The Week Ahead – Brexit, the FED, the Stats, and Trade Talks in Focus

On the Macro

For the Dollar

Economic data is on the lighter side in the week ahead. January factory orders, due out on Tuesday, kick-off the week. March Philly FED Manufacturing Figures and the weekly jobless claims figures on Thursday will have a greater influence. Prelim private sector PMI numbers and February new home sales due out on Friday will also need to be monitored.

Outside of the data, the FED’s March monetary policy decision will be the key driver for the Dollar. While rates are likely to be left untouched, the economic projections and outlook on policy will be key.

The Dollar Spot Index ended the week down by 0.73% to $96.595

For the EUR

It’s a busy week ahead for the EUR. In the early part of the week, Eurozone trade figures on Monday and economic sentiment and wage growth figures on Tuesday will be the key drivers. A lack of stats mid-week will leave the EUR in the hands of market risk sentiment ahead of a busy Friday. Prelim March private-sector PMI numbers will be key for the week, Germany’s manufacturing PMI likely to be the main area of focus. Outside of the numbers, the ECB Economic Bulletin on Thursday will also provide the EUR with direction.

The EUR/USD ended the week up 0.81% to $1.1326.

For the Pound

It’s a particularly busy week ahead. Employment and wage growth figures kick the week off on Tuesday. February inflation figures will be the key driver on Wednesday ahead of a busy Thursday. February retail sales figures are released on Thursday ahead of the BoE’s March monetary policy decision.

Outside of the stats and BoE policy decision, Theresa May’s Brexit deal will materially influence the Pound as will any EU member state vote on a Brexit delay submission.

The GBP/USD ended the week up 2.11% at $1.3290.

For the Loonie

It’s a busier week than normal. January wholesale sales figures on Thursday will be in focus ahead of a busy Friday. Stats due out of Canada on Friday include February inflation and January retail sales figures.  We can expect both sets of figures to have a material impact. Foreign securities purchases released at the start of the week will likely be ignored.

Outside the numbers, we can expect risk sentiment and crude oil prices to also provide direction.

The Loonie ended the week up by 0.60% to C$1.3336 against the U.S Dollar.

Out of Asia

For the Aussie Dollar

Economic data is limited to 4^th quarter house price figures due out on Monday and February employment figures on Thursday. The employment numbers will be the key driver from the data side.

Outside the numbers, the RBA will also release the RBA meeting minutes on Tuesday. Following a more hawkish than anticipated Statement, the minutes could provide a more dovish outlook should there be any reference to the prospects of a rate cut. Finely balanced will be the sentence to look out for.

The Aussie Dollar ended the week up 0.57% at $0.7085.

For the Japanese Yen

Trade due out on Monday will have a material impact on risk sentiment. February inflation figures due out on Friday will likely have less influence at the end of the week. Barring deviation from prelim figures, finalized industrial production numbers on Monday will likely be ignored.

Outside of the numbers, expect market risk sentiment to also provide direction through the week.

The Japanese Yen ended the week down 0.28% at ¥111.48 against the U.S Dollar.

For the Kiwi Dollar

Economic data scheduled for release includes 1^st quarter consumer sentiment figures on Tuesday and 4^th quarter GDP numbers on Thursday. We would expect 4^th quarter current account figures due out on Wednesday to have a muted impact.

Outside of the stats, expect market risk sentiment to also provide direction through the week.

The Kiwi Dollar ended the week up 0.62% to $0.6846.

Out of China

There are no material stats due out this week. The U.S – China trade talks will continue to influence risk sentiment in the week.

Geo-Politics

U.S – China Trade War:  Expect more updates on trade talks. The markets will be looking for a Summit to signal an agreement on trade terms.

Brexit: It’s a big week on the Brexit front. Another Brexit deal vote is due to take place. A vote in favor of the deal would then lead to a 3-month extension to Brexit request. A vote against and expect chaos ahead… Interestingly, EU member states must all agree on any extension. They may press for a much longer extension than 3-months…

The Rest

On the monetary policy front,

For the AUD, the RBA meeting minutes on Tuesday could give more color on the RBA’s outlook on rates for the year. Any talk of a finely balanced move either up or down could weigh on the Aussie. The RBA Statement had failed to mention the chances of a rate cut, which provided support at the start of the month.

For the GBP, Thursday’s monetary policy decision is not expected to deliver too many surprises. The BoE will likely hold off on making any hints or moves until there is some clarity on Brexit.

For the USD, Wednesday’s FOMC decision will provide direction, though the key driver will be the FOMC projections and press conference.