WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Most Asian equities closed in the red on Monday, as soft Chinese inflation data revived concerns about deflationary pressures in China, overshadowing China’s central bank initiative to set the daily midpoint rate higher for a second consecutive session. In FX markets, the USD/JPY regained some ground hitting session high of 117.90 in early European trade, after falling to a six-month low of 116.70 at some point earlier today as China’s central bank decision softened investors’ fears over a continuing depreciation of the yuan and smoothed demand for safe haven assets. The firmer than expected US December non-farm payrolls report that was released on Friday also had a positive impact on the US currency. Focus this week is on the ECB’s accounts of the 3 December monetary policy meeting and the BoE monetary policy meeting on Thursday. On the US data front, retail sales and industrial data are due on Friday, while in the euro area, industrial production figures are expected to be published on Wednesday. Last but least, Chinese trade data statistics on Wednesday are also anticipated to lure market attention.
GREECE: Speaking in a joint press conference after a meeting with his Greek counterpart, French Finance Minister Michel Sapin reportedly said that Greece’s 1st programme review may be completed within weeks, opening the way for official discussions on Greece’s debt sustainability. According to some press reports, technical teams representing Greece’s official creditors are expected to arrive in Athens later this week to prepare the ground for the inception of official discussions in the context of the review. Provided that things go as planned, the mission heads are reportedly expected to arrive by January 25th.
SOUTH EASTERN EUROPE
BULGARIA: Despite a quiet start last week amid thin post-holiday trade, the local equity market ended lower on a weekly basis amid growing concerns about China’s slowing economy.
ROMANIA: The year started out with a global risk-off mood stemming from China-related jitters, which however had relatively little impact on the RON markets.
SERBIA: The EUR/RSD moved sideways in the first week of the year, on the back of EUR demand from local corporates and ongoing Central Bank interventions.
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