The Week Ahead – Geopolitics, Capitol Hill, COVID-19, and Economic Data in Focus

On the Macro

It’s a quieter week ahead on the economic calendar, with 56 stats in focus in the week ending 21^st August. In the week prior, 69 stats had been in focus.

For the Dollar:

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

In the 1^st half, August’s NY Empire State Manufacturing Index and July housing sector numbers are in focus.

Barring particularly dire housing sector figures, expect the Manufacturing figures to be the key driver.

The focus will then shift to the weekly jobless claims and August Philly FED Manufacturing Index figures on Thursday.

We can expect plenty of influence from these stats ahead of a busy end to the week.

On Friday, August’s prelim private sector PMIs and July existing home sales figures are due out. Expect the prelim Services PMI to be the key driver on the day.

From the FOMC, the meeting minutes are due out late on Wednesday. While there should be no surprises, there would likely be some caution ahead of the release.

Away from the economic calendar, updates from the U.S – China trade talks will influence at the start of the week. There is also the small matter of the COVID-19 stimulus package.

The Dollar Spot Index ended the week down by 0.36% to 93.096.

For the EUR:

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

The markets will need to wait until Friday, however, for key stats.

August prelim private sector PMIs for France, Germany, and the Eurozone will influence at the end of the week.

Expect Germany’s manufacturing PMI and the Eurozone’s services and composite PMIs to be the key drivers.

The Eurozone’s finalized inflation figures for July and Germany’s wholesale inflation figures will likely be brushed aside.

A lack of stats through most of the week will leave the EUR in the hands of geopolitics and market risk sentiment.

On the monetary policy front, the ECB meeting minutes are due out on Thursday. The minutes should garner plenty of attention. Ahead of the last meet, there had been reports of dissent within the ranks…

The EUR/USD ended the week up by 0.47% to $1.1842.

For the Pound:

It’s also a relatively busy week ahead on the economic calendar. On Wednesday, July inflation figures are in focus. With the BoE’s gloomy outlook, however, we don’t expect too much influence from the numbers.

On Thursday, August’s CBI Industrial Trend Orders are in focus, ahead of a busy end to the week.

July retail sales and August prelim private sector PMIs will have an impact on Friday.

Expect the retail sales figures and service PMI to be the key drivers.

Away from the economic calendar, we should be hearing from the EU and the UK on how Brexit talks are progressing.

The GBP/USD ended the week up by 0.26% to $1.3086.

For the Loonie:

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

July inflation figures on Wednesday and June retail sales figures on Friday will be the key drivers.

June wholesale sales figures and July house price figures will likely have a muted impact in the week.

From elsewhere, private sector PMIs from the Eurozone and the U.S and geopolitics will also influence.

The Loonie ended the week up by 0.88% to C$1.3266 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

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

A lack of stats will leave the Aussie Dollar in the hands of the private sector PMIs and geopolitics.

On the monetary policy front, the RBA meeting minutes will draw interest on Tuesday.

Following the spike in new COVID-19 cases in Melbourne, was there the talk of further easing???

The Aussie Dollar ended the week up by 0.20% to $0.7171.

For the Kiwi Dollar:

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

On the economic data front, 2^nd quarter wholesale inflation figures are due out on Wednesday.

We don’t expect too much influence from the numbers, however.

A lack of stats will leave the Kiwi in the hands of market risk sentiment in the week. Weak PMIs from the U.S and the EU would add further pressure on the Kiwi Dollar.

Expect updates from the U.S – China trade talks to also have an impact along with COVID-19 news.

The Kiwi Dollar ended the week down by 0.95% to $0.6542.

For the Japanese Yen:

It is a relatively busy week ahead on the economic calendar.

2^nd quarter GDP and June industrial production figures kick things off on Monday.

The focus will then shift to July trade data due out on Wednesday.

At the end of the week, August’s prelim private sector PMIs and July inflation figures are due out. The inflation should have a muted impact on the Yen, however.

Away from the economic calendar, geopolitics and COVID-19 remain key drivers.

The Japanese Yen ended the week down by 0.64% to ¥106.60 against the U.S Dollar.

Out of China

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

There are no material stats due out of China to provide direction.

A lack of stats will leave the Yuan in the hands of the PBoC and any chatter from Beijing.

On the monetary policy front, the PBoC is in action on Thursday. Following recent forward guidance, however, it remains to be seen whether recent economic data would force another cut in loan prime rates. The PBoC had recently stated that the easing cycle had come to an end.

Away from the economic calendar, U.S – China trade talks from the weekend will have a material impact.

The Chinese Yuan ended the week up 0.25% to CNY6.9504 against the U.S Dollar.

Geo-Politics 

UK Politics:

Brexit will likely garner more interest in the week ahead. One of the key sticking points remains EU access to UK fisheries. While the British Brexit team may concede on other issues, rights to UK waters is one that the government will likely stand firm on. That will make a trade deal all the more elusive unless EU negotiators bow to certain demands.

U.S Politics:

Still no progress towards a COVID-19 stimulus package. While the markets had largely brushed aside the lack of progress last week, we could see volatility pick up.

Much will depend upon labor market conditions over the summer. Any spike in jobless claims would make the markets more sensitive to a continued lack of progress.

U.S – China Trade Talks

Finally, updates from the U.S – China trade talks will also need monitoring. Tensions between the U.S and China have risen of late for a number of reasons. Hong Kong, COVID-19, and the hacking of U.S tech companies are amongst a lengthening list. U.S negotiators may turn the screw and attempt to rein China in. Trump’s need to distract the markets from COVID-19 will be another reason to make the trade talks explosive…