The Week Ahead: Trade Talks, Brexit and Monetary Policy Take the Stage

On the Macro

For the Dollar:

It’s a quieter week ahead.

In the first half of the week, economic data due out of the U.S is limited to March JOLTs job openings on Tuesday.

Through the second half of the week, March trade and wholesale inflation figures are due out on Thursday, along with the weekly jobless claims numbers.

The key data set of the week will be April inflation figures that are due out on Friday.

Outside of the numbers, U.S- China trade talks will likely become a factor in the week ahead. Talks are scheduled to resume in Washington this week.

The Dollar Spot Index ended the week down 0.57% to $97.45.

For the EUR:

Key stats include service sector PMI numbers and Eurozone retail sales figures due out on Monday. Through the remainder of the week, the focus will be on economic data out of Germany.

Factory orders and industrial production figures are due out on Tuesday and Wednesday ahead of trade data on Friday.

We can expect the EUR to be particularly sensitive to the numbers.

The EUR/USD ended the week up 0.42% to $1.1198.

For the Pound:

It’s a busy week ahead. In the first half of the week, house price figures, and retail sales data will likely be brushed aside ahead of a busy Friday.

On the data front, 1^st quarter GDP numbers, industrial and manufacturing production, and trade data due out on Friday will be the key drivers for the Pound.

Outside of the stats, we can expect market sentiment towards Brexit to have an influence as will any talk of a vote of no confidence in Parliament.

The GBP/USD ended the week up 1.99% to $1.3173.

For the Loonie:

It’s also a relatively busy week ahead for the Loonie. Market focus will be on April’s Ivey PMI, due out on Tuesday, trade data on Thursday and April employment figures on Friday.

With the stats having been on the quieter side since the last BoC policy decision, we can expect the Loonie to be responsive to the stats due out in the 2^nd half of the week.

The Loonie ended the week up 0.26% to C$1.3420 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

March trade and retail sales figures are due out on Tuesday. However, barring material deviation from forecasts, the Aussie Dollar may be unresponsive to the figures. The market focus will be on the RBA monetary policy decision later in the morning.

While the RBA has taken a more dovish stance, there’s been little talk of a rate cut to-date… The focus will be on the rate statement…

The RBA Monetary policy statement due out on Friday will unlikely have too many surprises following Tuesday’s rate statement.

The Aussie Dollar ended the week down 0.34% to $0.7018.

For the Japanese Yen:

March household spending figures are due out of Japan on Friday.

On the monetary policy front, the BoJ will release its monetary policy meeting minutes that will unlikely have a material impact on the Yen.

Market risk appetite and progress updates on the U.S – China trade talks will be the key drivers in the week.

The Japanese Yen ended the week up 0.43% to ¥111.10 against the U.S Dollar.

For the Kiwi Dollar:

The heavily anticipated RBNZ monetary policy decision on Wednesday will be the main event of the week. Will they or won’t they?

If there’s no rate cut, the Kiwi could be in hot water should the RBNZ talk of a need to cut rates near-term.

Later in the week, electronic card retail sales will be in focus, though the degree of influence will depend on the RBNZ’s tone mid-week.

The Kiwi Dollar ended the week down 0.23% to $0.6647.

Out of China:

Key stats include April trade figures due out on Wednesday and April inflation figures due out on Thursday.

Additionally, ahead of the trade and inflation figures, April service sector PMI numbers due out on Monday will also have an impact on risk sentiment.

Geo-Politics

U.S – China Trade War:  Trade talks are set to resume in Washington, where hopes are of an agreement to be reached. While corporates are still releasing earnings results, progress on trade talks will be key.

Brexit: Following last week’s local council elections, will momentum build toward a vote of no confidence and a 2nd Referendum on Brexit? A vote of no confidence would certainly take the Brexit debate to the next level.

The Rest

On the monetary policy front,

For the Aussie Dollar, the RBA is expected to leave rates unchanged. The focus will be on the RBA rate statement. Will there be a shift in bias towards a rate cut?

For the Kiwi Dollar, the RBNZ will deliver its monetary policy decision on Wednesday. Expectations are for a near-term rate cut. Will Wednesday be the day that sinks the Kiwi Dollar to $0.65 levels?

Corporate Earnings: Corporate earnings are on the lighter side in the week ahead. Some of the key releases include those for: