The Week Ahead – Earnings, Geopolitics and Stats to Drive the Majors

It’s another big week for the global financial markets, Corporate earnings, Brexit, trade and economic data in Focus. It’s also Draghi’s last media show…
Bob Mason
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On the Macro

For the Dollar:

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

September existing home sale figures, due out on Tuesday, get things going. Barring dire numbers, however, we would expect the stats to have a muted impact on the Dollar.

A lack of stats on Wednesday will leave the Dollar in the hands of geopolitics ahead of a busy day on Thursday.

Prelim private sector PMIs, durable goods orders and new home sales will provide direction on the day.

We would expect September core durable goods orders and prelim service sector PMI figures to be the key driver.

Finalized October consumer expectation and sentiment figures wrap up the week. Barring a material deviation, the Dollar will likely brush aside the numbers on the day.

The Dollar Spot Index ended the week down by 1.04% at $97.282.

For the EUR:

It’s also a busy week ahead on the economic data front.

October private sector PMI numbers kick things off on Thursday. After a quiet start to the week, the EUR will be particularly sensitive to the numbers.

Barring a surprise move by the ECB, the last minutes suggest that the ECB is on hold this week, which should limit any influence.

The market focus will then shift to German consumer and business climate figures due out on Friday.

While progress on the U.S – China trade talks have been positive, we would expect doubts to creep in over a quick turnaround in the Eurozone economy.

There is also the renewed uncertainty over Brexit to test the EUR.

The EUR/USD ended the week up by 1.13% to $1.1167.

For the Pound:

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

Economic data was limited to October CBI Industrial Trend Orders due out on Tuesday.

We would expect the numbers to have a muted impact, however, with Brexit the key driver.

There’s the World Bank in focus. While trade remains a key agenda for both, the immediate focus is on Brexit. While the request for an extension should ease any immediate fears, Parliament’s failure to deliver raises the chances of a snap general election. A Johnson victory would likely deliver a no-deal Brexit. The Pound wouldn’t like that…

The GBP/USD ended the week up by 2.49% to $1.2984.

For the Loonie:

It’s a relatively quiet week ahead on the data front.

August retail sales figures, due out on Tuesday, are the key driver for the week. Sales figures are Loonie positive.

Wholesale sales figures, due out on Wednesday, will likely have a muted impact, however.

Outside the numbers, trade talk and economic data out of China are the key drivers in the week. There’s also the Canadian election to factor in…

The Loonie ended the week up by 0.58% to C$1.3127 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a particularly quiet week ahead.

There are no material stats due out of Australia to provide the Aussie Dollar with direction.

A lack of stats leaves the Aussie in the hands of PBoC monetary policy and risk sentiment throughout the week.

Trade talks are far from over and expect chatter to continue to influence.

The Aussie Dollar ended the week up by 0.91% to $0.6856.

For the Japanese Yen:

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

Key stats are limited to September trade data due out on Monday.

We would expect the stats to have a relatively muted impact on the Yen, however.

Geopolitics and economic data out of the U.S and China will continue to have the greatest impact in the week.

The Japanese Yen ended the week down by 0.15% to ¥108.45 against the U.S Dollar.

For the Kiwi Dollar:

Stats are also on the quieter side in the week ahead.

Economic data is limited to September trade data due out on Wednesday. With stats on the quiet side, expect the Wednesday numbers to have a material impact. If recent economic indicators are anything to go by, the Kiwi could come under pressure early on.

Sentiment towards trade will need to improve to provide support.

The Kiwi Dollar ended the week up by 0.71% to $0.6382.

Out of China:

It’s a quiet week on the economic data front. There are no material stats due out, leaving the focus on the PBoC on Monday and trade chatter in the week.

The Yuan ended the week up by 0.11% to CNY7.0817 against the Greenback.

Geo-Politics

Impeachment: With Brexit and Trade news continuing to grab the headlines, it’s been on the quieter side. Some vigilance is required, however, as any rise in threat of an impeachment would be a further negative for the Greenback and the U.S equity markets.

Trade Wars: Following disappointing GDP numbers out of China last week, positive progress on a draft trade agreement is going to be needed to support risk sentiment. Trade tariffs are still in effect and economic data and business and consumer sentiment continue to wane. We can expect the markets to continue to react to any updates in the week ahead.

UK Politics: The UK Parliament voted down Johnson’s version of the Brexit agreement. That ultimately affirms the view that Parliament is too divided for any form of a deal to be ratified. On that basis, in the interest of democracy, a general election or a 2nd referendum looks to be the only way forward. With Johnson’s success at renegotiating a new agreement, a general election may well fall Johnson’s way. Labour and the Lib Dems will look for a 2nd referendum to avert a no-deal Brexit that Saturday’s vote raised the prospects of… Any suggestions of a general election would sink the Pound…

The Rest

Earnings:  It’s a big week on the earnings front, with U.S tech companies, Amazon.com, Boeing, and Caterpillar amongst the companies in focus.

ECB monetary policy: The ECB delivers its October monetary policy decision on Thursday. Following last month’s mixed messages and some resistance to further easing by influential members, this month’s press conference will be telling.  A number of members will look to rein in the looseness of policy. It’s Draghi’s final press conference…

Canadian Elections: Will there be any shock result in this week’s election? While we expect the Loonie to be responsive, Canadian stocks will likely show the greatest reaction to the election outcome.

Polls from Friday showed that it was too close to call on who will come out on top…

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