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Global equities ended mostly firmer last week. UK markets ended the week in negative territory, led by losses in mining sector stocks. On the data front, UK’s consumer price index (CPI) advanced at a slower pace, in line with market anticipations on an annual basis in December. Furthermore, the nation’s retail sales dropped more-than-expected on a monthly basis in December, reaching its weakest level since June 2016 Brexit referendum vote. European markets ended the week on a positive footing, amid robust corporate earnings. Meanwhile, news emerged that the European Central Bank (ECB) might not end its massive bond-buying programme at its upcoming meeting. On the macro front, Eurozone’s final CPI slowed down at par with market expectations on an annual basis in December. US markets ended the week in green, boosted by gains in technology sector stocks. In major news, the US Senate is set to take a decision regarding the US government shutdown today, as it failed to reach an agreement in the previous week. On the data front, the US industrial production recorded a more-than-anticipated rise on a monthly basis in December. Further, initial jobless claims fell more than market anticipations during the week ended 13 January 2018, reaching its lowest level in 45 years. However, the country’s monthly manufacturing production grew less-than-expected in December. Asian markets ended firmer last week, tracking gains on Wall Street. Data revealed that China’s gross domestic product (GDP) expanded on an annual basis in the fourth quarter. Further, annual industrial production rose more-than-expected in December.

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Currency Update

The EUR ended firmer against the USD, as Eurozone’s trade surplus expanded more-than-expected in November. Furthermore, the current account surplus widened in the same month. Additionally, the region’s construction output rebounded on a monthly basis in November. The British Pound ended stronger against the greenback, amid increasing optimism that the European Union members will seek a relatively “soft” Brexit. On the macro front, UK’s monthly retail price index jumped more than market forecast in December. Moreover, the house price index climbed more-than-anticipated on an annual basis in November. The US Dollar ended weaker against its major counterparts last week, amid rising concerns over the US government shutdown. Data indicated that the US preliminary Michigan consumer sentiment index recorded an unexpected drop to its lowest level in six months in January. Further, the monthly housing starts plunged to its lowest level in one year in December. However, monthly building permits dropped less-than-expected in the same month.

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Fed's Beige Book: US economic activity expanded at a modest-to-moderate pace

According to the Federal Reserve’s (Fed) Beige Book report, the US economy and inflation expanded at a modest-to-moderate pace from late November through the end of 2017, while most districts reported modest increase in wages, on-going labour market tightness and challenge finding qualified workers across skills and sectors. Meanwhile, the report also indicated that some manufacturers increased capital expenditures in the first three quarters of 2017. Further, it revealed that the outlook for 2018 remains optimistic for a majority of contacts across the nation.

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The Week Ahead

Going ahead this week, investors will keep a tab on the ECB’s interest rate decision along with the Bank of England Governor, Mark Carney’s speech for further direction. On the data front, US and UK’s GDP figures along with UK’s ILO unemployment rate, Markit manufacturing and services PMI in the US and Eurozone would garner market attention.

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