The Week Ahead – Brexit, Italy, Trade Talks and Policy Meeting Minutes in Focus

On the Macro

For the Dollar. Stats for the week ahead include October housing sector data on Tuesday and Wednesday, along with October durable goods orders numbers, the weekly jobless claims and finalized November consumer sentiment numbers due out on Wednesday, with November’s prelim private sector PMI numbers on Friday to also provide direction. Outside of the stats, Trade talks, FOMC member commentary and geo-political risk in Europe will also influence. It’s a shortened week with the Thanksgiving holidays. The Dollar Spot Index ended the week down 0.49% to $96.427.

For the EUR, Key stats for the week ahead include prelim consumer confidence figures out of the Eurozone on Thursday and November’s prelim private sector PMI numbers due out on Friday, with wholesale inflation numbers out of Germany unlikely to have a material impact on Tuesday. Outside of the stats, the ECB policy meeting minutes and EU Commission decision on Italy will be of greater influence. The EUR/USD ended the week up 0.70% to $1.1415.

For the Pound, Economic data for the week ahead is limited to November CBI Industrial Trend Order numbers on Tuesday that will have a relatively muted impact on the Pound, with BoE governor Carney and the inflation hearings in the spotlight on Tuesday. While Carney and inflation may provide some direction, it will continue to come down to progress on Brexit and Theresa May’s survival through the week. The GBP/USD ended the week down 1.06% to $1.2834.

For the Loonie, it’s a busier week ahead with September wholesale sales figures to provide some direction ahead of Friday’s October inflation and September retail sales figures that will be the key driver through the week. Outside the stats, we can expect some direction from crude oil prices and general market risk appetite. The Loonie ended the week up 0.48% to C$1.3148 against the U.S Dollar.

Out of Asia, it’s a quiet week ahead.

For the Aussie Dollar, there are no material stats scheduled for release through the week, leaving the RBA meeting minutes release on Tuesday the main area of focus, though we can U.S – China trade talks and sentiment towards the global economy in general to influence, private sector PMI numbers out of Europe and the U.S to provide some sense of where the economies are heading in the 4^th quarter. The Aussie Dollar ended the week up 1.47% to $0.7332.

For the Japanese yen, key stats through the week are limited to October trade figures on Monday and October inflation figures on Thursday, a trade deficit unlikely to be too alarming following the natural disasters and storms that plagued productivity. The inflation figures are also unlikely to give too many surprises, which should leave the Yen in the hands of risk sentiment. Outside of the numbers, BoJ Governor Kuroda is scheduled to speak at the start of the week. The Japanese Yen ended the week up 0.88% to ¥112.83 against the U.S Dollar.

For the Kiwi Dollar, stats are limited to 3^rd quarter wholesale inflation numbers due out on Monday that will provide direction, with moves through the rest of the week likely to be hinged on U.S – China trade talks. The Kiwi Dollar ended the week up 2.09% to $0.6878.

Out of China, there are no material stats due out, leaving the markets to focus on trade talks with the U.S.

Geo-Politics

Brexit: The Pound continues to bounce around as Brexit chatter swings from hopes of a deal to no deal, parliament now seeming to be the biggest threat to Britain being able to depart the EU with some form of a deal. We can expect another major move in the Pound in the week ahead. Could the British PM, who took the job that no one wanted, be ousted this week as a threat of a no confidence vote lingers?

U.S – China Trade War:  U.S President Trump hints of a possible trade agreement that may well be in everyone’s best interest, talks of an agreement likely to boost risk appetite and ease demand for the Greenback, with the recent progress suggesting that the January 2019 tariffs may be put on ice.

Italy: The EU Commission decision on Italy is due on Wednesday and, with the Italian government seemingly unwilling to compromise, could there be sanctions and more that could see yield spreads between German and Italian government bonds break through 400 bps to rock the markets?

Saudi Sanctions: Sanctions on 17 officials linked to Kashoggi’s murder were announced last week. It remains to be seen whether that’s where it stops, Democrats likely to call for more than a slap on the wrist, particularly if the Crowned Prince is implicated.

Mueller Investigations: Mueller gets the green light from newly appointed acting Attorney General Whitaker to proceed, with the investigation reportedly reaching its final stages, which could give the markets some angst ahead of any final findings release, particularly with the Democrats now running the House.

The Rest

On the monetary policy front, the RBA and ECB monetary policy meeting minutes, due out on Tuesday and Thursday respectively will have an impact on the respective currencies, economic growth prospects for both in question at present, any dovish sentiment and expect a reversal of last week’s gains. For the greenback, we can expect some more FOMC member chatter, some dovish comments having crept in of late that has weighed on the Dollar.