The Week Ahead – Brexit, Economic Data, Trade and the BoJ are in Focus

It’s another big week ahead. More data out of China could rile the markets, with Brexit, the BoJ and a busy economic calendar to keep things interesting…
Bob Mason
Pound Coins Dollar

On the Macro

For the Dollar:

It’s another busy week ahead. December business inventories and January retail sales start the week off on Monday. February inflation numbers will influence on Tuesday ahead of durable goods orders and wholesale inflation numbers on Wednesday. A relatively quiet Thursday leaves the weekly jobless claims and new home sales figures as the key drivers. Rounding off the week will be the release of consumer sentiment, industrial production, manufacturing data, and the all-important JOLTs job openings. Retail sales, inflation, and durable goods orders will be the key drivers ahead of Friday’s stats. The retail sales figures are delayed and cover the period of the U.S government shut down. Weak figures off the back of Friday’s NFP numbers would have a material influence on the markets.

Outside of the data, the Oval Office will continue to influence throughout the week. On the policy front, FED Chair Powell scheduled will speak ahead of the Asian market open on Monday.

The Dollar Spot Index ended the week up by 0.81% to $97.306.

For the EUR:

The focus shifts to Germany at the start of the week. Germany’s January industrial production and trade data will provide direction on Monday. A relatively quiet Tuesday sees French 4th quarter nonfarm payrolls due out, which will likely have a muted impact on the EUR. A forecasted slide in German industrial production could weigh on the Eurozone’s production figure, which is due out on Wednesday. Through the 2nd half of the week, finalized February inflation numbers are due out, though we would expect the numbers to be brushed aside. A particularly dovish ECB will pin focus on output in the week ahead.

The EUR/USD ended the week down 1.14% to $1.1235.

For the Pound:

January’s industrial and manufacturing production and trade figures are due out on Tuesday. Alongside the numbers are monthly GDP numbers to consider ahead of the NIESR GDP tracker later in the day.

Influence on the Pound will be short-lived, with parliament’s meaningful vote on Brexit the main event of the day and possibly the week. Consequently, a 2nd parliamentary vote could be on the cards for Thursday in the event that Theresa May’s Brexit deal gets thrown out.

Traditionally of influence, but likely to be less so this time around, are the annual budget release and spring forecast statement. Due out on Wednesday, influence will depend upon Tuesday’s meaningful vote.

The GBP/USD ended the week down 1.42% at $1.3015.

For the Loonie:

It’s a quiet week ahead on the data front. January house price figures and manufacturing sales are due out on Thursday and Friday. The house price figures are likely to be ignored. Manufacturing sales figures will need to be impressive to provide the Loonie with any support.

Outside of the numbers, market risk sentiment and impact on crude oil prices will need to be considered in the week. OPEC and the IEA will be releasing their monthly reports, which could spell trouble if forecasts for demand are lowered.

The Loonie ended the week down by 0.89% to C$1.3416 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

February business confidence figures are due out on Tuesday and consumer confidence numbers on Wednesday. Both sets of numbers will provide direction mid-week. Additionally, industrial production numbers out of China and updates on the U.S – China trade talks will also influence. The RBA held back from taking a more dovish stance, so this week’s numbers will need to stack up.

The Aussie Dollar ended the week down 0.48% at $0.7045.

For the Japanese Yen:

BSI larger manufacturing conditions figures for the 1st quarter are due out on Monday. The data is unlikely to have an impact on the Yen, which will continue to be driven by market risk sentiment. The markets will need to consider the BoJ’s monetary policy decision on Friday.

The Japanese Yen ended the week up 0.64% at ¥111.17 against the U.S Dollar.

For the Kiwi Dollar:

After a quiet week, economic data in the week ahead is limited to February electric card retail sales and Business PMI numbers. A hawkish RBNZ has left the Kiwi Dollar vulnerable to any disappointing numbers… Outside of the stats, expect U.S – China trade talks to also influence.

The Kiwi Dollar ended the week up 0.06% to $0.6804.

Out of China:

Economic data includes January’s fixed asset investment, industrial production, and retail sales figures. The focus will be on the production numbers that could deliver more doom and gloom.

Geo-Politics

U.S – China Trade War:  Expect more updates on trade talks. Risk appetite could weaken as news hits the wires of a delay to the late March Trump – Xi meeting.

Brexit: It’s a big week on the Brexit front. Parliament will vote on the Brexit deal on Tuesday. A vote to delay Brexit could follow Tuesday’s vote.

The Rest

On the monetary policy front,

For the JPY, The BoJ is unlikely to deliver any surprises on the policy front on Friday. The BoJ will likely hold off on any moves following the pickup in economic activity in the 4th quarter.

For the USD, FED Chair Powell will speak on Sunday night. Expect the Dollar to respond to any comments related to the economy or monetary policy.

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