US Presidential inauguration
US markets will be away on Monday for Martin Luther King Jr.’s birthday and will see a short three days before welcoming their new President on Friday. Asian markets have been relatively relieved in the past week with the moderating US dollar. Nonetheless, the upcoming week is likely to bring in new feeds that could sway prices otherwise.
Expectations have been built ahead the President-elect Donald Trump's January 11 conference, reflecting the untapped positive sentiment the market has towards the new administration's plans. Despite the lack of insights popping enthusiasm, a repeat of the pre-conference price action ahead of President-elect Donald Trump's inauguration cannot be ruled out. The first 100 days for President-elect Donald Trump will be key in forming market expectations for the rest of his term.
Besides the anchoring event, we will also see tier-1 data from the US including December’s industrial production and consumer price index. The market consensus for December's industrial production currently points to an improvement that could lift the US dollar and indices should we see surprises on the upside. Gains on the latter could potentially trickle down to Asian markets as well. Earning reports will also be critical for the stock markets with highly watched names including Goldman Sachs, Netflix and General Electric Co reporting.
The key data for Asia, China's Q4 GDP, will also land on Friday. After three quarters of consistent 6.7% year-on-year (YoY) growth reported, the market is expecting the final quarter of the year to expand at the same rate. With China’s official manufacturing PMI coming in above 51.0 for all three finals months of 2016 and components including output as well as new orders stabilizing, conditions indeed support the delivery of a 6.7% YoY result. However, the market would most likely be following the data release of December’s industrial production and retail sales more closely. Surprises on the upside could potentially provide support for the waning Chinese market.
On central bank meetings, following the Bank of Korea’s (BoK) meeting this week, Bank Negara Malaysia (BNM) and Bank Indonesia (BI) are expected to hold rates unchanged in their upcoming meetings as well. Other key data for the week ahead includes Malaysia's December inflation rate, Indonesia's December trade and Singapore's non-oil domestic exports (NODX).