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The Week Ahead – Geopolitics, the RBNZ and Stats in Focus

Bob Mason

On the Macro

For the Dollar:

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

September’s prelim private sector PMI numbers get the week started on Monday, with consumer confidence figures due out on Tuesday.

We can expect the Dollar to be particularly sensitive to the service sector PMI and the consumer confidence figure.

The market focus will then shift to 3rd estimate GDP numbers for the 2nd quarter due out on Thursday. Any deviations from the 2nd estimate will impact.

August trade data and the weekly jobless claims figures due out on Thursday will also need some attention.

August durable goods orders, the FED’s preferred PCE Price Index figures, personal spending, and prelim consumer sentiment numbers round off the week.

Barring dire numbers, we would expect housing sector data due out on Wednesday and Thursday to have a muted impact.

On the monetary policy front, FOMC member chatter will also provide direction.

The Dollar Spot Index ended the week up by 0.21% to $98.462.

For the EUR:

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

September prelim private sector PMI numbers are due out of France, Germany, and the Eurozone on Monday.

While we expect Germany’s manufacturing PMI and the Eurozone’s composite to have the greatest influence, service sector activity will need to hold steady.

The focus will then shift to September business sentiment figures due out of Germany on Tuesday.

With no stats due out on Wednesday, German consumer sentiment figures on Thursday and French consumer spending numbers on Friday will also influence.

Outside of the stats, the ECB will also release its economic bulletin on Thursday.

On the geopolitical front, Brexit will continue to influence. Any progress on solving the Irish backstop issue would be EUR positive.

The EUR/USD ended the week down by 0.51% to $1.1017.

For the Pound:

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

Economic data is limited to September’s CBI Industrial Trend Orders due out on Monday.

While the Pound will respond, Brexit will continue to be the key driver throughout the week.

The GBP/USD ended the week down by 0.18% to $1.2478.

For the Loonie:

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

Economic data due out of Canada is limited to July wholesale sales figures. Barring dire numbers, we expect the Loonie to show little reaction to the numbers.

Through the week, crude oil prices and sentiment towards the global economic outlook and trade will be the key drivers.

The Loonie ended the week up by 0.19% to C$1.3263 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a quiet week ahead on the Economic data.

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 exposed to geopolitical risk through the week.

Any negative chatter on trade or dire private sector PMI numbers out of the Eurozone or the U.S would be negative.

The Aussie Dollar ended the week down by 1.64% to $0.6766.

For the Japanese Yen:

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

September’s Tokyo core inflation figures are due out on Friday. With the BoJ signaling the possibility of further easing next month, the numbers will need to impress to support the Yen.

With economic data on the lighter side, market risk sentiment will continue to drive the Yen.

The Japanese Yen ended the week up by 0.49% to ¥107.56 against the U.S Dollar.

For the Kiwi Dollar:

It’s a busy week ahead. While economic data is limited to August trade data, due out on Wednesday, the RBNZ will also deliver its monetary policy decision on Wednesday.

Having delivered a larger than anticipated rate cut last month, a dovish hold could send the Kiwi to new lows.

The Kiwi Dollar ended the week down by 1.87% to $0.6258.

Out of China:

It’s a quiet week ahead on the economic data front. There are no material stats to influence the markets in the week.

The lack of stats will leave the markets focused on trade news.

The Yuan ended the week down by 0.17% to CNY7.0909 against the Greenback.

Geo-Politics

Iran: Will there be pressure for the U.S to deliver a military response that could drive risk aversion across the global financial markets and spike crude oil prices? The UN Security Council meeting in the week ahead will garner plenty of interest.

Trade Wars:  Following Friday’s decision by China to cancel U.S farm visits and Trump’s reaction, market sensitivity to trade war chatter will likely return. Any updates from Beijing or Washington will influence risk sentiment in the week.

UK Politics: Juncker gave the Pound with support last Wednesday, but it wasn’t enough to prevent a weekly loss. The Supreme Court will decide on whether the suspension of Parliament was lawful.  While the ruling will throw UK politics into more chaos, the key will be addressing the backstop issue. Talk of a 30th September deadline for proposals on the Irish backstop issue leaves the PM with little wriggle room.

The Rest

The RBNZ:  The RBNZ is expected to leave rates unchanged on Wednesday. Following a 50 basis point rate cut last month, will there be suggestions of more to come to sink the Kiwi? Uncertainty over the U.S – China trade war remains following Friday’s negative chatter.

Corporate Earnings: Corporate earnings season kicks off once more and will certainly be of interest as the U.S – China trade war wages on. First up, from the heavyweights, is Nike on Tuesday…

This article was originally posted on FX Empire

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