The Week Ahead – Brexit, Capitol Hill, and COVID-19 Remain in Focus

On the Macro

It’s a particularly quiet and shortened week ahead on the economic calendar, with 15 stats in focus in the week ending 1^st January. In the week prior, 32 stats had been in focus.

For the Dollar:

It’s a relatively busy week ahead on the economic data front, with U.S stats making up for most of the stats due out.

On Tuesday, Chicago PMI numbers are due out on Wednesday.

Of greatest significance, however, are the all-important initial jobless claims figures that are due out on Thursday.

Other stats including housing sector and trade data that will likely have a muted impact on the Dollar.

It’s a shortened week, with the U.S markets closed on Friday.

The Dollar Spot Index ended the week up by 0.23% to 90.223.

For the EUR:

It’s a particularly quiet week ahead on the economic data front, with most European markets closed on Thursday and Friday. French jobseeker totals on Monday and prelim inflation figures for Spain on Wednesday are the only stats to consider.

We don’t expect the numbers to have a material impact on the EUR, however.

Economic data from China and Brexit and COVID-19 news will remain the key drivers in the week.

The EUR ended the week down by 0.52% to $1.2193.

For the Pound:

It’s a particularly quiet week ahead on the economic calendar. It’s another shortened week, with the UK markets closed on Monday and Friday and set for an early close on Thursday.

Key stats are limited to December house price figures that will likely have a muted impact on the Pound.

The main area of focus in the week will remain Brexit and updates on COVID-19. For the Pound, the House of Commons vote on 30th December will be the main event.

The Pound ended the week up by 0.27% to $1.3560.

For the Loonie:

It’s also a particularly quiet week ahead on the economic calendar, with no material stats to provide direction.

The lack of stats will leave the Loonie in the hands of COVID-19 news updates in the week.

It’s a shortened week, with the Canadian markets closed on Monday and on Friday.

The Loonie ended the week down by 0.60% to C$1.2865 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

There are no material stats due out to provide the Aussie Dollar with direction.

From China, private sector PMI numbers for December will draw interest on Thursday and Friday, however. With the Australian markets closed on Friday and scheduled for an early close on Thursday, we could see a bigger response than normal. The Australian markets are also closed on Monday.

Away from the economic calendar, expect COVID-19 news to also influence.

The Aussie Dollar ended the week down by 0.22% to $0.7605.

For the Kiwi Dollar:

It’s a particularly quiet week ahead on the economic calendar. There are no material stats due out to provide the Kiwi Dollar with direction.

From China, private sector PMI numbers for December will draw interest on Thursday and Friday, however.

It’s a shortened week, with New Zealand also on holiday on Monday and Friday and set for an early close on Thursday.

The Kiwi Dollar ended the week down by 0.27% to $0.7117.

For the Japanese Yen:

It is a relatively quiet week on the economic calendar.

Prelim industrial production figures for November are due on Monday.

With a number of major markets closed, we can expect some sensitivity to the numbers, with volumes on the lighter side.

Away from the economic calendar, COVID-19 news will continue to influence.

The Japanese Yen ended the week down by 0.13% to ¥103.43 against the U.S Dollar.

Out of China

It’s a relatively busy week ahead on the economic data front.

December private sector PMI numbers are due out on Thursday and Friday.

The markets preferred Caixin Manufacturing PMI is due out on Friday, however, when most major markets are closed for New Year’s Day.

The Chinese Yuan ended the week down by 0.03% to CNY6.5418 against the U.S Dollar.

Geo-Politics

U.S Politics

With the U.S on holiday, there shouldn’t be too much to rock the boat in a shortened week ahead.

How the stimulus package proceeds on Capitol Hill will draw interest, however. Following Trump’s refusal to sign the bill, lawmakers refused to accept Trump’s demands last week. The markets are expecting a major package once Biden enters the White House. An interim package is going to be needed, however, to avoid risk aversion and a pickup in demand for the Greenback.

While the package is the main area of focus, President Trump continues to raise eyebrows. He seems unwilling to leave quietly…

Brexit

Boris Johnson delivered what other Prime Ministers failed to deliver last week. In the week ahead, the details of the deal and, more importantly, the parliamentary vote will be the main event.

Reports over the weekend suggest that the Brexit agreement should sail through the House of Commons. With the transition period ending in less than 1-week, there’s no time to make any changes…