IMF Downgrades Global Growth, Inflation Weak In U.S., Brexit Summit Begins

The U.S. Market Is Unfazed By Weak Data

The U.S futures were indicating a slightly higher open in early pre-opening trading. The Dow Jones Industrial Average, S&P 500, and NASDAQ Composite were all up 0.10% to 0.15%. The move comes despite a downgrade to global growth from the IMG and weak inflation data at home.

The IMF says global growth will only be 3.3% this year, down another 0.20%, and the second major downgrade this year. According to them, downside risks prevail and the solution is in the hands of world governments. The IMF says a coordinated effort (ie resolving trade disputes) is needed.

On the economic front, U.S. CPI data was mixed. The headline 0.40% MoM and 1.9% YoY were both hotter than expected but core data was weak. Stripping out food and energy CPI rose a tepid 0.1% and 2.0%, both below consensus estimates. The dollar barely moved on the news.

The ECB Holds Rates Steady, An Emergency BREXIT Summit Is About To Begin

In Europe, the ECB held rates steady as expected. The bank did not issue any major changes in its policy statement and intends to continue on with TLTRO-III. The European Central Bank has had to backtrack on its plans to tighten policy later this year and may increase QE if the data doesn’t alter its trajectory. There was no data from the EU today.

In England the data was good. UK GDP grew faster than expected over the last 12 month period. The monthly data shows a 0.20% increase which is as expected but the YOY read is hot at 2.0%. Industrial and manufacturing production were both hot in the last month as well, helping to drive strength in the UK economy. The news is good for Brexit too because it shows confidence among the British people.

In Brexit news, Theresa May is headed to Brussels for an emergency summit with UK leaders. Among the dignitaries, she will meet German Chancellor Angela Merkel and EU Council President Tusk. May is expected to ask for an extension to the Brexit deadline, President Tusk is in favor of a flexible one-year deal.

Asian Markets Mixed, Data And Earnings Are In Focus

Asian markets were mixed in Monday trading following the IMF’s downgrade. The Japanese Nikkie fell -0.53% leading the declining indices despite positive moves in index giants Fast Retailing and Softbank. The Korean Kospi led advancing indices with a gain of 0.49%. It was supported by a tech-led really that had SK Hynix up 1.0%. The Shanghai Composite and Hang Seng were both hugging break-even levels while traders wait on new trade data.

In Australia, the ASX advanced only 0.03%. The index was weighed down by a near 10% drop in Crown Resorts after it yesterday’s 20% rise. The leaked news Wynn Resorts was interested in buying the company caused Wynn to pull out of talks. Now it looks like there is no Wynn for Crown Resorts.

Earnings Season Begins, Equities Markets Mixed, Trade Hopes Take Back Seat

The Q1 Earnings Season Is Set To Begin

The U.S. futures were indicating a modestly lower open in early Monday trading. The move is one of caution as traders await the first major reports of the Q1 2019 earnings cycle. By all accounts, this should be the first quarter of negative earnings growth since 2016.

Earnings expectations have taken a dive over the last quarter on signs of slowing economic growth. If the S&P 500 falls short of expectations it could send the broad market moving sharply lower. The Dow Jones Industrial average led the major indices with a loss of -0.25%. The S&P 500 and NASDAQ Composite were both looking at losses near -0.10%.

In trade news, reports out of China indicate “new progress” has been made. The news follows the conclusion of last week’s high-level trade talks in Washington and suggests headway has been made on key issues. Key issues yet to be resolved include forced tech transfers, treatment of intellectual property, and the trade balance.

In earnings news, banks JP Morgan and Wells Fargo are set to report on Friday. Both are estimated to report flat to slightly higher earnings from the year-ago period. Next week earnings season will kick into high gear with reports from several dozen important S&P 500 companies. Later today traders will be looking for the Factor Orders data around 10 AM.

European Equities Cautious As Brexit Draws Near

European equities markets were flat and mixed in midday trading. Investors in the region are cautious ahead of this week’s earnings events and the upcoming Brexit. Brexit is slated for April 12th, Friday, and can only be avoided if the UK Parliament reaches consensus on Theresa May’s deal or the EU grants another extension. Theresa May is expected in Brussels later this week for a summit of EU leaders, she is expected to formally request another extension at that time.

The FTSE 100 was up in early trading, about 0.05%, and matched by the French CAC. The German DAX was down about -0.25%. In stock news, shares of SAP fell -1.5% after another of its top executive’s leaves. Shares of Euronext, France-listed equities exchange, moved higher after it was approved to purchase a Norwegian stock exchange. Shares of Safran, the supplier of engines for Boeing’s Max-8, fell after Boeing cut production outlook for its most popular jetliner.

Asia Mixed After Strong U.S. Labor Data

Strong labor data on Friday helped push the U.S. indices to new highs last week. the positive sentiment did not carry over into Asia where indices were without direction in Monday trading. The Australian ASX led advancers with a gain of 0.65% on strength in mining and energy while the Japanese Nikkei led decliners. The Nikkei fell about -0.20% while the Shanghai Composite fell -0.05% and the Hang Seng and Kospi both posted small gains. Traders in the region will be looking out for the FOMC minutes on Wednesday, word on trade, and earnings.

As Risk Aversion Hits, Focus will be on Theresa May and the Pound

Earlier in the Day:

The economic calendar was bare through the Asian session this morning. Other than a BoJ board member Harada speech, there was very little to shift market sentiment following the European and U.S sell-off on Friday.

While there were no stats, the markets had a window of opportunity to respond to the outcome of the Robert Mueller investigation. The investigation into the U.S administration’s presidential election campaign failed to implicate the U.S President. While positive for risk sentiment, any upside in the futures market was short-lived

For the Major Pairings,

At the time of writing, the Japanese Yen was up by 0.12% to ¥119.79 against the U.S Dollar. Risk aversion provided support through the early part of the day and will likely continue to do so throughout.

In spite of risk aversion, the Kiwi Dollar held on through the early hours. At the time of writing, the Kiwi Dollar was flat at $0.6879. Support continues to come ahead of this week’s RBNZ monetary policy decision. While the RBNZ is expected to leave rates steady, 4th quarter GDP numbers supported the optimistic outlook towards the New Zealand economy.

Things were less rosy for the Aussie Dollar, however, which was down by 0.07% to $0.7078.

In the equity markets, the Nikkei was down by 3.22%, with the Hang Seng and CSI300 down by 1.81% and 1.27% respectively. The ASX200 also saw heavy losses ahead of the close, down by 1.2% at the time of writing.

Bond yields were back on the slide, with both Australian and Japanese government bond yields taking a tumble at the start of the week.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. Business sentiment figures will provide the EUR with direction in the early part of the day.

Barring particularly impressive numbers, however, we would expect risk sentiment to be the key driver.

At the time of writing, the EUR was down 0.04% at $1.1298.

For the Pound

There are no material stats to provide direction to the Pound. Brexit will be the key driver through the day and throughout the week for that matter…

Uncertainty over what lies ahead weighed on the Pound in the early part of the day. Theresa May is due to convene later this morning with her cabinet and lay out her plans. A timetable that must include her resignation will then decide the fate of the Brexit Deal that had been voted out previously.

At the time of writing, the Pound was down by 0.08% to $1.3198.

