The Week Ahead – Economic Data and Geopolitics to Keep Things Interesting

It may be a shortened week once more, but it’s unlikely to be as lackluster as the week prior. Economic data, trade, and Brexit will be in focus.
Bob Mason
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On the Macro

It’s a relatively quiet week ahead on the economic calendar, with 27 stats to monitor. In the previous week, just 13 stats had been in focus.

With many of the markets shut through the middle part of the week, volumes will be on the lighter once more, particularly across the European and U.S markets.

For the Dollar:

Key stats include November goods trade and pending home sales figures due out on Monday and December consumer confidence figures due out on Tuesday.

We can expect December’s Chicago PMI to also influence early in the week.

With a large number the major global financial markets on half days on Tuesday and closed on Wednesday, volumes will be on the lighter side.

The focus will then shift to Thursday’s weekly initial jobless claims figures and Friday’s ISM manufacturing PMI numbers for December.

We would expect the Markit survey’s finalized manufacturing PMI for December and October house price figures to have a muted impact in the week.

On the geopolitical front, updates from the U.S and China on the imminent signing of the Phase 1 Trade Agreement will also influence.

The Dollar Spot Index ended the week down by 0.79% to $96.919.

For the EUR:

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

On Monday, November retail sales figure out of Germany will be the key driver at the start of the week. Consumer spending remains a key contributor to growth in the region. Expect any weak numbers to weigh heavily on the EUR.

With the major markets either on half-days or closed on Tuesday and closed on Wednesday, the focus then shifts to Thursday.

December manufacturing PMI numbers are due out of Italy and Spain. Finalized figures are also due out of France, Germany, and the Eurozone.

Expect any revision to Germany and the Eurozone’s PMI numbers to have the greatest impact on the EUR.

On Friday, German unemployment numbers for December wrap things up for the week. In the prelim December PMI survey, employment growth across the Eurozone had slowed to a 5-year low.

Expect plenty of EUR sensitivity to any disappointing numbers that could raise the prospects of a pullback in spending.

Outside of the stats, any chatter from Beijing or Washington on trade would need to be considered.

Do note that German and Italian markets are closed on 31st December, with France on a half-day. The European markets are all closed on 1st January.

The EUR/USD ended the week up by 0.88% to $1.1177.

For the Pound:

It’s another quiet week ahead on the economic calendar. Finalized manufacturing PMI for December is due out on Thursday, with the construction PMI due out on Friday.

Barring any deviation from prelim, the construction PMI will be the key driver on the day.

While the stats will influence, the focus will continue to be on Brexit. While Parliament is in recess until 5th January, there are few that doubt a Boris Johnson loss after 3-days of debate in the 2nd week of January.

The bigger issue will be the EU’s ability to deliver its list of demands by 1st February. We can expect plenty of chatter from member states to test the Pound and the EUR.

The UK markets are on a half-day on Tuesday and closed on Wednesday.

The GBP/USD ended the week up by 0.61% to $1.3078.

For the Loonie:

It’s a particularly quiet week ahead on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction.

A lack of stats leaves the Loonie in the hands of risk appetite and influence on crude prices. While support continues to come from the USMCA and Phase 1 trade agreement between the U.S and China, much will depend upon monetary policy.

Economic data has been far from impressive. Until there is a shift in the BoC and Governor Poloz’s stance, however, the Loonie could start eyeing sub-C$1.30 levels.

The Loonie ended the week up by 0.62% to C$1.3079 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s another quiet week ahead.

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

The lack of stats leaves the Aussie Dollar in the hands of market risk appetite and economic data out of China.

China’s private sector PMI figures for December are due out on Tuesday and Thursday. While the markets will be in a forgiving mood, with the phase 1 agreement due to be signed in the coming weeks, any dire numbers will test appetite for riskier assets.

The Aussie Dollar ended the week up by 1.16% to $0.6980.

For the Kiwi Dollar:

There are no stats due out of New Zealand in the week ahead. With the NZ markets closed on Wednesday and Thursday, expect volumes to be on the lighter side.

We saw the Kiwi Dollar hit the highest level since late July last week. Support had come from positive updates from the U.S and China on the phase 1 trade agreement.

Suggestions are that the RBNZ will be able to hold back from a rate cut in Q1, as it looks to assess the impact of the trade agreement on Kiwi trade terms.

While the lack of stats remains Kiwi positive, the reality is that tariffs remain as the U.S and China look to enter phase 2.

Economic data out of China on Tuesday and Thursday will influence, though the effect of dire numbers may be limited.

The Kiwi Dollar ended the week up by 1.52% to $0.6699.

For the Japanese Yen:

It’s a quiet week on the economic calendar. There are no material stats to provide the Yen with direction.

Volumes will be on the lighter side, with the Japan markets closed on Tuesday, Thursday and Friday.

The direction in the week ahead will come from market risk appetite. Barring any shock events, it may ultimately boil down to chatter from the Oval Office and Beijing.

The Japanese Yen ended the week flat at ¥109.44 against the U.S Dollar.

Out of China

It’s a relatively busy week on the economic data front. December private sector PMI figures are due out on Tuesday and Thursday.

While Tuesday’s NBS PMI numbers will influence, the Caixin Manufacturing PMI due out on Thursday will have the greatest impact.

The Yuan ended the week up by 0.15% to CNY6.9957 against the Greenback.


Impeachment: While there’ll be no action in the week ahead, the news wires and the U.S President have been far from quiet. At the end of the day, however, there’s unlikely to be too much influence on the global financial markets. The Republicans have the majority and are extremely unlikely to oust Trump, irrespective of any testimony presented.

Trade Wars: The markets are now awaiting the official signing date of the phase 1 agreement. While the phase 1 agreement led to record highs across the European and U.S major indexes, the focus may well begin to shift to phase 2. If phase 1 is a benchmark, phase 2 is unlikely to come to a swift conclusion. News of China beginning measures to hit the U.S will certainly test investor resilience at the start of the week.

UK Politics: The UK Parliament is in recess until 5th January. That hasn’t stopped the EU from getting the propaganda machine working over the holidays. The EU Commission President, Ursula von der Leyen, said that both parties need to seriously consider the time frame to reach a trade agreement. She added that she was also very worried about how little time was available.

The comments were not surprising, with the EU tactic of dragging its heels likely to continue…

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