Economic Uncertainty

The Week Ahead – Brexit, PMI Numbers and Trade Talks in Focus

On the Macro

For the Dollar:

Key stats include December durable goods orders, February’s Philly FED Manufacturing Index, prelim U.S private sector PMI numbers and existing home sales figures all due out on Thursday. An upward trend in the weekly jobless claims figures has also made the Dollar more sensitive to the weekly figures.

The FOMC meeting minutes on Wednesday and FOMC member commentary will also be in focus.

The Dollar Spot Index ended the week up by 0.29% to $96.916.

For the EUR:

Stats include economic sentiment numbers due out of Germany on Tuesday and Eurozone consumer confidence numbers on Wednesday in a quiet start to the week. A busy Thursday includes prelim February private-sector PMI numbers out of France, Germany, and the Eurozone. At the end of the week, finalized GDP numbers and business sentiment figures are due out of Germany. Finalized January inflation numbers are also due out during the week, with Friday’s Eurozone figures of greater influence.

Outside of the numbers, the ECB will release its monetary policy meeting minutes on Thursday.

The EUR/USD ended the week down by 0.24% to $1.1296.

For the Pound:

It’s a quiet week ahead, with stats limited to employment figures on Tuesday and CBI Industrial Trend Orders on Wednesday. The employment figures will be the key driver on the data front.

Outside the numbers, Brexit chatter will continue to overshadow the economic calendar through the week.

The GBP/USD ended the week down 0.42% at $1.2889.

For the Loonie:

Economic data is limited to wholesale sales figures on Thursday and retail sales figures on Friday. We would expect the retail sales figures to be the key driver on the data front.

Outside the numbers, the effects of U.S – China trade talks on market risk sentiment will also influence ahead of a scheduled Bank of Canada Governor Poloz speech on Thursday.

The Loonie ended the week up by 0.26% to C$1.3244 against the U.S Dollar.

Out of Asia

It’s a relatively quiet ahead.

For the Aussie Dollar:

Economic data includes 4th quarter wage growth figures due out on Wednesday and January’s employment numbers due out on Thursday. We would expect both sets of stats to provide direction.

Outside of the numbers, the RBA meeting minutes are due out on Tuesday, which will be a market reminder of the latest shift in sentiment towards policy. RBA Governor Lowe is scheduled to speak on Friday, who may add further color. Additionally, expect updates from trade talks between the U.S and China to also influence.

The Aussie Dollar ended the week up 0.75% at $0.7141.

For the Japanese Yen:

Stats are limited to January trade data, which is due out on Wednesday and January inflation figures due out on Friday. Of less influence, but of interest, will be the release of December machinery orders on Monday and February’s prelim manufacturing PMI on Thursday.

Market risk sentiment will be the key driver through the week as trade talks resume.

The Japanese Yen ended the week down 0.67% at ¥110.47 against the U.S Dollar.

For the Kiwi Dollar:

Stats are limited to 4th quarter producer price input figures that are due out on Wednesday. The lack of stats will leave the Kiwi firmly in the hand of market risk sentiment through the week. Following the RBNZ’s surprisingly hawkish outlook on growth, some resilience in the Kiwi Dollar is to be expected.

The Kiwi Dollar ended the week up 1.90% to $0.6868.

Out of China:

There are no material stats scheduled for release through the week, leaving sentiment towards trade talks the key driver and influence on market risk sentiment.

Geo-Politics

U.S – China Trade War:  Trade talks are due to resume, with no agreement reached on Friday. With the 1st March deadline looming, an extension will be likely should there be no collapse in talks.

Brexit: Unity!!! British PM calls for a united parliamentary front on Brexit. With time running out, finding support from the EU should be the first order of business. We can expect progress, or lack of, to be the Pound’s key driver in the week ahead.

The Rain in Spain: Snap elections called for April. Polls show a divided country, which could deliver another populist party to Brussels before the summer.

The Rest

On the monetary policy front,

For the USD, the FOMC meeting minutes are due out. Some more details on how the Committee is divided on policy and sentiment towards the economy will be of particular interest. A number of FOMC members are also scheduled to speak through the week, which will garner the Dollar’s attention.

For the EUR, the ECB’s more dovish outlook on growth will give the ECB monetary policy meeting minutes a greater influence on Thursday. ECB President Draghi is also scheduled to speak on Friday, which could add further pressure on the EUR.

For the AUD, the RBA meeting minutes are due out on Tuesday. With the RBA also taking a more dovish outlook on growth, sensitivity to the minutes will depend on progress on trade talks between the U.S and China. RBA Governor Lowe is scheduled to speak on Friday that could provide further direction should monetary policy be discussed.

For the Loonie, BoC Governor Poloz is scheduled to speak on Thursday. Economic data has been far from impressive suggesting a dovish bias should monetary policy be discussed.