Across the Pond

It’s a quiet start to the week, with no material economic data to provide direction to the Dollar. FOMC member chatter and risk sentiment will be the key drivers.

FOMC member Harker is scheduled to speak later today. The question will be whether there will be an attempt to calm the markets over the Treasury yield inversion. It will take more than one FOMC member to ease the pain, however, so more members could hit the news wires through the day.

At the time of writing, the Dollar Spot Index was down by 0.04% to 96.617.

For the Loonie

It’s also a quiet day on the economic calendar. Crude oil prices and risk appetite will provide the Loonie with direction through the day.

With January’s trade data not due out until Wednesday, it could be a tough first half of the week for the Loonie.

The Loonie was up 0.01% at C$1.3429, against the U.S Dollar, at the time of writing.

The Week Ahead – It’s Brexit, Powell, Trump, Trade and Stats to Drive the Markets

On the Macro

For the Dollar:

The week kicks off with December housing figures and February consumer confidence number on Tuesday. December factory orders and pending home sales are due out on Wednesday, ahead of 4th quarter GDP numbers and the weekly jobless claims figures. A particularly busy Friday has December’s core PCE price index and personal spending figures due out, ahead of manufacturing PMI numbers and finalized consumer sentiment figures for February.

Outside of the stats, FED Chair Powell’s testimony Tuesday and Wednesday will garner plenty of attention ahead of a scheduled speech on Thursday.

The Dollar Spot Index ended the week down by 0.42% to $96.507.

For the EUR:

Key stats through the week include consumer confidence figures out of Germany on Tuesday and the Eurozone’s consumer confidence figures on Wednesday. On Thursday, 4th quarter GDP numbers and January consumer spending figures out of France will be in focus. Inflation figures out of Spain, Italy, and Germany are also scheduled for release on the day. Focus on Friday will shift to finalized manufacturing PMI numbers, the Eurozone’s unemployment rate and inflation figures. Of greater influence will likely be February employment numbers out of Germany.

The EUR/USD ended the week up 0.35% to $1.1335.

For the Pound:

It’s another relatively quiet week on the data front. Key stats are limited to February manufacturing PMI numbers on Friday.

While there will be some interest in the inflation hearings on Tuesday, focus through the week will continue to be on Brexit.

The GBP/USD ended the week up 1.27% to $1.3053.

For the Loonie:

Economic data includes January inflation figures due out on Wednesday. Also in focus will be January’s RMPI due out on Thursday, while 4th quarter GDP numbers on Friday will 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 crude oil prices and the Loonie.

The Loonie ended the week up by 0.82% to C$1.3135 against the U.S Dollar.

Out of Asia

It’s a busier week ahead.

For the Aussie Dollar:

After a quiet start to the week, 4th quarter construction work done will provide direction on Wednesday. A relatively busy Thursday sees the release of 4th quarter new CAPEX and January private sector credit numbers. February’s AIG manufacturing index numbers round off the stats for the week on Friday.

The Aussie Dollar ended the week down 0.17% at $0.7129.

For the Japanese Yen:

Stats through the week include January industrial production and retail sales figures on Thursday. On Friday, economic data includes 4th quarter capital spending, February’s Tokyo inflation numbers and employment figures for January.

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

The Japanese Yen ended the week up 0.20% at ¥110.69 against the U.S Dollar.

For the Kiwi Dollar:

Stats include 4th quarter retail sales figures due out on Monday. Mid-week, January trade figures are scheduled for release on Wednesday, with business confidence numbers due out on Thursday.

The figures will have a material impact on sentiment towards RBNZ monetary policy and the Kiwi Dollar through the week.

The Kiwi Dollar ended the week down 0.32% to $0.6846.

Out of China:

Economic data includes the NBS manufacturing and non-manufacturing PMI numbers on Thursday. We can expect Thursday’s figures and Friday’s CAIXIN manufacturing PMI will have a material impact on risk sentiment later on in the week.

Geo-Politics

U.S – China Trade War:  Trade talks have been extended, with both sides talking of progress. With the 1st March deadline on Friday yet to be extended, an agreement will need to be wrapped up or close at hand to support an extension.

Brexit: It’s another big week ahead. Theresa May will address Parliament in the early hours of the Asian session on Tuesday. Parliament will then debate the Brexit deal on Wednesday. At the start of the week, it will become clearer on whether the EU will ease on its stance towards the Irish border.

The U.S – North Korea Summit: U.S President Trump and North Korean Leader Kim Jong Un will be meeting on Wednesday and Thursday. The markets will be looking for progress on denuclearization.

The Rest

On the monetary policy front,

For the USD, FED Chair Powell gives testimony on Tuesday and Wednesday, ahead of a scheduled speech on Thursday. Other FOMC members scheduled to speak through the week include Clarida, Bostic, and Harker.

It’s Risk on, Dollar Off as the Markets Consider the FED’s 2019 Rate Path

Earlier in the Day:

Economic data released through the Asian session this morning was limited to December machinery order numbers and 1st quarter forecasts out of Japan.

For the Japanese Yen,

According to figures released by the Cabinet Office,

Core machinery orders fell by 0.1% in January, month-on-month, which was better than a forecasted 1.1% decline. In November, orders had stagnated. Year-on-year, core machinery orders rose by 0.9%, falling well short of a forecasted 4.8% increase. In November, orders had risen by just 0.8%.

  • For the 4th quarter, core machinery orders slid by 4.2%, quarter-on-quarter.
  • Forecast for the 1st quarter of this year is for core machinery orders to fall by a further 1.8%.
  • Machinery orders from overseas fell by 21.9% in December, month-on-month, whilst rising by 12.1% in the 4th quarter of last year.
  • Orders for the 1st quarter of this year are forecasted to slide by 17.1%, reflecting the effects of weaker global growth and the ongoing U.S – China trade war.

Upon release of the figures, the Japanese Yen moved from ¥110.536 to ¥110.521, against the Dollar. At the time of writing, the Yen stood at ¥110.50, down 0.03% for the session.

Out of China,

Vehicle sales will give the likes of the DAX a move and also give the markets some further insight into the direction of the Chinese economy. Sales figures are due out later this morning.

Elsewhere,

The Kiwi Dollar stood at $0.6887 at the time of writing, a gain of 0.28% for the morning. The Aussie Dollar was also in positive territory ahead of the RBA meeting minutes due out tomorrow. Rising by 0.17%, the Aussie Dollar stood at $0.7153.

In the equity markets, direction came from positive updates from trade talks, with an anticipated extension to the 1st March deadline for tariffs supporting risk appetite early on.

At the time of writing, the Nikkei was up 1.87%, in spite of the disappointing machinery order figures, with the ASX200 up 0.33%.

Leading the way through the early part of the day was the CSI300, which was up by 2.11%, while the Hang Seng trailed with a 1.51% gain early on.

The Day Ahead:

For the EUR

There are no material stats scheduled for release through the day. The EUR will be in the hands of market risk sentiment. With the Spanish government calling for snap elections in April and economic woes troubling the markets, new questions have arisen over the fiscal policies of both France and Italy.

Both Italy and France have budget deficits that are forecasted based on overly optimistic growth forecasts. With the EU cutting Italy’s growth forecasts and France’s existing forecasts sitting ahead of Germany, the EU may be forced to deliver cuts to French growth forecasts should 1st quarter economic indicators fail to support the numbers.

