The next week's economic calendar will begin with data on Chinese economy. Markets expect reports such as GDP for the fourth quarter and industrial production in December. The stability of Chinese economy is a factor of support for oil prices and optimism in stock markets of China's main trading partners - the EU, Australia and the Asian bloc of countries.

On Tuesday, the agency ZEW will publish an index of economic sentiment in Germany for December. The European currency is very sensitive to these soft data, as the ZEW index is the leading indicator of investment in the German economy. The market expects the index to rise to 60 points which would reflect quite high level of optimism.

Inflation data for the UK, EU and Canada will be the main eco reports on Wednesday. In addition, the decision on the interest rate on this day will be made by the Bank of Canada, however, the status quo of the Central Bank is priced in the CAD as the BoC basically signaled that it’s done with easing on the last meeting.

On Thursday, the decision on the interest rate will be announced by the ECB and Bank of Japan. As in the case of the BoC, the central banks of the EU and Japan have completed policy easing and should be taking wait-and-see stance. In this regard, we should expect a moderately positive reaction of the Euro and the yen (primarily against the dollar) to the Central Banks’ policy updates.

Manufacturing PMIs in Germany in the UK round out the important news for the next reporting week. The manufacturing momentum seen in the data is likely to manifest in January as well, so a positive surprise in the data is likely. However, the market tends to discount production data and focus on services, which in developed countries make the main contribution to GDP.

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