The Week Ahead – Post-Brexit, the Senate Race, and Economic Data in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 58 stats in focus in the week ending 8^th January. In the week prior, just 15 stats had been in focus.

For the Dollar:

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

December ISM Manufacturing and Service PMI figures for December are due out on Tuesday and Thursday.

While we expect sensitivity to the manufacturing numbers, the Services PMI will be the key driver.

Expect initial jobless claims figures on Thursday to also draw attention ahead of December NFP numbers on Friday.

With labor market numbers in focus, expect nonfarm payroll figures and the unemployment rate to have the greatest impact.

Other stats include ADP nonfarm employment change, finalized Markit private sector PMI numbers, and factory orders.

The Dollar Spot Index ended the week down by 0.32% to 89.937.

For the EUR:

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

December manufacturing PMI figures for Spain and Italy are due out at the start of the week.

Expect Italy’s manufacturing PMI to draw the greatest interest. With finalized manufacturing from France, Germany, and the Eurozone also due out, any revisions will also provide direction.

On Tuesday, the focus shifts to retail sales and unemployment figures from Germany.

With consumption key to economic recovery, both will provide the EUR with direction.

On Wednesday, Service sector PMIs for Italy and Spain are due out along. Barring dire numbers, however, the focus will be on finalized numbers from France, Germany, and the Eurozone.

Through the 2^nd half of the week, the German economy remains in the spotlight.

November factory orders, industrial production, and trade data are due out on Thursday and Friday.

On Friday, French consumer spending figures for November will also draw attention.

While there will be sensitivity to the stats, the markets may be in a forgiving mood.

The ongoing vaccinations across the EU and beyond and optimism towards the economic outlook will likely limit the impact of any disappointing numbers.

Other stats due out include inflation figures from Germany and Italy and retail sales and unemployment numbers for the Eurozone.

These stats are unlikely to have an impact on the EU, however.

The EUR ended the week up by 0.18% to $1.2215.

For the Pound:

It’s a relatively quiet week ahead on the economic calendar. Key stats include finalized private sector PMI numbers for December and construction PMI figures.

Expect any revisions to the services PMI to have the greatest influence.

Other stats include December house price and 3^rd quarter labor productivity figures. We would expect the numbers to have a muted impact on the Pound, however.

COVID-19 and updates from Europe on Britain’s 1^st week away from the EU will influence.

The Pound ended the week up by 0.83% to $1.3672.

For the Loonie:

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

November’s RMPI is in focus on Tuesday ahead of trade data and December’s Ivey PMI on Thursday.

While we expect some influence from the numbers, December employment figures on Friday will likely have the greatest impact.

From elsewhere, private sector PMIs will influence sentiment towards the economic outlook. The knock-on effects on crude oil prices would also provide the Loonie with direction.

The Loonie ended the week up by 1.06% to C$1.2728 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

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

November building approval and trade figures are due out on Thursday.

With no other stats to consider, expect the trade figures to garner the greatest interest.

From elsewhere, private sector PMI numbers will also influence market risk sentiment and the Aussie Dollar.

The Aussie Dollar ended the week up by 1.17% to $0.7694.

For the Kiwi Dollar:

It’s another particularly quiet week ahead on the economic calendar. There are no material stats due out to provide the Kiwi Dollar with direction.

Private sector PMIs through the week will influence, however.

The Kiwi Dollar ended the week up by 1.00% to $0.7188.

For the Japanese Yen:

It is a relatively quiet week on the economic calendar.

Finalized private sector PMI figures for December are due out on Monday and Wednesday.

The numbers are unlikely to have any impact on the Yen, however.

At the end of the week, November household spending will draw interest, however.

The Japanese Yen ended the week up by 0.42% to ¥103.20 against the U.S Dollar.

Out of China

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

December private sector PMI numbers are due out on Monday and Wednesday.

While service sector numbers will influence, Monday’s Manufacturing PMI will garner the greatest interest.

The Chinese Yuan ended the week up by 0.22% to CNY6.5272 against the U.S Dollar.

Geo-Politics

U.S Politics

U.S politics will likely remain front and center in a relatively busy week ahead on the economic data front.

The Senate race will draw plenty of interest, with the Georgia runoff on 5^th January. A Democrat victory would give the Democrats control of both houses of Congress. While the markets would expect more pandemic aid support, other Biden policies could be a concern.

There’s also Trump lingering in the background…

Brexit

It is Britain’s first week outside of the EU. There’s likely to be plenty of news hitting the wires. Some EU member states are likely to attempt to cause as much disruption as possible.

Border controls and trade will be the main area of focus. Any disruption could test support for the Pound.

One other area of interest will be whether some EU states look to forge bilateral ties with Britain.