Expect plenty of rumblings over the respective budget deficits of both France and Italy and the likely impact of sizeable downward revisions to growth projections for this year.

Outside of the political arena, sentiment towards the U.S – China trade talks and today’s vehicle sales figures out of China will also influence.

At the time of writing, the EUR up by 0.18% at $1.1316.

For the Pound

It’s a quiet day on the data front, leaving the Pound in the hands of Brexit chatter through the day. For now, the focus is on Theresa May’s attempts to unite parliament but, should there be a lack of progress and the prospects of a no-deal departure rise, more ministers could state support for a vote against a no-deal Brexit.

At the time of writing, the Pound was up by 0.19% at $1.2914.

Across the Pond

It’s a quiet day ahead, with the U.S markets closed for President’s Day, a celebration of George Washington’s birthday. While there are no stats to consider, weak economic data out of the U.S through the last week and political wrangling on Capitol Hill have left the Dollar on the defensive going into the week.

At the time of writing, the Dollar Spot Index was down by 0.17% to 96.735.

For the Loonie

Canadian markets are also closed today. With no economic data scheduled for release, the direction will come from risk sentiment through the day. While trading volumes will be on the lighter side, positive updates from trade talks between the U.S and China should provide support early on.

The Loonie was up by 0.09% to C$1.3232, against the U.S Dollar, at the time of writing.

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.

Carney and Powell Could Deliver More Swings in the GBP and USD

Earlier in the Day:

Economic data released through the Asian session this morning included electronic card retail sales figures out of New Zealand, and new home loan sales and business confidence figures out of Australia.

For the Kiwi Dollar,

According to figures released by NZ Stats, card sales rose by 1.8%, month-on-month, in January. Reversing most of December’s 2.3% slide, the figure also came in ahead of a forecasted 1.4% increase.

  • Sales were driven by spending on durables, which increased by 5.1%. The increase reversed a 4.2% slide in December.
  • Spending increased in 5 of the 6 retail industries. Spending on apparel came a distant second, rising by 2.2%. Spending had fallen by 1.7% in December.
  • Core retail spending, which excludes vehicle-related industries, rose by 2.2% in January, reversing a 1.7% fall in December.

The Kiwi Dollar moved from $0.67325 to $0.67331 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.10% to $0.6726. The figures were a much needed positive, but will unlikely be enough for the RBNZ tomorrow morning…

For the Aussie Dollar,

Home loans fell by 6.1%, month-on-month, in December, which was worse than a forecasted 2.8% decline. In November, home loans had fallen by 0.9%. According to figures released by the ABS,

The NAB Business Confidence Index came in at 4 in January, coming in ahead of a forecasted and December 3.0.

  • The Business conditions index increased by 4 points to +7, the rise attributed to an increase in trading (+10), profitability (+5) and employment (+5).
  • The rise in the confidence index failed to pull the index above the long-run average.
  • Forward indicators were described as mixed in January.
    • Forward orders rose to above average.
    • Capex and capacity utilization declined, leaving capacity utilization at just above long-run averages.
    • Most industries saw capacity utilization fall to below average levels, which may impact hiring trends down the road.
    • The NAB also noted that the RBA’s next move on interest rates could be down rather than up when considering the current trajectory of growth and rising downside risks.

The Aussie Dollar moved from $0.70632 to $0.70748 upon release of the figures. At the time of writing, the Aussie Dollar stood at $0.7076, up by 0.20% for the session.

Elsewhere,

The Japanese Yen was down by 0.19% to ¥110.59 against the U.S Dollar. Risk on sentiment through the session weighed on the Yen in the early part of the day. The Nikkei was the main beneficiary, rallying by 2.66%.

A lack of negative commentary on trade provided support, leading to a 0.85% rise in the CSI300 and a more modest 0.16% rise in the Hang Seng. The ASX200 was up by 0.34% at the time of writing.

The Day Ahead:

For the EUR

It’s another quiet day on the economic calendar. Focus through the day will likely remain on trade war chatter and any updates on Brexit negotiations between the EU and Britain. No deal would be a dire outcome for Britain, but the EU economy would certainly not be unscathed.

The EUR has been largely unaffected by the Brexit chatter in recent months. When considering the possible impact of a no-deal on certain economies, including Germany’s, sensitivity may begin to kick in.

At the time of writing, the EUR up by 0.02% at $1.1278, early support coming from the risk-on sentiment.

For the Pound

There are no material stats scheduled for release out of the UK to provide direction through the day.

While there are no stats, BoE Governor Carney is scheduled to speak and could provide the Pound with further direction should there be any further comments on monetary policy.

Following disappointing economic stats out of the UK on Monday, there’s little reason for Carney to deliver a hawkish stance, though it wouldn’t be the first time that Carney has caught the markets off-guard.

On the Brexit front, any updates on talks between British PM May and Opposition leader Corbyn will also influence through the day, as would any comments from Brussels. British PM May is scheduled to update Parliament today, while the government has also confirmed that there will be no meaningful vote this week.

The Pound needs a no-deal scenario to come off the table to bring $1.30 levels back.

At the time of writing, the Pound was up 0.06% at $1.2863.

Across the Pond

Economic data scheduled for release out of the U.S is limited to December’s JOLTs job openings. Following January’s nonfarm payroll figures, we can expect the Dollar to largely ignore the numbers, barring particularly dire numbers.

Outside of the numbers, FED Chair Powell is scheduled to speak later in the day. A renewed love for the Dollar comes in spite of the FED’s more dovish stance on rates. We can expect the Dollar to respond to any policy chatter.

While FED Chair Powell will influence, the focus will remain on updates on from the U.S administration on trade talks with China and where things stand on the government funding deadline.

At the time of writing, the Dollar Spot Index was up by 0.01% to 96.069.

For the Loonie

There are no material stats scheduled for release through the day. Crude oil prices will likely provide direction, with sentiment towards the U.S – China trade talks and the global economic outlook influencing alongside OPEC’s monthly report due out later in the morning.

The Loonie was up by 0.11% to C$1.3288, against the U.S Dollar, at the time of writing, support coming from a pickup in crude oil prices and risk appetite across the broader market.

Brexit Chatter and Economic Data Put the Pound in the Spotlight

Earlier in the Day:

There were no material stats released through the Asian session this morning.

Following Central Bank downward revisions to growth forecasts last week, China’s return from a week off was watched closely as Trade talks with the U.S remain the main area of focus for the markets.

Initial progress in trade talks and a willingness by China to make early concessions has provided some early support as trade talks resume this week. Trump’s comments last week, which plagued the markets, will likely see the markets look to the U.S to delay the planned roll-out of fresh tariffs, scheduled for 1st March.

At the time of writing, the Japanese Yen was down by 0.22% to ¥109.97 against the U.S Dollar. With the Japanese markets closed today, a bounce in the Hang Seng and the CSI300 in the early part of the day weighed on the safe havens.

The Aussie Dollar was up by 0.03% to $0.07090, while the Kiwi Dollar was up by 0.28% to $0.6759. The pair may have found support at the start of the week, but with the RBNZ policy decision due out on Wednesday and lingering concerns over global growth keeping the bulls at bay, it’s likely to be a choppy week ahead.

