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The Week Ahead – Stats are Lighter, which Could Deliver Some Holiday Swings…

Bob Mason

On the Macro

It’s a particularly quiet week ahead on the economic calendar, with just 13 stats to monitor. In the previous week, 94 stats had been in focus.

With many of the markets shut through the middle part of the week, volumes will be on the lighter, particularly across the European and U.S markets.

For the Dollar:

November new home sales get things going on Monday, with a rebound from a 0.7% fall in October needed to support the Dollar.

Mortgage rates and interest rates remain supportively low and labor market conditions are prime to continue supporting the sector.

A lack of stats in the week will leave the Dollar more sensitive to the numbers.

The focus will then shift to November durable goods and core durable goods orders due out on Tuesday.

With no other stats to consider in the week ahead and with lighter volumes anticipated, the Dollar will certainly respond to the numbers.

On the geopolitical front, there’s unlikely to be too many surprises to disrupt what should be a relatively peaceful week for the global financial markets.

The U.S markets are on a half-day on Tuesday and will be closed on Wednesday.

The Dollar Spot Index ended the week up 0.53% to $97.690.

For the EUR:

It’s also a particularly quiet week ahead on the economic calendar. The markets will need to wait until Friday for anything material to consider. The ECB will release its monthly economic bulletin on Friday.

It will be Lagarde’s first release and will also garner plenty of attention. Expect the EUR to come under pressure if recent private sector PMIs have weighed on the ECB’s outlook.

On the Brexit front, there will no doubt be some chatter, though with the UK and European markets closed on Wednesday and Thursday, and the DAX30 also closed on Tuesday, it shouldn’t be too spectacular…

The EUR/USD ended the week down by 0.38% to $1.1079.

For the Pound:

After a hectic week last week, it’s also a quiet week ahead on the economic calendar. There are no material stats due out to provide the Pound with direction.

Following last week’s disappointing economic data and a more dovish than expected BoE, the upside could be limited in the week, with lighter trade volumes leaving the Pound susceptible to any rebalancing acts…

The UK markets are on a half-day on Tuesday and closed on Wednesday and Thursday.

The GBP/USD ended the week down by 2.49% to $1.2999.

For the Loonie:

It’s a quiet week ahead on the economic calendar, with economic data limited to October GDP numbers due out on Monday.

With the Canadian markets closed on Wednesday and Thursday, it’s the only set of numbers for the markets to consider in the week…

Following a string of disappointments last week, could this be the straw that broke the BoC’s resilience?

The Loonie ended the week up by 0.04% to C$1.3161 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s another quiet week ahead.

November private sector credit figures are due out on Monday.

Low-interest rates, tax cuts and more should support demand for credit. It’s been less than convincing, however, which could leave the Aussie Dollar susceptible to a pullback should the number disappoint.

Volumes will be on the lighter side, with the Australian market on a shortened session on Tuesday and closed on Wednesday and Thursday…

The Aussie Dollar ended the week up by 0.35% to $0.6900.

For the Kiwi Dollar:

There are no stats due out of New Zealand in the week ahead. With the holiday season in full swing and the markets closed mid-week, there’s not much to provide direction.

This time last year, we saw the Kiwi Dollar slide over the holiday season. With dovish sentiment towards monetary policy persisting, we could see the same again…

The Kiwi market is on a shorted session on Tuesday and is closed on Wednesday and Thursday.

The Kiwi Dollar ended the week flat at $0.6599.

For the Japanese Yen:

It’s another relatively busy week on the economic calendar.

The markets will need to wait until Friday, however, for any meaningful data to digest.

On Friday, November prelim industrial production and retail sales figures are due out along with inflation numbers for December.

While any further slide in production would raise yet more red flags, there’s Abe’s fiscal policy measures and the U.S – China phase 1 trade agreement to consider. The BoJ is showing no signs of wanting to deliver more support. To be fair, monetary policy has failed to drive inflation…

The Japanese Yen ended the week down by 0.05% to ¥109.44 against the U.S Dollar.

Out of China

It’s a quiet week on the economic data front. November industrial profit figures are due out on Friday.

We saw a strong market reaction to particularly disappointing numbers last month, so expect the same again…

While there will be some buffering from the phase 1 trade agreement with the U.S, the markets will have some quiet time to consider just how effective phase 1 of the agreement will be in supporting global trade.

There may be a realization that it’s not quite the golden ticket…

This time last year, the Chinese equity markets had found support in spite of the trade war. With a phase 1 agreement due for signing in early Jan, optimism could reign supreme.

The Yuan ended the week down by 0.30% to CNY7.0065 against the Greenback.

Geo-Politics

Impeachment: There’ll be no action in the week ahead. Trump has agreed to give testimony in February though… That will be a mouth-watering prospect, though even that is unlikely to lead to his ousting.

Trade Wars: After the phase 1 agreement, the markets can enjoy the holidays… Or will there be some concern over the policing and effectiveness of the agreement in turning economic woes into a boon?

With the UK Parliament due to debate Johnson’s Brexit Bill on 7th, 8th and 9th January, more fires will likely need putting out in the year ahead…

For the U.S and China, let’s just see how the 1st quarter goes before we get too carried away…

UK Politics: The Brexit wheel will churn, but there will be a break in proceedings in the week ahead giving time for reflection. If last Friday’s parliamentary vote is a sign of things to come, then Johnson’s string of losses before the General Election may have been his last… A shuddering thought for the Pro-Remainers and Brexit fence-sitters. Even shadow cabinet members are now supporting Brexit motions… The people did speak after all and they spoke loudly in favor of bringing to an end the Brexit debacle that left British politics in deadlock from the minute Cameron shed his final tear as British PM.

This article was originally posted on FX Empire

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