The Economy Week Ahead – Earnings, Geopolitics, Monetary Policy and Stats in Focus

It’s another busy week ahead. Geopolitics will certainly test risk appetite early on, with earnings, the BoE and RBA, and economic data in focus.
Bob Mason
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On the Macro

For the Dollar:

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

September factory orders due out on Monday gets things going for the Dollar, with October service sector PMIs on Tuesday.

On the PMI numbers, the ISM Non-Manufacturing PMI for October will have the greatest influence.

In a relatively quiet 2nd half of the week, 3rd quarter nonfarm productivity and unit labor costs are due out on Wednesday.

On Friday, prelim November consumer sentiment and expectation figures wrap up the week.

We would expect trade data and JOLTs job opening numbers on Tuesday to have a muted impact on the Dollar.

The Dollar Spot Index ended the week down by 0.61% at $97.239.

For the EUR:

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

Finalized October manufacturing PMIs are due out of France, Germany, and the Eurozone on Monday. Barring any deviation from prelim, however, the focus will be on Spain and Italy’s PMIs.

After a quiet Tuesday, finalized service sector PMIs are due out of the Eurozone member states. We can expect the market focus to be on the Eurozone’s composite.

German factory order and Eurozone retail sales figures for September will also influence on Wednesday.

Through the rest of the week, German industrial production and trade data due out on Thursday and Friday will provide direction.

Outside of the numbers, the ECB will also release its Economic Bulletin for November that will garner some attention as Lagarde takes the helm.

The EUR/USD ended the week up by 0.78% to $1.1166.

For the Pound:

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

October construction and service sector PMI numbers are due out on Monday and Tuesday, along with October’s BRC Retail Sales Monitor numbers.

While the BRC number will draw attention, the private sector PMI numbers will have the greatest impact on the Pound.

While the stats will provide direction, the BoE monetary policy decision on Thursday is the main event.

The markets are not expecting a rate cut just yet, which leaves the Pound exposed to any unexpected dissent.

On the geopolitical front, chatter from the UK Parliament will need monitoring. The Pound will be sensitive to the polls going forward.

While the markets will be tracking the polls, the Autumn Budget on Wednesday will also influence.

The GBP/USD ended the week up by 0.93% to $1.2946.

For the Loonie:

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

September trade data due out will provide direction on Tuesday, ahead of October’s Ivey PMI due out on Wednesday.

After a quiet Thursday, the focus will then shift to October labor market numbers due out on Friday. Sensitivity to the stats will be on the rise following last week’s BoC rate statement.

We expect October housing starts and September building permit numbers to have a muted impact on Friday, however.

From elsewhere, stats out of China and the U.S will influence crude oil prices and ultimately the Loonie.

The Loonie ended the week down by 0.64% to C$1.3142 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a busy week ahead.

September retail sales figures, due out on Monday, will provide the Aussie Dollar with direction.

The market focus will then shift to the RBA. While the markets are not expecting a rate cut on Tuesday, the rate statement will need considering.

Hawkish chatter has continued to provide support to the Aussie Dollar, so anything dovish would weigh heavily.

In the 2nd half of the week, September trade data due out on Thursday will also influence ahead of the RBA’s monetary policy statement due out on Friday.

We would expect September home loan figures due out on Friday to have a muted impact on the day.

From elsewhere, expect private sector PMIs from the U.S and PMI numbers out of China to also influence.

On the geopolitical risk front, chatter on trade will also provide direction.

The Aussie Dollar ended the week up by 1.19% to $0.6904.

For the Japanese Yen:

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

October service sector PMI numbers are due out on Wednesday, ahead of September household spending figures due out on Friday.

The numbers will have a muted impact on the Yen, however, with market risk sentiment the key driver in the week.

The Japanese Yen ended the week up by 0.44% to ¥108.19 against the U.S Dollar.

For the Kiwi Dollar:

Stats are on the quieter side once more in the week ahead.

Economic data is limited to 3rd quarter employment numbers and the unemployment rate.

Expect the Kiwi Dollar to be particularly sensitive to the numbers that are due out on Wednesday.

Outside of the stats, chatter on trade will continue to provide direction in the week.

The Kiwi Dollar ended the week up by 1.23% to $0.6427.

Out of China:

It’s a relatively quiet week on the economic data front. October Caixin Service sector PMI is due out on Tuesday.

With the manufacturing sector in the doldrums, service sector activity will need to continue providing support. Weak numbers would test risk appetite mid-week.

Outside of the numbers, updates from Beijing and Washington on trade talks will ultimately drive risk sentiment in the week.

The Yuan ended the week up by 0.44% to CNY7.00342 against the Greenback.


Impeachment: Testimony continues behind closed doors. We’re still nowhere nearer to an actual impeachment, which should alleviate any immediate stress on the markets. Any increase in chatter and progress towards an impeachment and expect the markets to begin to react. Congress is off for the week, which leaves the focus on interviews that will continue.

Trade Wars: Unsurprisingly, Trump demanded China buy $50bn worth of agri goods as part of the phase 1 deal. Without Trump removing existing tariffs, however, this may prove to be a challenge without assurances Washington. There’s also the war against China tech stocks that will need to come to an end. News late last week of pessimism over the prospects of a longer-term agreement will test risk appetite. The markets will also want to know when phase 1 will be signed, after the cancellation of the mid-November Asia-Pac Summit.

UK Politics: Britain is heading back to the polls on 12th December in what will be a defining moment for the UK and the EU. Expect the bookies and the polls to begin and for the Pound to embark on a rollercoaster of a ride. Over the weekend, news hit the wires of the police presenting a case against Vote Leave to the Crown Prosecution Services. Boris Johnson, Dominic Cummings, and Michael Gove reportedly overspent in the EU Referendum campaign to leave the EU. The news will test the Pound and voter sentiment in the week.

The Rest

Earnings:  It’s another busy week on the earnings front. While just Walt Disney and CVS Health are big names to release, the sheer number of earnings due for release will influence.

Bank of England: The BoE delivers its November interest rate decision on Thursday. Expectations are for the BoE to leave rates unchanged. With Brexit now thrown into greater uncertainty and a general election in December, there’s little for the BoE to do until there’s greater clarity on what lies ahead.

Any dissenting on Thursday would influence, however.

The RBA: Ahead of the BoE policy decision, the RBA is also expected to leave rates unchanged on Tuesday. With the Aussie Dollar finding support in recent weeks, off the back of some hawkish chatter, the rate statement and monetary policy statement will garner plenty of attention.

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