In the equity markets,

The CSI300 was up by 1.37%, with the Hang Seng up by 0.23%. Hitting reverse was the ASX200, which ended the day down by 0.18%, a partial recovery late in the day limiting the day’s losses.

The Day Ahead:

For the EUR

There are no material stats scheduled for release in what’s a particularly quiet first half of the week on the data front. The markets will need to wait for Eurozone industrial production figures due out on Wednesday, which is not expected to be too EUR friendly.

Outside the numbers, expect market sentiment towards this week’s U.S – China trade talks and risk appetite in general to provide direction.

At the time of writing, the EUR down 0.03% at $1.1320, with $1.12 levels continuing to be the near-term target.

For the Pound

It’s a big day on the economic data front. Key stats through the day include 4th quarter GDP numbers, December’s industrial and manufacturing production figures, and December trade data. We will expect the focus to be on the manufacturing production and GDP numbers.

Following BoE Governor’s comments on monetary policy and warning to the markets on the policy front last week, positive data would give the Pound a much-needed boost.

While the numbers will have an influence, Brexit chatter from parliament will remain the key driver. The possibility of support from the Labour Party is good news for the British PM, though the markets will be looking for a plausible deal rather than just a willingness for both sides to explore alternative options.

At the time of writing, the Pound was down 0.08% at $1.2933.

Across the Pond

There are no material stats scheduled for release. For the Greenback and risk sentiment in general, the markets will be looking toward both Capitol Hill and the Oval Office.

While trade war chatter will certainly be a key driver, the threat of yet another partial government shutdown returns, with temporary funding expiring on Friday.

At the time of writing, the Dollar Spot Index was up by 0.07% to 96.705.

For the Loonie

Economic data is limited to December’s trade data. We can expect the Loonie to be particularly sensitive to today’s trade figures. Any weakness in the numbers and the Loonie could be facing the prospects of C$1.34 levels against the U.S Dollar.

The Loonie was down by 0.11% to C$1.3293, against the U.S Dollar, at the time of writing.

Stats, the RBNZ, the U.S Government, Trade and Brexit are in Focus this Week

On the Macro

For the Dollar:

Key stats include December’s JOTLs job openings on Tuesday, January inflation figures and 4th quarter unit labor cost numbers due out on Wednesday, and December retail sales figures and wholesale inflation numbers on Thursday. February consumer sentiment, NY State manufacturing data, and January industrial production figures wrap up a busy week on the data front.

Outside of the numbers, FED Chair Powell will be speaking on Tuesday, with a number of FOMC members also scheduled to speak through the week.

The Dollar Spot Index ended the week up by 1.11% to $96.637.

For the EUR:

Stats include December industrial production figures on Wednesday and prelim 4th quarter GDP numbers out of Germany and 2nd estimate GDP numbers out of the Eurozone on Thursday. Finalized inflation figures out of Spain and December trade data on Friday will unlikely to have a material impact on the EUR, with focus on growth.

The EUR/USD ended the week down by 1.16% to $1.1323.

For the Pound:

The week kicks off with a bang, with key stats due out on Monday including 4th quarter GDP numbers and December industrial and manufacturing production figures and trade data. Through the rest of the week, January inflation figures due out on Wednesday and January retail sales figures on Friday will also have a significant influence on the Pound.

Outside the numbers, BoE Governor Carney is scheduled to speak on Tuesday, with the BoE’s Haldane scheduled to speak on Friday. It goes without saying that Brexit chatter may ultimately overshadow the economic calendar through the week.

The GBP/USD ended the week down 1.03% at $1.2944.

For the Loonie:

Key stats are limited to December trade data, due out on Monday and manufacturing sales numbers due out on Thursday. We would expect new house price figures and foreign securities purchases to be brushed aside through the week.

Outside the numbers, market risk sentiment, likely to be driven by economic data out of China and chatter on trade, will provide direction for crude oil prices and the Loonie through the week.

The Loonie ended the week down 1.34% to C$1.3278 against the U.S Dollar.

Out of Asia

It’s a relatively busy week ahead.

For the Aussie Dollar:

Key stats are limited to January business confidence figures, due out on Tuesday, and consumer sentiment figures due out on Wednesday.

While we will expect the numbers to have a material influence, trade data out of China and any updates on trade negotiations between the U.S and China will also influence. Bearish central bank revisions to growth forecasts will also remain a factor through the week.

The Aussie Dollar ended the week down 2.23% at $0.7088.

For the Japanese Yen:

Economic data of influence is limited to prelim 4th quarter GDP numbers due out on Thursday. Finalized December industrial production figures due out on Friday will unlikely have a material impact on the Yen, barring a significant revision.

Outside the numbers, market risk sentiment will be the key driver through the week

The Japanese Yen ended the week down 0.21% at ¥109.73 against the U.S Dollar.

For the Kiwi Dollar:

Stats are limited to January electronic card retail sales numbers due out on Tuesday and January’s business PMI due out on Friday. While the figures will influence, the RBNZ’s interest rate decision, policy and rate statement, and press conference on Wednesday will be the key driver for the Kiwi in the week.

The Kiwi Dollar ended the week down 2.23% at $0.6740.

Out of China:

January trade figures due out on Thursday and inflation numbers due out on Friday will be the key drivers on the data front.

Outside of the numbers, expect trade war chatter to continue to influence risk sentiment through the week.

Geo-Politics

U.S – China Trade War:  With Chinese New Year celebrations over, the focus will be back on trade. Material differences and a lack of progress through the week would have a material impact on risk sentiment. Fresh tariffs are to be rolled out on 1st March should an agreement not be in place.

The U.S Budget Deadline: The shutdown may be over, but the temporary funding deadline on Friday could make the government’s return to work the shortest ever.

Brexit: Deal or no deal?

Just like a game of poker, betting on this one has proven to be costly.  With the British Government on its final lap, we expect plenty of Brexit chatter from Brussels and Parliament through the week.

The Rest

On the monetary policy front,

For the NZD, the RBNZ will deliver its policy decision, monetary policy statement and rate statement on Wednesday, which will be followed by the RBNZ press conference. Following downward revisions to growth forecasts by the IMF, the ECB, and the RBA, the RBNZ may well jump on the bandwagon.

Crude Oil,

OPEC and the IEA will release their monthly reports this week. With the number of downward revisions to growth forecasts on the rise and the U.S – China trade war continuing, downward revisions to demand may well be on the cards. The question will be whether production has been pegged back enough to prevent a slide in crude oil prices. WTI ended the week down by 4.60%, whilst Brent was down by 1.04%.

With the Aussie under Pressure, the EUR Could Follow with Trade Data in Focus

Earlier in the Day:

Economic data released through the Asian session was on the lighter side this morning. Key stats were limited to household spending out of Japan.

Outside of the numbers, the RBA also released its statement on monetary policy.

For the Japanese Yen

According to figures released by the Statistics Bureau, household spending increased by 0.1%, year-on-year, falling short of a forecasted 0.8% rise, whilst recovering from a revised 0.5% fall in November.

