The Week Ahead – Brexit, the FED and the G20 to Hit the Markets

It’s a big week ahead, with news from the EU Summit on Brexit, Brexit news, the FED’s meeting minutes and the G20 in focus through the week.
Bob Mason
week ahead

On the Macro

For the Dollar, it’s a busy week ahead, with key stats including consumer confidence figures on Tuesday, finalized 3rd quarter GDP and new home sales figures on Wednesday, pending home sales, October inflation and consumer spending on Thursday and PMI numbers on Friday. Outside of the stats, the FOMC meeting minutes on Thursday, FOMC member chatter and the G20 Summit will also provide direction. The Dollar Spot Index ended the week up 0.47% to $96.916.

For the EUR, key stats include German business expectations figures out on Monday, consumer confidence and unemployment figures out of Germany on Wednesday and Thursday, with prelim November inflation out of Spain, France, Germany, Italy and the Eurozone due out on Thursday and Friday, with German retail sales figures and the Eurozone’s unemployment rate on Friday also there to consider. Outside the stats, ECB President Draghi will be speaking on Monday, with EU Summit reports from the weekend to also consider.  The EUR/USD ended the week down 0.68% to $1.1337.

For the Pound, it’s a particularly light week on the data front, with stats limited to UK mortgage approvals, which will provide little direction for the Pound, focus expected to be on Brexit, with updates from the EU Summit over the weekend to influence early ahead of a Carney speech late in the day on Monday. The BoE will also be delivering its view on the draft Brexit deal on Thursday. The GBP/USD ended the week down 0.16% to $1.2814.

For the Loonie, economic data is limited to GDP and October RMPI numbers due out on Friday, which will hit the Loonie at the end of the week, while market jitters over trade talks between the U.S and China and the direction of crude oil prices will also influence. The Loonie ended the week down 0.68% to C$1.3238 against the U.S Dollar.

Out of Asia, it’s a busy week ahead.

For the Aussie Dollar, data includes 3rd quarter construction work done due out on Wednesday, new home sales and new CAPEX figures due out on Thursday, with October private sector credit numbers due out on Friday. Outside of the numbers, chatter over the U.S – China trade war will also influence ahead of the G20 Summit that gets underway on Friday. The Aussie Dollar ended the week down 1.35% to $0.7233.

For the Japanese yen, stats through the week include prelim November manufacturing figures on Monday, October retail sales figures on Thursday, with industrial production inflation and unemployment numbers due out on Friday. While we can expect the Yen to find some direction of the numbers on Thursday and Friday, market risk sentiment will remain the key driver, with focus likely to be on the FED and the G20 Summit. The Japanese Yen ended the week down 0.12% to ¥112.96 against the U.S Dollar.

For the Kiwi Dollar, data due out includes 3rd quarter retail sales figures on Monday, October trade numbers on Tuesday, with November business confidence and October building consents due out on Thursday and Friday. We can expect the first half of the week numbers to have the greatest influence. The Kiwi Dollar ended the week down 1.41% to $0.6781.

Out of China, the markets will need to wait until Friday, with the start of the G20 Summit coinciding with the release of November’s private sector PMIs. While a forecasted pick up in manufacturing activity would provide some direction, it will ultimately boil down to the Trump – Xi face off at the G20.

Geo-Politics

Brexit: The weekend’s EU Summit and the BoE’s delivery on Thursday of its impact analysis of the Brexit deal on the UK economy and financial stability will be the key driver, following the EU Summit over the weekend where Britain is looking to garner the necessary member state support to take it to Parliament. Expect plenty of volatility, with those against the draft likely to raise doubts over a vote in favour of the deal should 20 member states support the draft.

U.S – China Trade War:  It’s the G20 Summit and, while few are expecting a resolution, progress is going to be needed to ease market jitters. The Summit kicks off on Friday and ends on Saturday.

Italy: With the EU Commission preparing for disciplinary action, some caution is needed in the week ahead, any retaliatory responses from the Italian coalition government likely to hit the EUR in the wake of the EU Summit over the weekend.

Saudi Sanctions: Looks like the Saudi Crown Prince has avoided retribution for Kashoggi’s murder, but that has provided little support to crude that has continued to slide ahead of OPEC’s meeting.

The Rest

On the monetary policy front, the FED’s monetary policy meeting minutes on Thursday will be in focus, any member concerns over the U.S economic outlook likely to pin back rates and yields, with FED Chair Powell and a slew of FOMC member speeches scheduled for the week.

Other central banks in focus will include the BoE, who will be delivering its views on the draft Brexit deal on Thursday, a Carney speech on Monday, with ECB President Draghi and team also scheduled to speak through the day on Monday.

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