Markets gear up for a possible BOJ rate hike next week

Japanese GDP

Japan narrowly avoided recession, clearing the way for a Bank of Japan (BOJ) rate hike. gross domestic product (GDP) grew by 0.1% in Q4 quarter on quarter (QoQ) after a 0.8% contraction in Q3. It was helped by a strong upward revision of capital expenditure, up 2% after an initial 0.1% fall. The yen has been strengthening last week against the dollar, which weighed on Japan's equity market. A growing number of Bank of Japan policymakers are warming to the idea of ending negative interest rates this month. The bank is set to decide on rates on March 19.

Inflation data

Over the weekend, China's National Bureau of Statistics released its latest inflation data. Consumer prices rose for the first time in six months due to spending linked to the Lunar New Year. consumer price indec (CPI) climbed 0.7% in February year-on-year (YoY), beating the 0.3% gain forecast by economists. The producer price index fell 2.7% from a year earlier in February, faster than the 2.5% anticipated. Producer prices have now been declining for more than 1-1/2 years.

UK macro indicators

In the UK this week, a few macro indicators are worth keeping an eye on. On Tuesday, the unemployment rate is expected to remain at 3.8% in January. The average earnings increase, excluding bonuses, should also stay unchanged at 6.2%. On Wednesday, January gross domestic product (GDP) is forecast to rise by 0.2% month-over-month (MoM), and January industrial production is expected to stay flat.

The US dollar

Over in the US, the USD could react to CPI data due tomorrow. Core consumer price index (CPI) growth is expected to slow to 3.7% year-over-year (YoY). It will be followed on Wednesday by retail sales for February, forecast to rise by 0.7% month-over-month (MoM), and the producer price index, expected to rise by 1.2% in February YoY.

Oracle

US computer software company Oracle is due to report its latest earnings after the bell tonight after US close, and again, its cloud computing area is seen as being a key driver of that growth. Current estimates call for Q3 earnings of $1.37 per share, reflecting a 12.3% improvement relative to the same quarter last year. Oracle has exceeded the earnings mark in each of the past four quarters, delivering an average earnings surprise of 3.32% over that timeframe. Sales are anticipated to have risen 7.07% to $13.27 billion.

Oil

Last Friday, the Baker Hughes weekly survey showed a drop in total rig count to 622 last week, from 629 the previous one. The number of oil rigs in operation fell by two to 504.

Gold

Gold consolidated after logging its biggest weekly gains in a year and setting fresh record highs during the prior week.