The Week Ahead – The BoE, BoJ, the FOMC, Economic Data, and Geopolitics in Focus

On the Macro

It’s a particularly busy week ahead on the economic calendar, with 65 stats in focus in the week ending 18^th September. In the week prior, 41 stats had been in focus.

For the Dollar:

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

In the 1^st half of the week, September NY Empire State Manufacturing and August industrial production figures are in focus.

The markets will be looking for a continued upward trend to support hopes of further economic recovery.

Mid-week, the market focus will shift attention to August retail sales figures due out on Wednesday. Expect plenty of influence, with consumer spending key to the U.S economic revival.

On Thursday, Philly FED Manufacturing and weekly jobless claims will influence ahead of consumer sentiment figures on Friday.

While we can expect plenty of influence from the stats, the FOMC monetary policy decision on Wednesday will be the main event.

The key area of focus will be the FOMC economic projections and interest rate projections.

We saw the Dollar take a beating following the FED’s announcement of its new monetary policy framework… The projections will need to reflect a low for longer outlook to pin back the Greenback.

The Dollar Spot Index ended the week up by 0.66% to 93.333.

For the EUR:

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

In the 1^st half of the week, Eurozone industrial production, wage growth, and economic sentiment figures are due out. Germany’s ZEW economic sentiment figures are also due out.

Expect the ZEW economic sentiment figures to be the key driver on Tuesday.

On Wednesday, trade data for the Eurozone are due out. Barring particularly dire numbers, the trade data should have a muted impact on the EUR.

Through the week, finalized August inflation figures for member states and the Eurozone are also due out.

Following sensitivity to the prelim numbers, expect the EUR to be sensitive to any revisions in the week.

The EUR/USD ended the week up by 0.07% to $1.1846.

For the Pound:

It’s a particularly busy week ahead on the economic calendar. In the 1^st half of the week, earnings and employment figures are due out. From Tuesday’s stats, expect the unemployment rate and claimant count figures to have the greatest impact.

On Wednesday, August inflation figures are also due out. The Pound will likely be sensitive to any deflationary pressure build ahead of the BoE decision on Thursday.

On Thursday, the BoE is in action. While the markets are expecting policy to remain unchanged, there had been some recent dovish chatter. Expect any dissent to influence the Pound.

The market focus will then shift to August’s retail sales figures due out on Friday.

Following the BoE’s gloomy outlook on the economy, weak numbers would weigh heavily, assuming the BoE stands pat on policy.

The GBP/USD ended the week down by 3.64% to $1.2796.

For the Loonie:

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

Key stats include August inflation figures on Wednesday and July retail sales figures on Friday.

Both sets of numbers will influence.

On the crude oil front, OPEC and the IEA’s monthly reports will also need consideration in the week. Downward pressures have risen as a result of concerns over demand. Any negative chatter from either OPEC or the IEA and expect some pressure on the Loonie.

The Loonie ended the week down by 0.90% to C$1.3179 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

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

Key stats include 2^nd quarter house price figures on Tuesday and August’s employment figures on Thursday.

Expect the employment numbers to have the greatest impact. We have yet to hear of the RBA talk of negative rates. Dire numbers, following the 2^nd quarter GDP numbers, could raise the prospects of further easing.

From the RBA, the monetary policy meeting minutes are due out on Tuesday, with the RBA Bulletin on Thursday.

Any talk of further monetary policy support and gloomy sentiment towards the economy would weigh on the Aussie.

The Aussie Dollar ended the week up by 0.03% to $0.7284.

For the Kiwi Dollar:

It’s another quiet week ahead on the economic calendar.

Key stats include 2^nd quarter current account figures on Wednesday and 2^nd quarter GDP numbers on Thursday.

The markets will be looking at the GDP numbers to get a sense of whether the RBNZ needs to make a near-term move. These are 2^nd quarter numbers, however, so we can expect the markets to be forgiving to an extent.

Following the FED’s shift in monetary policy, central banks will need to douse any bullish demand…

The Kiwi Dollar ended the week down by 0.82% to $0.6666.

For the Japanese Yen:

It is a busy week ahead on the economic calendar.

Key stats include August trade data due out on Wednesday and inflation figures on Friday.

The main event, however, is the BoJ’s interest rate decision on Thursday. What’s next for Japan, as the economy struggles to find its feet?

We have heard frequently from the BoJ, stating its willingness to support. Until now, however, there appears little that the BoJ can do to spur growth.

On the political front, the Liberal Democratic Party leadership vote will take place on Monday. The winner of the election will serve out Abe’s remaining term.

The Japanese Yen ended the week up by 0.08% to ¥106.16 against the U.S Dollar.

Out of China

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

Key stats include August fixed asset investment, industrial production, and retail sales figures due out on Tuesday.

With little else for the markets to consider in the week, expect industrial production and retail sales to be the key drivers.

Beijing is looking from within for an economic rebound, giving retail sales greater influence than usual.

The Chinese Yuan ended the week up 0.12% to CNY6.8344 against the U.S Dollar.

Geo-Politics

UK Politics

The Pound took a beating last week. Expect Brexit to remain a key driver in the week ahead. From last week, news of a free trade agreement with Japan will be Pound positive. Progress with the U.S on a Brexit deal will be needed, however, for the Pound to avoid any further downside.

U.S – China

It’s all in the U.S President’s hands in the week ahead, as Trump continues to rile Beijing.

Beijing agreed to ramp up imports and stick to the phase 1 agreement, which has limited the impact of Trump’s targeting on Chinese companies. A continued focus and attack on Chinese companies may eventually draw a retaliatory response, however.

U.S Politics

And finally, the U.S Stimulus Package that has failed to make it through. Chatter from the weekend suggests that there is little chance of the package being voted in before the Presidential Election.

With unemployment still at exceptionally high levels, expect the markets to be even more sensitive to the retail sales figures.