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

Brexit, U.S – China trade talks, the Robert Mueller Report and a mass of economic data will provide the markets with plenty to consider in the week ahead.
Bob Mason
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On the Macro

For the Dollar:

Economic data is on the heavier side in the week ahead. March consumer confidence figures on Tuesday and 2nd estimate, 4th quarter GDP numbers on Thursday will be key drivers mid-week. A revision to January retail sales figures is expected to weigh on the GDP numbers…

A particularly busy Friday sees the FED’s preferred core PCE Price Index figures released. Personal spending and consumer sentiment figures will also provide direction on the day.

From the real estate sector, building permits, housing starts, pending home sales and new home sales figures will also be released through the week.

Outside of the data, trade talks between the U.S and China will in focus along with FOMC member chatter through the week.

The Dollar Spot Index ended the week up 0.06% to $96.651

For the EUR:

It’s a particularly busy week ahead for the EUR.  The week kicks off with business sentiment figures out of Germany. The focus will be on the Business Climate Index figure on Monday.

German consumer sentiment figures and French GDP numbers on Tuesday will also influence ahead of a busy Friday.

German and French retail sales figures and German unemployment figures will be the key drivers on Friday.

Prelim March inflation figures out of France, Germany, Italy, and Spain will unlikely have a material impact, barring a marked rise in inflationary pressure.

Other stats through the week include 4th quarter GDP numbers out of Spain, which will also be largely ignored by the broader market.

Outside the stats, ECB President Draghi could hit the EUR in a scheduled speech on Wednesday.

The EUR/USD ended the week down 0.21% to $1.1302.

For the Pound:

A relatively quiet week ahead leaves the Pound in the hands of Brexit chatter and an anticipated Parliamentary vote on Theresa May’s deal ahead of key stats due out on Friday.

2nd estimate, 4th quarter GDP and business investment figures will influence the Pound on Friday. Barring a material deviation from prelim figures, however, Brexit progress will remain the key driver.

The GBP/USD ended the week down 0.61% at $1.3209.

For the Loonie:

January trade data due out on Wednesday and GDP numbers due out on Friday will be the key drivers in the week.

Of lesser influence will be February’s RMPI figures due out on Friday.

The markets will be looking for a pickup in activity to support a possible shift the Bank of Canada’s outlook on monetary policy

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

The Loonie ended the week down by 0.70% to C$1.3429 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a particularly quiet week. February private sector credit figures due out on Friday is the only stat to consider.

Outside the numbers, the RBA commentary on Tuesday and Wednesday could influence mid-week.

With the U.S – China trade talks to resume in the week ahead, risk sentiment will likely remain the key driver.

The Aussie Dollar ended the week down 0.03% at $0.7083.

For the Japanese Yen:

It’s a quieter week on the data front, with no material stats scheduled for release until Friday. Stats on Friday include March inflation figures, and February retail sales and industrial production figures.

While we can expect Friday’s figures to have some influence, market risk sentiment will be the key driver throughout the week.

The Japanese Yen ended the week up 1.40% to ¥109.92 against the U.S Dollar.

For the Kiwi Dollar:

Economic data scheduled for release includes February trade data on Tuesday and March consumer confidence numbers on Thursday.

Of less influence will be building consent figures due out on Friday.

Outside of the stats, the RBNZ monetary policy decision and forward guidance will be the key driver on Wednesday. The RBNZ is expected to leave rates unchanged, making the press conference and rate statement the main area of focus.

The Kiwi Dollar ended the week up 0.48% to $0.6879.

Out of China:

There are no material stats scheduled for release, leaving progress on the U.S – China trade talks to influence risk sentiment in the week. A U.S delegate is scheduled to be in Beijing for talks on Thursday and Friday.

Geo-Politics

U.S – China Trade War:  Expect more updates on trade talks. The markets will be looking for a resolution to outstanding issues to pave the way for a Trump – Xi Trade Summit.

Brexit: It’s do or die for the Pound. One more Parliamentary vote on Theresa May’s deal next week is expected following the EU’s extension ‘till 22nd May.

Robert Mueller: A possible curveball. With the U.S President having avoided any interviews, anything is possible and needs to be monitored.

The Rest

On the monetary policy front,

For the NZD, the RBNZ will deliver its March monetary policy decision. Will they maintain their hawkish outlook or take a step back? If January’s trade figures and consumer sentiment figures are anything to go by, there may be a more tempered outlook… Much will depend on February trade data due out on Tuesday.

For the USD, FOMC member commentary could provide direction, though there will need to be some hawkish chatter to provide Dollar support.

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