The rise in spending was attributed to:

  • Ay 19.4% surge in spending on housing, with spending also on the rise on furniture & household utensils (+7.3%); education (+7%); transportation & communication (+5.1%); clothing & footwear (+4.3%); and culture & recreation (+1.1%).
  • Partially offsetting the increase spending were declines in spending on fuel, light & water charges (-13.3%); medical care (-6%); and food (-3.2%).

Month-on-month, spending fell by 0.1%, which was better than a forecasted 0.2% decline following a 1.1% rise in November.

The Japanese Yen moved from ¥109.790 to ¥109.781 against the Dollar, upon release of the figures. At the time of writing, the Japanese Yen stood at ¥109.7 against the Dollar, up 0.11% for the session

For the Aussie Dollar

The RBA Statement of Monetary Policy was released in the early hours.

Following dovish commentary from RBA Governor Lowe the day after the RBA’s policy decision and release of the rate statement on Tuesday, there was more bad news for the Aussie Dollar.

Growth forecasts were revised downwards and the revisions were certainly not minor.

  • For year-ended June 2019, GDP growth was revised down from 3.25% to 2.5%. For year-ended December 2019, growth was revised down from 3.25% to 3%.
  • Things were not much better for 2020. Year-ended June 2020 GDP forecasts were revised down from 3.25% to 2.75% and from 3% to 2.75% for year-ended December 2020.
  • For year-ended June 2021, the GDP growth estimate came in at 2.75%.

Inflation was also revised down,

  • CPI inflation was forecasted to come in at 1.25% for year-ended June 2019, revised from a previous 2%. For year-ended December 2019, inflation was revised down from 2.25% to 1.75%.
  • Forecasts for year-ended June 2020 were also revised down, from 2.25% to 2%, whilst year-ended December 2020 forecasts were left unchanged at 2.25%.

The Aussie Dollar moved from $0.70975 to $0.70697 upon release of the statement. At the time of writing, the Aussie Dollar stood at $0.7074, a loss of 0.38% for the session.

Elsewhere

The Kiwi Dollar was up by 0.10% to $0.6756, a recovery from earlier losses coming ahead of next week’s RBNZ policy decision. The Kiwi bulls could be in for a surprise, with the RBNZ likely to be joining the doves in next week’s meeting.

This morning’s growth forecasts released by the RBA come off the back of the ECB’s forecasts released on Thursday, which were also revised downwards.

In the equity markets, it was back in the red for the majors.

The ECB’s revisions to growth, Trump’s pessimism over a trade agreement being hashed out ahead of a 1st March rollout of fresh tariffs and this morning’s gloomy RBA forecasts added pressure on riskier assets.

At the time of writing, the ASX200 was down by 0.43%, while the Nikkei was down by 1.77%.

The Day Ahead:

For the EUR

Germany is back in the spotlight. Following disappointing factory order and industrial production figures released this week, December’s trade figures will be the key driver for the EUR.

The ECB’s economic bulletin raised enough red flags for the EUR to face the prospect of a pullback to $1.12 levels should the stats continue to weaken. While forecasts are for the trade surplus to narrow, the real question will be by how much.

If Germany’s January manufacturing PMI is anything to go by, new export orders seeing the largest fall in 6-years, the doom and gloom may not end in December…

At the time of writing, the EUR was flat at $1.1341.

For the Pound

There are no material stats scheduled for release through the day. Following BoE Governor Carney’s comments on Thursday, where he said that further rate hikes should not be priced out of the Pound, its back into the red in the early part of the day.

Focus returns to Brexit and whether Theresa May can find more support for concessions to deliver a deal acceptable to Parliament.

We can expect Brexit chatter to have a significant influence, with any chances of a pickup in economic growth hinged on a soft Brexit.

At the time of writing, the Pound was down 0.02% at $1.2932.

Across the Pond

There are also no material stats scheduled for release through the day. Dovish central bank commentary by the ECB and RBA have provided the Dollar with support this week, the FED continuing to talk up the U.S economy in spite of an acknowledgment that rate hikes may need to pause.

The lack of stats will leave the Oval Office in focus, any trade chatter likely to influence.

At the time of writing, the Dollar Spot Index was up by 0.06% to 96.564.

For the Loonie

It’s a busy day on the data front. Key stats scheduled for release include January housing start figures and labor market statistics. The focus will be on January’s employment change data and the unemployment rate, a forecasted uptick in the unemployment rate a negative for the Loonie.

Outside of the numbers, market risk sentiment will play a hand, with Trump’s pessimism over a U.S – China trade agreement by the end of this month, weighing on crude oil prices and the Loonie in the early part of the day.

The Loonie was down by 0.10% to C$1.3321, against the U.S Dollar, at the time of writing.

The Greenback is on the Move, with Stats on the Lighter Side Today

Earlier in the Day:

Economic data released through the Asian session was limited to December building consents and building approvals out of Australia.

For the Kiwi Dollar

Building consents increased by 5.1% to a 14-year high in December. The increase reversed November’s revised 1.9% slide.

According to StatsNZ,

  • 32,996 new homes were consented, sitting just below the most recent peak in June 2004, when 33,251 were consented.

At the time of writing, the Kiwi Dollar stood at $0.6890, a loss of 0.14% for the session.

For the Aussie Dollar

Building approvals tumbled by 8.4% in December, following a revised 9.8% fall in November. Approvals came up well short of a forecasted 1.8% rise. According to figures released by the ABS,

  • Consents for private dwellings excluding houses fell by 18.8%.
  • Private house consents fell by 2.2%.

The Aussie Dollar moved from $0.72530 to $0.72325 upon release of the figures, before easing to $0.7226 at the time of writing, a loss of 0.33% for the session.

Elsewhere, the Japanese Yen stood at ¥109.76 against the Dollar, down by 0.24% for the session, as U.S Dollar strength weighed on the majors through the early part of the day.

In the equity markets, it was a solid start to the day, supported by solid labor market figures out of the U.S on Friday and positive comments from the U.S President on trade talks between the U.S and China over the weekend.

The ASX200 was up by 0.57% ahead of the close, with the Nikkei up by 0.30%. Trailing was the Hang Seng, with a more modest 0.21% gain, volumes on the lighter side due to Chinese New Year.

The Day Ahead:

For the EUR

Preliminary January inflation figures out of Italy are the only material stats scheduled for release out of the Eurozone.

The inflation figures are forecasted to be EUR positive, though we would expect the EUR response to be relatively muted barring better than expected numbers.

Following Friday’s nonfarm payroll figures out of the U.S, the EUR may well start off the week on the back foot.

Disappointing data out of the Eurozone and upbeat numbers out of the U.S gives the Dollar momentum going into the week.

At the time of writing, the EUR was down 0.11% to $1.1443.

For the Pound

The January Construction PMI is the only economic data due out later this morning. The numbers will have some influence on the Pound, though the focus will ultimately be on Brexit and Thursday’s monetary policy decision.

News of Nissan scrapping its plans to make the X-Trail in the UK may be the tip of the iceberg.

At the time of writing, the Pound was down by 0.05% to $1.3072, with Brexit chatter remaining the key driver through the day.

Across the Pond

It’s a relatively quiet day on the economic calendar. U.S factory orders will provide the Dollar with direction later in the day, as the Asian markets respond to Friday’s nonfarm payroll figures.

Outside of the numbers, chatter from the Oval Office will also have an influence ahead of tomorrow’s State of the Union Address.

