The week ahead will see investors keep one eye on the Reserve Bank of Australia and another on Wall Street, where US President Donald Trump it appears is moving ahead with plans to cut financial regulation.
At its first meeting of the year on Tuesday, all but one of the 29 economists polled by Bloomberg expect the RBA to keep rates steady at 1.5 per cent on Tuesday.
Weaker-than-expected inflation growth and a slight rise in unemployment is expected to tie the RBA's hands on a rate rise.
But an overheating housing market, as well as record balance of trade figure and soaring commodity prices, make it similarly unlikely that the RBA will cut the cash rate.
Because of expectations the RBA will keep rates steady, investors will keep a close eye on Friday's release of the central bank's quarterly statement on monetary policy, said AMP chief economist and head of investment strategy Shane Oliver.
"Of most interest will be any revisions to the RBA's forecasts, where we expect a downwards revision to the growth forecasts following the September quarter growth contraction and a possible pushing out in the return of inflation to target," he said.
"Also of interest will be what the RBA has to say about the resurgent Sydney and Melbourne property markets.
"Our assessment remains that – with record low wages growth, ongoing spare capacity, an increasing risk that low inflation will feed on itself and the Australian dollar remaining too high – the RBA will cut rates again around May."
Citi's Paul Brennan said there was unlikely to be any movement until the May board meeting, which will come after another inflation result and three more sets of unemployment figures.
"Our central case remains no change in rates this year, but that the market is underpricing the risk of easing," he said.
Local markets will also take cues from the United States, where Friday saw the release of positive job growth figures.
Also on Friday, President Donald Trump ordered a review into the 2010 Dodd-Frank financial regulations, which were brought in after the global financial crisis with the aim of limiting the systemic risk of another collapse.
The S&P500; surged 0.7 per cent in response. The gains were even larger in financial stocks – the key beneficiaries of the so-called Trump Trade which rose strongly on Friday, led by Goldman Sachs which added 4.6 per cent.
The Australian market is set to open stronger on Monday, regaining some of last week's falls. ASX200 futures were up 0.4 per cent on Sunday.
The ASX200 fell 0.8 per cent in January – a worrying indicator for those who hold that performance in the first month of the year as a good guide of the remaining 11.
Locally, Monday will see the release of the December retail sales figures, which are expected to show signs of continuing weakness in the consumer sector. ANZ job ads, a leading indicator of the employment market, will also be released.
The RBA meeting will dominate discussion on Tuesday, but it's not the only release that will impact markets.
China's Central Bank will release its statement on the level of its foreign exchange reserves, which will likely show a further fall in its stores, particularly of US currency.
The release could play into tensions between China and the US Trump administration, which has ramped up rhetoric against China's artificially controlled currency.
The week ahead sees earning season get into full swing, with several key earnings results due in the next five days.
On Wednesday, big miner Rio Tinto will release its full-year profit figures – investors are hoping soaring commodity prices mean good news for the stock.
Overnight on Wednesday (early Thursday AEDT) will also see the release of the US trade balance. Economists expect a slight narrowing, according to Bloomberg.
Locally, Thursday evening will see a speech by RBA Governor Philip Lowe, which will no doubt be closely scrutinised for clues as to the RBA's strategy. Investors will get another glimpse of this with Friday's release of the statement on monetary policy.
Also being released on Friday are the December housing finance figures.
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