The Week Ahead – Brexit, the ECB, China GDP Numbers and Trade in Focus

It’s not just China’s economy that the markets are concerned with. An end to the government shutdown and more progress on trade talks is needed.
Bob Mason
Week ahead

On the Macro

For the Dollar, key stats are limited to December existing home sales on Tuesday, prelim January private sector PMI and the weekly jobless claims figures on Thursday and advanced December durable goods figures on Friday. Expect the durable goods and private sector PMI figures to have the greatest impact on the data front. Outside the numbers, trade talk and the extended government shutdown will also influence. The Dollar Spot Index ended the week up 0.70% to $96.336.

For the EUR, stats include economic sentiment numbers out of Germany and the Eurozone on Tuesday, prelim January private sector PMI numbers out of France, Germany and the Eurozone on Thursday and business sentiment figures out of Germany on Friday. Outside the numbers, the ECB’s first policy decision of the year is slated for Thursday, with the Draghi press conference likely to be on the dovish front, irrespective of the stats through the week. The EUR/USD ended the week down 0.92% to $1.1363.

For the Pound, key stats are limited to employment numbers due out on Tuesday and January industrial trend orders on Wednesday. We will expect some response to the earnings and claimant count figures, while direction through the week will ultimately be hinged on Brexit. Will there be a plan B and will there be support for it, or is it going to be another Referendum? These are the questions ahead of a scheduled 29th January parliamentary vote. The GBP/USD ended the week up 0.22% to $1.2872.

For the Loonie, November manufacturing and wholesale sales figures on Tuesday and November retail sales figures on Wednesday will provide direction, following the jump in inflation. Impressive numbers could reignite hopes of a more hawkish BoC, particularly if progress is made on trade talks between the U.S and China. The Loonie ended the week up 0.05% to C$1.3260 against the U.S Dollar.

Out of Asia, it’s a busier week ahead.

For the Aussie Dollar, a quiet week ahead leaves December employment figures due out on Thursday the key driver. Elsewhere, China’s GDP figures on Monday will also influence, any weakness to be AUD negative, though the blow could be softened should trade talks progress and agreements start rolling out. The Aussie Dollar ended the week down 0.65% to $0.7168.

For the Japanese yen, economic data includes December trade figures on Wednesday and January inflation figures out of Tokyo on Friday. Barring anything particularly impressive, we can expect China’s GDP numbers, progress on trade talks, Brexit and corporate earnings to have the final say on the Yen. The BoJ’s first monetary policy decision of the year is not expected to deliver any surprises. The Japanese Yen ended the week down 1.20% to ¥109.78 against the U.S Dollar.

For the Kiwi Dollar, stats are limited to 4th quarter inflation figures due out on Wednesday that will influence. Direction through the week will ultimately be down to market risk sentiment however, which will be in the hands of China’s 4th stats on Monday and updates from the Oval Office and Beijing on trade talks. The Kiwi Dollar ended the week down 1.30% to $0.6743.

Out of China, it’s a big week on the data front, with key stats including 4th quarter GDP, December retail sales, industrial production and fixed asset investment figures, the numbers due out on Monday morning. While we can expect heightened sensitivity to any weaker growth numbers, the markets may be able to stomach it should the U.S and China wrap up trade negotiations with a concrete agreement.


Brexit: Hopes are that there will be an extension and a deal for Parliament to vote for on the 29th January. Expect the Pound to be particularly sensitive to chatter from Parliament. If there’s no talk of an extension and if Plan B looks very much like Plan A, the Pound could be in for a rough ride, the only saviour being more talk of a second referendum that would be Pound positive.

U.S – China Trade War:  Updates were positive at the end of last week and there may well be more progress in the week ahead to provide support for risk appetite. The markets will likely need something more concrete than the odd statement from a U.S administration that has been known to issue contradictory messages.

U.S Government Shutdown: The extended and longest government shutdown in U.S history will have begun to take its toll on the economy and, if there’s no resolution in sight, the Dollar could begin to pay. Things are fluid at the time of writing, as compromises get rejected.

The Rest

On the monetary policy front,

For the EUR, Thursday’s ECB policy decision will be in focus. Economic data released ahead of Thursday’s press conference unlikely to have a material impact on Draghi’s outlook. While policy will be on hold, with the ECB unlikely to give any indications on when it will make a move, Brexit, the U.S government shutdown, economic data out of China and progress on trade talks will also provide reasons for caution.

For the Japanese Yen, expect no surprises here, there’s little to no cause for the BoJ to change course.

DAVOS: World leaders, with the exception of Trump, Theresa May and Macron, will be there and it may turn out to be a dull affair without Mogul present to ruffle the feathers.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.