At the time of writing, the Dollar Spot Index was up 0.10% to 95.673.

For the Loonie

Market risk sentiment and direction from crude oil prices will be the key drivers for the Loonie through the day. The markets will need to wait until tomorrow’s December trade figures to assess whether there is any chance of a shift in the BoC’s outlook on rates.

The Loonie was down by 0.02% to C$1.3104, against the U.S Dollar, at the time of writing.

The Week Ahead – Brexit, The BoE, The RBA and Trump in Focus

On the Macro

For the Dollar:

Key stats include November factory orders due out on Monday, private sector PMI numbers from both the Markit and ISM surveys on Tuesday. On Wednesday, nonfarm productivity and unit labor costs for the 4th quarter are due out. Following last week’s jobless claims, labor market numbers will garner more attention than usual in the week ahead.

4th quarter GDP numbers will also be released during the week. A 30th January’s scheduled release was delayed due to the extended government shutdown.

The Dollar Spot Index ended the week down 0.56% to $95.794.

For the EUR:

Stats include Spanish unemployment numbers due out on Monday, member service sector PMI numbers and retail sales figures out of the Eurozone. Economic data due out of Germany includes factory orders, industrial production, and trade figures due out Wednesday through Friday. Of less influence will be inflation figures out of Italy on Monday.

The EUR/USD ended the week up by 0.38% to $1.1406.

For the Pound:

Key economic data due out is limited January construction and service sector PMI numbers on Monday and Tuesday. We will expect January house price figures to be largely ignored on Thursday. The BoE’s first policy decision of the year and Brexit chatter will likely to take the spotlight.

The GBP/USD ended the week up 2.52% to $1.3196.

For the Loonie:

Stats include December trade data due out on Tuesday, housing sector figures and January’s Ivey PMI on Wednesday and employment figures due out on Friday. Trade figures, the Ivey PMI and employment figures will be the main area of focus from a data perspective.

The Loonie ended the week up 0.32% to C$1.3218 against the U.S Dollar.

Out of Asia

It’s a busier week ahead.

For the Aussie Dollar:

Key stats include retail sales figures and trade data due out on Tuesday, which will be out ahead of the RBA’s February policy decision. The RBA will also release its statement of monetary policy on Friday. The markets will likely brush aside December building approvals, due out on Monday.

The Aussie Dollar ended the week up 0.15% to $0.7179.

For the Japanese Yen:

It’s a relatively quiet week ahead. Key stats are limited to December household spending and current account figures due out on Friday. While household spending figures will provide some direction, expect market risk sentiment to drive the Yen through the week.

The Japanese Yen ended the week up 0.21% to ¥109.55 against the U.S Dollar.

For the Kiwi Dollar:

Stats are limited to December building consents due out on Monday and 4th quarter employment numbers that are scheduled for release on Thursday. Expect the 4th quarter employment numbers to be the key driver on the data front.

The Kiwi Dollar ended the week up 1.42% to $0.6839.

Out of China:

There are no material stats scheduled for release, with China on holiday for Chinese New Year for the week. Volumes will be on the lighter.

Geo-Politics

Brexit: We’re onto Plan C, or at least that is the hope. The alternative is a no deal departure. BoE views on what lies ahead could add to the Pound’s troubles this week.

Trump and the State of the Union Speech: The Speech is on Tuesday. Expect some market moving comments.

U.S – China Trade War:  There were no negative updates to hurt the global financial markets, with talks next scheduled to resume in March.

Hua Wei: Will Canada extradite Huawei CFO Wanzhou to the U.S? Expect a political storm and a material impact on any hopes of a trade agreement between the U.S and China should Wanzhou be delivered.

The Rest

On the monetary policy front,

For the AUD, the RBA will deliver its policy decision and rate statement on Tuesday. Will the recent hike in mortgage rates by the RBA and slowdown in economic growth in China be reasons for the RBA to take a more dovish stance and adjust the language on the likely direction of the next policy move? The RBA will also release its statement of monetary policy on Friday that will give more clues on how the RBA sees the road ahead.

For the GBP, Thursday’s BoE policy decision will draw plenty of attention. Members of the MPC remain in a state of flux as Brexit uncertainty continues to weigh. There may be concerns over the economic outlook should businesses accelerate their relocation beyond British borders, as the prospects of a no-deal departure rise once more.

Asia Closes Flat After Volatile Trading, Optimism Fades In The EU, FOMC Comes Into Focus

Asian Markets Mixed In Monday Trading

Asian markets closed flat and mixed on Monday after a volatile day of trading. The major indices had been largely higher in the early portion of the session but gave up their gains in the last hour of trading as trade-talk fears resurface. Chinese Vice Premier Liu He is scheduled to meet with top-level negotiators in Washington later this week.

There is no expectation a trade deal will be reached but most market watchers agree forward progress is expected, at least enough to stave off the next round of US tariffs slated to go into effect at the end of March.

The Hang Seng Index was the only major market to close with a gain. The Hong Kong-based index advanced a mere 0.03% while others in the region closed in the red. The Japanese Nikkei led late-afternoon declines with a loss of -0.60% while the Shanghai and Korean Kospi closed with much smaller losses. The Australian ASX was closed for public holiday.

Optimism Fades In EU As Brexit Deadline Approaches

Optimism fades in the EU as the US/China trade war wears on and Brexit deadline fast approaches. In Brexit news, the UK Parliament is expected to vote on new terms Theresa May will then have to take to Brussels. The terms, whatever they may be, are not expected to be accepted by the EU. EU negotiators have already stated, and reiterated, that the current deal is not up for renegotiation. If this turns out to be true an already likely hard-Brexit becomes more likely.

EU based indices were broadly lower in early Monday trading. The French CAC led the losses with a decline of -0.60% and was followed closely by the UK FTSE 100 and German DAX. Traders will also be watching an important statement from Mario Draghi this week. Draghi, head of the ECB’s Governing Council, is slated to report on economic conditions to the EU Parliament. In his remarks, he is expected to draw attention to growing risk to global and EU economies.

US Markets Brace For Another FOMC Meeting

In the US markets are bracing for what is to be another market-moving policy statement from the FOMC. The FOMC is meeting this week and scheduled to release their statement on Thursday. The committee is not expected to raise rates, or lower them, but is expected to comment on the trajectory of future hikes and the status of its balance sheet wind-down.

The FOMC has indicated in recent months they could or would hold off on future rate hikes until the data warrants it. The data continues to show expansion within the US economy but with less upward pressure to inflation than previously expected, a situation that has led the market to discount any possibility of rate hikes in 2019.

Regarding the balance sheet wind-down, the FOMC has been allowing proceeds from their bond purchases to run-off as they reach maturity which equates to 25 basis points of policy tightening every quarter. The Committee has come under fire for this as it has been holding back economic activity and is expected to begin slackening that run-off.

Earnings will also be in focus this week. This is the beginning of “Peak Earnings Season”, a three week period in which 60% of the S&P 500 companies are expected to report earnings results for the 4th quarter. The major US indices were broadly lower in the early Monday pre-opening session and look like they will come under pressure this week.

