The Week Ahead – Brexit, Italy, Trade and a Busy Economic Calendar in Focus

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It’s a busy week ahead, with key stats to drive the majors along with geo-political risk, with Italy, Brexit and the U.S – China trade war in focus. · FX Empire

Bob Mason

Updated Sat, Nov 10, 2018, 11:00 PM

On the Macro

For the Dollar, key stats through the week include October inflation figures on Wednesday, with retail sales, business inventories and Philly and NY State manufacturing PMI’s due out on Thursday, ahead of September industrial production figures on Friday. The inflation and retail sales figures will be the key drivers on the data front, while noise from Capitol Hill and a FED Chair Powell speech on Wednesday night will also provide direction. The Dollar Spot Index ended the week up 0.37% to $96.901.

For the EUR, it’s a busy week ahead, with finalized inflation figures out of member states and the Eurozone due out through the week, November economic sentiment numbers due out of Germany and the Eurozone on Tuesday, with 3^rd quarter GDP numbers out of Germany and the Eurozone on Wednesday, along with the Eurozone’s September industrial production figures. On Thursday, stats are limited to the Eurozone’s trade balance and France’s 2nd estimate of 3^rd quarter GDP. Focus will be on the Germany and Eurozone GDP and economic sentiment figures ahead of Friday’s finalized Eurozone inflation numbers that will also influence. The EUR/USD ended the week down 0.46% to $1.1336.

For the Pound, it’s another busy week ahead, employment figures due out on Tuesday, October inflation numbers on Wednesday and October retail sales figures on Thursday for the markets to consider and, while all the stats are key drivers for the Pound, Brexit chatter will likely overshadow the numbers. The GBP/USD ended the week up 0.02% to $1.2972.

For the Loonie, it’s another quiet week ahead, stats limited to September foreign security purchases and manufacturing sales, which will have limited influence, with direction ultimately being hinged on the direction of crude oil prices through the week. The Loonie ended the week down 0.78% to C$1.3212 against the U.S Dollar.

Out of Asia, it’s a busy week ahead.

For the Aussie Dollar, stats include October business confidence figures on Monday and November consumer confidence figures on Tuesday that are released ahead of 3^rd quarter wage growth and Thursday’s employment numbers, the Aussie Dollar likely to be particularly sensitive to the data. The Aussie Dollar ended the week up 0.46% to $0.7226.

For the Japanese yen, key stats through the week include 1^st estimate GDP numbers for the 3^rd quarter and September industrial production and tertiary industry activity index numbers. With all the stats due out on Wednesday, focus will be on the GDP numbers, the economy forecasted to contract in the 3^rd quarter, following an earthquake and storms that disrupted output. The Japanese Yen ended the week down 0.56% to ¥113.83 against the U.S Dollar.

For the Kiwi Dollar, stats are on the lighter side, limited to October’s electronic card sales numbers on Monday and business PMI figures on Friday, both sets of numbers expected to influence. The Kiwi Dollar ended the week up 1.14% to $0.6737.

Out of China, focus will be on Wednesday’s release of retail sales, fixed asset investment and industrial production numbers, with the key driver being October’s industrial production figures. Other stats include new loan growth due out on Tuesday. Outside the numbers, the markets will be looking for progress on trade talks with the U.S.

Geo-Politics

Brexit: With B-Day inching ever closer and a planned emergency EU summit later this month to sign off on a deal, sensitivity will continue and Theresa May is going to need the support of her cabinet through the week.

U.S – China Trade War: Following the mid-terms, this will likely become Trump’s main area of focus, along with Iran and riling the Democrats. Concerns over the Chinese economic outlook will make the markets all the more sensitive in the week ahead.

Italy: The coalition government has until Tuesday to submit its revised draft of the budget. How the coalition government responds to the Establishment’s requirements will be key, with any more infighting within the coalition also of influence.

Saudi Sanctions: It’s probably about time that there was some update from the Saudis, with the U.S President needing to decide on what action is to be taken if any, the world watching to see just what a U.S ally is able to get away with, with the tape of Kashoggi’s murder now having been shared.

Mueller Investigations: Talks of an investigation into Jeff Sessions’s resignation and reports of an imminent arrest of Trump Junior are to set the tone on Capitol Hill, as the Mueller investigation looks to make progress, with any interference into the investigations by newly appointed attorney-general Whitaker likely to lead to quite a backlash, the Republican Party having already lost significant support in the mid-terms.

The Rest

On the monetary policy front, with none of the major central banks in action, focus will be on FOMC member commentary through the week and a FED Chair Powell speech scheduled for overnight on Wednesday, any hawkish chatter expected to provide some support for the Dollar.

On the oil front, the OPEC meeting over the weekend could provide fuel for crude oil prices that have been on the slide, with any talk of a cut in production going into next year a positive, while the monthly OPEC and IEA reports could downwardly revise demand further that would offset some of the gains in crude, in the event that production volumes are cut.

This article was originally posted on FX Empire