The Week Ahead – Private Sector PMIs, Powell, Geopolitics, and COVID-19 in FocusWhile economic data is on the lighter side, there is still plenty to influence the markets, PMIs, Powell, geopolitics, and COVID-19 will drive the markets.
On the Macro
It’s a particularly quiet week ahead on the economic calendar, with just 32 stats in focus in the week ending 25th September. In the week prior, 69 stats had been in focus.
For the Dollar:
It’s a relatively quiet week ahead on the economic data front.
Key stats include prelim private sector PMI numbers for September on Wednesday.
Expect the services PMI to have the greatest impact ahead of the all-important weekly jobless claims on Thursday.
Wrapping up the week, durable and core durable goods orders for August will also influence.
For the markets, it is all about momentum. Any weak numbers will test the demand for riskier assets.
On the monetary policy front, FED Chair Powell is also back in action, giving testimony on Capitol Hill. Following last week’s FOMC press conference, however, will there be any more surprises?
The Dollar Spot Index ended the week down by 0.44% to 92.926.
For the EUR:
It’s a busy week ahead on the economic data front.
In a quiet start to the week, Eurozone flash consumer confidence figures are due out on Tuesday. The EUR will likely respond to the numbers ahead of a busy Wednesday.
Consumer confidence and spending remain key to any economic recovery across the Eurozone. Any weak numbers would test support for the EUR.
The focus will then shift to the busy Wednesday.
September’s prelim private sector PMIs for France, Germany, and the Eurozone are due out. Alongside the figures, Spanish GDP and German consumer confidence figures are also in focus on Wednesday.
The focus will then shift to September’s Ifo Business Climate and sub-index figures due out on Thursday.
While we can expect the private sector PMIs to be the key drivers, both business and consumer confidence will need to improve.
Concerns over economic speed bumps will raise EUR sensitivity to the stats in the week.
On the monetary policy front, ECB President Lagarde is due to speak on Monday. Expect any references to inflation or exchange rates and the economic outlook to influence.
The EUR/USD ended the week down by 0.05% to $1.1840.
For the Pound:
It’s a quieter week ahead on the economic calendar. September’s prelim private sector PMIs, due out on Wednesday, will be the key driver.
Following last week’s BoE forward guidance and chatter on Brexit, the Pound will be sensitive to the numbers.
CBI Industrial Trend Orders are also due out but will likely have a muted impact, barring dire numbers.
On the monetary policy front, BoE Governor Bailey is scheduled to speak on Thursday. Any further chatter on negative rates and a gloomy economic outlook would weigh on the Pound.
The GBP/USD ended the week down by 0.95% to $1.2917.
For the Loonie:
It’s a quiet week ahead on the economic calendar.
House price figures for August are due out that will likely have a muted impact on the Loonie.
Expect the private sector PMIs from the Eurozone and the U.S and market risk sentiment to be key drivers.
Geopolitics and COVID-19 will influence market risk sentiment in the week.
The Loonie ended the week down by 0.19% to C$1.3204 against the U.S Dollar.
Out of Asia
For the Aussie Dollar:
It’s a particularly quiet week ahead on the economic calendar.
There are no material stats due out of Australia to provide the Aussie with direction.
That leaves the Aussie in the hands of geopolitics and the global economic outlook influenced by the PMIs.
The Aussie Dollar ended the week up by 0.07% to $0.7289.
For the Kiwi Dollar:
It’s a relatively quiet week ahead on the economic calendar but an important one for the Kiwi Dollar.
Key stats include August trade figures due out on Thursday. We’ve seen plenty of sensitivity to China numbers of late, so expect the devil to be in the details.
Earlier in the week, however, is the RBNZ monetary policy decision on Wednesday. There had been the talk of negative rates. Will there be action or just some more chatter? Economic indicators have yet to impress despite all of the support.
The Kiwi Dollar ended the week up by 1.40% to $0.6759.
For the Japanese Yen:
It is a quiet week ahead on the economic calendar.
Prelim private sector PMI numbers for September will be in focus mid-week. Other than that, there are no stats to consider, leaving the Yen in the hands of geopolitics and COVID-19 news.
On the monetary policy front, BoJ monetary policy meeting minutes will likely have a muted impact. The minutes are dated following last week’s monetary policy decision.
The Japanese Yen ended the week up by 1.50% to ¥104.57 against the U.S Dollar.
Out of China
It’s a particularly quiet week ahead on the economic data front.
There are no material stats due out of China, leaving geopolitics in focus in the week.
On the monetary policy front, the PBoC is in action on Monday. We don’t expect any further cuts in Loan Prime Rates, however. PBoC forward guidance and recent economic data support a hold.
The Chinese Yuan ended the week up 0.95% to CNY6.7692 against the U.S Dollar.
The Pound found much-needed support last week. Brexit will remain a key driver in the week ahead, however. We have the House of Lords vote on the Internal Market Bill that could throw Brexit negotiations into chaos. Last week, the British PM attempted to soften the impact of the internal market bill. An amendment to the bill was made to prevent ministers from using the bill to override the Brexit Withdrawal Agreement without a parliamentary vote.
It will get interesting as, while this may have placated some of Johnson’s critics, it may not satisfy the EU…
All in all, it spells for a choppy week ahead for the Pound.
U.S – China
Last week, Trump hit TikTok and WeChat. From the weekend, news hit the wires of Beijing taking retaliatory steps in response.
China issued a warning stating that if the U.S insists on going its own way, China would take the necessary steps to protect the rights and interests of Chinese firms.
We can expect more in the week ahead, particularly with Trump trailing Biden in the polls…
Presidential Election fever should start to pick up and begin to have a greater influence on the global financial markets.
Trump has yet to claw back the deficit that Biden has enjoyed since COVID-19 reached U.S shores.
Expect Trump’s distraction tactics to draw plenty of attention.