The Week Ahead – Plan B, The FED, Trade and Economic Data in Focus

On the Macro

For the Dollar, it’s a particularly busy week ahead. Key stats through the week include January consumer confidence figures on Tuesday, January ADP non-farm payroll and 4th quarter GDP numbers on Wednesday, the FED’s preferred Core PCE Price index figures, personal spending and Chicago PMI numbers on Thursday. The week will be rounded off with wage growth and nonfarm payroll figures due out on Friday, along with the ISM manufacturing PMI numbers and consumer sentiment figures for January. Outside the stats, the FED will deliver its first policy decision and rate statement of the year. From Capitol Hill, the reopening of the U.S government and updates on U.S – China trade talks will also need to be factored in. The Dollar Spot Index ended the week down 0.56% to $95.794.

For the EUR, stats include French 4th quarter GDP numbers, consumer sentiment figures and consumer spending numbers out of Germany, which are due out on Monday with  German retail sales and unemployment figures due out on Tuesday, alongside the Eurozone’s 4th GDP numbers and December’s unemployment rate. Finalized January manufacturing PMI figures will have limited influence, while we can expect some direction from member state inflation figures due out through the week. On the policy front, Draghi may look to pin back the EUR on Monday. The EUR/USD ended the week up by 0.38% to $1.1406.

For the Pound, economic data is limited to manufacturing PMI numbers due out on Friday, leaving the Pound in the hands of Brexit chatter and the parliamentary vote on plan B, slated for Tuesday. The GBP/USD ended the week up 2.52% to $1.3196.

For the Loonie, stats include GDP numbers and December’s RMPI figures that are due out on Thursday. While the numbers are on the lighter side, we can expect the Loonie to respond, anything weak likely to pin back the BoC for longer. The Loonie ended the week up 0.32% to C$1.3218 against the U.S Dollar.

Out of Asia, it’s a busier week ahead.

For the Aussie Dollar, stats include December business confidence numbers due out on Tuesday, 4th quarter inflation figures on Wednesday, with January’s manufacturing index and 4th quarter wholesale inflation figures on Friday. The Aussie Dollar ended the week up 0.15% to $0.7179.

For the Japanese yen, economic data scheduled for release includes December retail sales figures on Wednesday, prelim industrial production numbers on Thursday and job application figures on Friday. Outside the stats, the BoJ policy meeting minutes from December will be out, which will likely be brushed aside. The Japanese Yen ended the week up 0.21% to ¥109.55 against the U.S Dollar.

For the Kiwi Dollar, stats are limited to December trade figures due out on Tuesday. We can expect increased sensitivity to the numbers, though it’s not just the Kiwi stats that will influence the Kiwi Dollar through the week. The Kiwi Dollar ended the week up 1.42% to $0.6839.

Out of China, focus will be on January’s private sector PMI numbers that are due out on Thursday and Friday. While the numbers will ultimately influence market risk sentiment and the direction for the likes of the Aussie, Kiwi and Loonie, it may well boil down to any progress on trade talks, with talks kicking off in DC on Wednesday.

Geo-Politics

Brexit: It’s a plan B vote in parliament on Tuesday. A rejection along with a move to delay Britain’s departure from the EU may well be the best outcome for the Pound, particularly if backed up by talk of a 2nd referendum heats up.

U.S – China Trade War:  Trade talks are due to start in DC on Wednesday, with progress needed to give the market bulls one last rally before settling down to focus on the implications of the terms of any agreement and near-term impact on economic growth prospects.

U.S Government Shutdown: The longest shutdown in history is over and it didn’t quite go the way of the U.S President, who failed to raise a single U.S Dollar for The Wall…  Trump and the Republicans now have just under 2-years to hope that voters will forget the last 35 days…

Hua Wei: Hua Wei CFO Meng Wanzhou’s extradition deadline is on 30th January…  Canada could certainly get into hot water with China should Meng be extradited and then, there’s the U.S and China trade talks to consider and, to top it all off, the world’s 5 nuclear powers Britain, China, France, Russia and the U.S are due to meet in China on Wednesday. The agenda includes nuclear disarmament, the use of nuclear energy and nuclear non-proliferation.

Venezuela: How much influence the impact of sanctions has on crude oil prices remains to be seen, with a number of key drivers for crude in the spotlight this week.

The Rest

On the monetary policy front,

For the USD, the FED will deliver its first policy decision of the year. While expectations are for the FED to hold, focus will be on the FOMC statement. Recent FOMC member commentary suggests that the statement will be on the dovish side….

On the Earnings Front:

It’s a big week ahead, with Amazon.inc, Caterpillar, Apple, Boeing, Facebook, Microsoft, General Electric and Exxon Mobil due to release earnings that will give some guidance on where we’re heading in the coming quarters.

Asian Markets Drift Higher, ECB Dominates Trade In Europe, US Markets Brace For “Peak Earnings”

Uncertainty Caps Gains In Asia

Asian equities indices drifted higher in Thursday trading. Uncertainty dominates the market as trader await the outcome of an expected trade meeting scheduled for next week. The meeting, between Chinese Vice Premier Liu He and Washington’s top trade team, is an important step in the negotiating process between China and the US and there is a lot riding on the outcome. Until then it is watch-and-wait to see what happens.

The Korean Kospi led today’s action with a gain of 0.81%. The tech sector was strongest, shares of chipmaker SK Hynix were up more than 5.5% on earnings and despite missing analysts expectations. The company says sales were strong but revenue and earnings were impacted by lower prices.

Australian equities got a boost from positive data. Employment figures from the country were better than expected and show labor markets are robust. The data spurred one economist to say labor was “quite strong”, news that bodes well for general economic activity within the nation. Shanghai and Hong Kong were both up about 0.40% for the session, the Japanese Nikkei was the only stock to fall but it only posted a loss of -0.09%.

European Markets Wary Of The ECB

European indices were mostly higher at midday following a mostly as-expected policy statement from the ECB. The ECB has decided to hold its rates unchanged, no surprise there, but there was a small change in the statement. The Governing Council still expects to begin increasing rates late in 2019 but they may remain at current levels “longer, if necessary”.

The French CAC was leading at midday with gains near 0.80%. Tech and autos led, autos boosted by news Renault had selected a new chairman and CEO. The news had that stock up more than 1.25%.

In Italy, shares of ST Microelectronics surged 9.0% on its earnings and guidance. The company says the first half of 2019 is looking good, news that helped lift semiconductor stocks around the world. The German DAX was trading near 0/40% higher on the day, the UK FTSE 100 was showing a small loss as Brexit fears continue to stew. If things continue as they are a hard-Brexit is all but assured.

Peak Earnings Is At Hand

US markets were marginally higher in the early pre-opening session. The tech sector led but gains were broad, if small. The NASDAQ was up a mere 0.50% in the early hours despite strong showings from chipmakers in Asia and Europe. The trade was hampered by trade fears as well as expectations for earnings after the closing bell. After the closing bell reports include chipmaker Intel, consumer giant Starbucks, and rail-carrier Norfolk Southern.

The Dow Jones Industrial Average and S&P 500 were both positive in early trading but gains were small, less than 0.20%. A word from Commerce Secretary Wilbur Ross may have capped gains. Ross says the US is “miles and miles” from reaching a trade deal with China, news that most already assumed to be true.

