The Week Ahead – COVID-19 Vaccine News, Brexit, and U.S Stimulus in Focus

On the Macro

It’s a quiet and shortened week ahead on the economic calendar, with 31 stats in focus in the week ending 25^th December. In the week prior, 92 stats had been in focus.

For the Dollar:

It’s another busy week ahead on the economic data front, however, with U.S stats making up the lion’s share of the calendar.

On Tuesday, finalized 3^rd quarter GDP and November existing home sales figures are due out.

Barring a marked downward revision to GDP numbers, the stats should have a muted impact on the Dollar.

On Wednesday, November inflation, personal spending, and new home sales figures are due out. Expect inflation and personal spending figures to garner the greatest interest.

Finalized consumer sentiment figures for December are also due out, which should have limited influence.

On Thursday, November core durable goods and durable goods orders are due out along with the weekly jobless claims figures.

In a shortened session, expect the core durable goods orders and jobless claims figures to have the greatest impact on market risk sentiment.

Away from the economic calendar, Capitol Hill remains a key area of interest.

The Dollar Spot Index ended the week down by 1.06% to 90.016.

For the EUR:

It’s a particularly quiet week ahead on the economic data front, with most European markets closed on Thursday and Friday. Just France and Spain have a shortened session on Thursday, with Germany and Italy closed on both days.

Flash Eurozone consumer confidence figures will draw interest on Monday. An upward movement is expected, with COVID-19 vaccine news to provide support.

On Tuesday, GfK Consumer Climate figures for January are due out, which will likely provide further EUR support. COVID-19 vaccine news should also support a pickup in consumer sentiment at the turn of the year.

Finalized 3^rd quarter GDP numbers from Spain, however, should have a muted impact on the EUR on Wednesday.

Away from the economic calendar, COVID-19 and Brexit news will also influence.

The EUR ended the week up by 1.20% to $1.2257.

For the Pound:

It’s a relatively busy week ahead on the economic calendar.

Finalized 3^rd quarter GDP numbers are due out on Tuesday, along with current account and finalized business investment figures.

Barring marked revisions from prelim estimates, the markets will likely brush aside the stats in the week.

Away from the economic calendar, updates on Brexit and COVID-19 will influence before the holidays.

The Pound ended the week up by 2.27% to $1.3524.

For the Loonie:

It’s a relatively quiet week ahead on the economic calendar.

On Wednesday, October GDP figures are due out ahead of November building permit numbers on Thursday.

Expect the GDP figures to garner the greatest interest.

It’s a shortened week for the Loonie, with the Canadian market on a shortened day on Thursday and closed on Friday.

Away from the economic calendar, COVID-19 vaccine news and updates from Capitol Hill will also influence.

The Loonie ended the week down by 0.15% to C$1.2788 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a quiet week ahead on the economic calendar.

Retail sales figures for November are due out on Tuesday. Expect plenty of influence from the retail sales figures in the early part of the week.

COVID-19 vaccine news updates and sentiment towards the economic outlook will be the key driver in a shortened week.

Late last week, news of a COVID-19 cluster in Sydney weighed on the Aussie Dollar. Expect further updates from the weekend to also influence.

The Aussie Dollar ended the week up by 1.18% to $0.7622.

For the Kiwi Dollar:

It’s a particularly quiet week ahead on the economic calendar.

There are no material stats due out in a shortened week to provide the Kiwi Dollar with direction.

The lack of stats will leave the Kiwi Dollar in the hands of COVID-19 news updates and geopolitics.

It’s also a shortened, with the Kiwi markets on an early close on Thursday and closed on Friday.

The Kiwi Dollar ended the week up by 0.73% to $0.7136.

For the Japanese Yen:

It is a relatively busy week on the economic calendar.

December inflation figures are due out along with November retail sales and employment figures on Friday.

With other major markets closed on the day, lower volumes will likely make the Yen more sensitive to the numbers.

Expect November retail sales figures to have the greatest impact.

Away from the economic calendar, COVID-19 news updates will remain a key driver.

The Japanese Yen ended the week up by 0.71% to ¥103.30 against the U.S Dollar.

Out of China

It’s a quiet week ahead on the economic data front, with no economic data due out to influence risk sentiment.

The PBoC is in action at the start of the week, however, though the markets are expecting Loan Prime Rates to remain unchanged.

The Chinese Yuan ended the week up by 0.10% to CNY6.5400 against the U.S Dollar.

Geo-Politics

U.S Politics

With the holidays rapidly approaching, government funding and the stimulus package remain high on the agenda.

Expect plenty of market sensitivity to political updates from Capitol Hill. There was a lack of progress on Saturday, which could test risk appetite should lawmakers fail to make inroads on Sunday.

Brexit

There are less than 2-weeks remaining for Britain and the EU to come up with an agreement.

While the transition period ends on 31^st December, however, talks would likely continue if an agreement isn’t reached. It may be of little consolation for the Pound in the week ahead, however.

Much will depend on the messaging between now and the holidays. Until now, the EU has looked to place a more positive spin on talks. A similar sentiment from the British government should, therefore, be Pound positive.

Going into today, there was nothing positive to suggest a deal before the holidays…