publish retail sales m/m, while the U.S. will release advance GDP q/q and the core PCE price index m/m.
Throughout the week, several FOMC members are also expected to deliver remarks.
In Canada, the consensus for CPI m/m is 0.1% versus -0.2% previously. Median CPI y/y is expected to remain unchanged at 2.5%, trimmed CPI y/y is seen easing from 2.7% to 2.6%, while common CPI y/y is projected to hold steady at 2.8%.
RBC analysts suggest that a modest uptick in headline inflation is likely, driven largely by temporary tax effects rather than a renewed acceleration in underlying price pressures.
The absence of last year’s GST/HST holiday is expected to distort annual comparisons, while food inflation remains elevated. Grocery prices also appear to have stayed firm while energy prices, by contrast, are expected to provide a significant drag, as gasoline prices have fallen below year-ago levels.
Given that food and energy costs are heavily influenced by global factors, the Bank of Canada is likely to place greater emphasis on core inflation metrics. Measures such as median and trimmed CPI are expected to remain in the mid-2% range, easing gradually but still sitting above the Bank’s 2% target.
At this week’s meeting, the RBNZ is expected to keep rates unchanged at 2.25%. This will be the first meeting under Governor Anna Breman. Markets anticipate an updated set of projections, with the first rate hike possibly projected for December.
Domestic activity in New Zealand remains firm, and inflation is still running above the Bank’s target. However, policymakers are likely to emphasize the presence of remaining spare capacity, tighter financial conditions, and easing food and fuel inflation, all of which should help guide inflation back towards the 2% target, Westpac analysts said.
While a stronger growth outlook could prompt an upward revision to the longer-run OCR projection, the Bank is unlikely to signal any urgency around further tightening. Overall, the messaging is expected to lean more dovish than hawkish, broadly aligning with current market pricing rather than pushing expectations materially higher.
In the U.K., the consensus for CPI y/y is 3.0% vs. 3.4% previously, while core CPI y/y is expected to drop to 3.0% from 3.2%.
Headline inflation is projected to decline, driven by softer food price pressures and the unwind of last year’s private school tax increase.
However, core inflation is likely to prove more persistent, and this is the measure the BoE is monitoring most closely. According to ING analysts, a more significant drop in inflation is expected in April, with headline CPI potentially falling to around 1.8%.
Some softness is expected on the jobs front and the annual wage growth is also likely to moderate. If this turns out to be the case for February data as well, the BoE might deliver an additional rate cut next month. Average earnings index 3m/y is expected to drop from 4.7% to 4.6% and the unemployment rate is likely to print unchanged at 5.1%.
In Australia, the consensus for employment change is 20.1K versus 65.2K previously, while the unemployment rate is expected to rise from 4.1% to 4.2%.
Employment growth appears to be near its low point, as the drag from the unwind in the care-related sector fades and private-sector hiring begins to recover. However, renewed inflation pressures and a shift in market interest rate expectations suggest that the employment recovery this year could be more subdued.
Westpac analysts expect a stronger gain of around 40K in the January report. They also note that labour demand appeared to stabilise toward the end of last year, while a gradual easing in labour supply helped keep the unemployment rate broadly unchanged.
Recent data do not yet point to a renewed tightening in labour market conditions. Instead, they suggest a reasonably solid year-end backdrop, albeit distorted by seasonal volatility for January. Some of the late-year resilience may have reflected expectations of additional policy support in 2026, an assumption that has since shifted.
In the U.S., the consensus for the core PCE price index m/m is 0.3% versus 0.2% previously. Personal income is expected to rise 0.3% m/m compared to 0.3% prior, while personal spending is forecast at 0.4% versus 0.5%.
The Fed’s preferred inflation gauge, the core PCE deflator, will be closely watched. A 0.3% increase would reinforce the case for policy patience rather than aggressive easing.
U.S. consumer fundamentals remain relatively firm heading into 2026, with household spending continuing to expand at a steady pace. Nominal consumption growth is expected to remain modest at year-end, leaving real spending flat.
The softer December retail sales likely reflect timing effects rather than a genuine weakening in demand. As such, recent data do little to challenge the broader constructive outlook for consumers, Wells Fargo analysts said.
Income growth remains a key constraint, as slower gains may require households to dip further into savings. Even so, the near-term consumption outlook is supported by easing inflation, tax relief, and more stable employment conditions, which should help sustain moderate real spending growth into 2026.
In the U.S., the consensus for advance GDP q/q is 2.8% compared to 4.4% previously. Economic momentum likely eased toward the end of the year, though the underlying backdrop remains resilient.
Fourth-quarter growth is estimated to have moderated, partly reflecting the drag from the federal government shutdown, which temporarily weighed on headline activity. Excluding these effects, demand fundamentals appear to have held up reasonably well, with consumer spending remaining supportive and business investment posting modest gains, particularly in technology-related sectors. Trade flows and inventories continue to add volatility to the data. Tariff-related uncertainty and unusual movements in gold trade have complicated the interpretation of external balances, while inventory dynamics remain difficult to assess in real time, Wells Fargo analysts said. Looking through these distortions, the economy appears to have ended 2025 on solid footing, expanding at a healthy 2.2% pace over the year.
This article was written by Gina Constantin at investinglive.com.