Today’s data includes labor data from the US. Initial Claims fell more than expected and dropped below 200,000 for the first time in half a century. There are major earnings reports expected on Friday as well but the peak season is not until next week.

Asian Markets Mixed On “Fake News”, Trade Concerns Weigh On EU, Strong Earnings Lift US

“Fake News” Sends Asian Markets Looking For Direction

A report from the Financial Times has the worlds major indices moving lower on Tuesday but the move was a knee-jerk reaction to “fake news”. The news, that US trade delegates had canceled a low-level meeting ahead of next week’s high-level trade talks sent the Dow Jones Industrial Average down more than 350 points but was later refuted. White House Economic Adviser Larry Kudlow says no meeting was scheduled, no meeting was canceled, and next week’s meeting with Chinese Vice Premier Liu He is still on.

Equity markets in Asia were mixed on the news, at once concerned the trade talks were hitting the rocks and relieved that progress was still expected. The Chinese indices were least affected by the news, the Shanghai Composite and Hang Seng indices both closed with small gains less than 0.10%. The Australian ASX, hurt by global GDP woe, was the biggest loser at -0.26%. The Japanese Nikkei closed with a loss of -0.14% while the Korean Kospi paced advancing issues with a gain of 0.47%.

Trade Concerns Weigh On EU Equities

The trade news, along with weak China GDP released earlier this week, and the IMF downgrade of global GDP (citing weakness in the German auto market) had equities in the EU moving lower in the earliest portion of Wednesday’s session. The good news is that strong earnings in the US outweighed concerns for slowing growth allowing equities to post small gains.

The French CAC led at midday with a gain near 0.5% and was followed by a near 0.25% advance in the German DAX. The UK FTSE 100 was the only major indices of the region to post a loss and a minimal -0.20% at that.

The tech and financial sectors were the hardest hit in the EU. The sector saw losses averaging -1.5% on concerns trade disputes and the global economic slowdown would impact sales this year. The financial sector was hit by a double-shot of bad news. The first is that Metro Bank warned growth slowed in the last quarter, news that had the stock down more than -25% in early trading. The second is that the Deutsche Bank is under investigation for its role in the Danske Bank money-laundering scheme.

Strong Earnings Lift US Futures

US futures indicated a positive open for the major indices on Wednesday morning. The combination of Larry Kudlow’s refuting of trade-related news and strong earnings helped lift sentiment and halve the previous day’s losses. On the earnings front, reports from consumer giant P&G and aerospace behemoth UTX both came in better than expected.

Proctor & Gamble reported a top and bottom line beat on solid organic sales growth. UTX reported a stunning top and bottom line beat on demand for aircraft parts, the company also gave strong forward guidance and sent shares up more than 4.0% in the premarket session.

Today’s action is going to be dominated by earnings, there are another dozen or so reports from S&P 500 companies after the bell. Currencies are likely to hold steady ahead of tomorrow’s expected policy statement from the ECB.

Growth Worries Hit Early, with the GBP and Brexit Still in the Spotlight

Earlier in the Day:

There were no material stats released through the Asian session this morning to provide the markets with direction and, with the U.S markets having been closed on Monday, recent economic data out of the region and direction from the U.S futures influenced early on.

At the time of writing, the Japanese Yen was up 0.23% to ¥109.42 against the U.S Dollar, the gains driven by risk sentiment, as the Asian equity majors follow the U.S futures into the red through the early part of the day.

The Aussie Dollar saw bigger losses early on, down 0.34% to $0.7135 while the Kiwi Dollar was down by just 0.12% to $0.6724.

Following softer growth figures out of China on Monday and out of South Korea this morning, sentiment towards the economic outlook continues to plague the markets. On one side, an end to the trade war would support a pickup in economic activity, with a shift in central bank policy outlooks to the more dovish side also a positive. On the flip side, the slowdown in growth has not been immediate and has been evident for a number of quarters, which suggests that it hasn’t just been down to the U.S – China trade war.

In the equity markets, it was red for the majors, with the Hang Seng leading the way down, with a loss of 1% at the time of writing. The CSI300 and ASX200 were not far behind, with losses of 0.87% and 0.65%, with the Nikkei was down by 0.54%.

The Day Ahead:

For the EUR, following a quiet start to the week, on the data front, economic data scheduled for release this morning includes January economic sentiment figures out of Germany and the Eurozone.

Softer than forecasted numbers will likely weigh on the EUR, with the IMF and the Bank of Italy cutting growth forecasts at the start of the week.

On Monday, the IMF cut its global growth forecasts for this year and next, with 2019 growth cut by 0.2% to 3.5% for 2019 and by 0.1% to 3.6% for 2020, the cuts coming off the back of growth forecast cuts that had been made back in October.

While the U.S – China trade war was one of the key contributing factors to the downward revision, weakness in the German auto sector was also highlighted, as was weaker domestic demand in Italy.

At the time of writing, the EUR was up 0.04% to $1.1369, with today’s stats, updates on Brexit and chatter from the Oval Office to provide direction.

For the Pound, economic data scheduled for release this morning includes November wage growth and unemployment rate numbers along with December’s claimant count. We will expect wage growth and claimant count numbers to have the greatest influence on the data front.

Outside of the stats, Brexit continue to be the Pound’s ball and chain, with many likely to have hoped for a clear Brexit blueprint by now.

Monday’s Plan B, which was unsurprisingly similar to plan A, when considering the 3 days given to British PM to run back to Brussels, left Theresa May with little wiggle room. The EU is unwilling to renegotiate and Parliament is unwilling to agree to plan A, unlikely to agree to Plan B and most likely would vote against a Plan C, unless it involves a delay to Brexit and a 2nd referendum.

At the time of writing, the ever resilient Pound was down 0.09% to $1.2881, with today’s stats and updates on Brexit the key drivers through the day.

Across the Pond, economic data scheduled for release is on the lighter side, limited to December existing home sales.

While we can expect the Dollar to respond to the numbers, which are forecasted to be Dollar negative, focus will likely remain on Capitol Hill and the ongoing U.S government shutdown, together with any further updates on the U.S – China trade war.

At the time of writing, the Dollar Spot Index was up 0.5% to 96.38.

For the Loonie, economic data scheduled for release out of Canada includes November wholesale sales and manufacturing sales figures. A lack of stats at the start to the week could see the Loonie more sensitive to today’s figures, though direction will ultimately continue to come from sentiment towards growth and the direction of crude oil prices through the day.

The Loonie was down 0.15% to C$1.3314 against the U.S Dollar at the time of writing.

Trade Uncertainty and China’s Slow Down Test Resilience Ahead of Brexit Plan B

Earlier in the Day:

Economic data released through the Asian session this morning was on the heavier side, with key stats including 4th quarter GDP numbers and December fixed asset investment, industrial production and retail sales figures.

Out of China, the economy grew by 6.4% in 2018, which was in line with forecasts, whilst down from the previous quarter’s 6.5%. Quarter-on-quarter, the economy grew by 1.5%, which was also in line with forecast, whilst down from the 3rd quarters 1.6%.

Growth hit its lowest growth rate since 1990 and, with the effects of the ongoing trade war between the U.S and China becoming ever more evident in the numbers, the end of January could be a big day for the markets should Vice Premier He wrap up an agreement with Trump in DC.

Fixed asset investments rose by 5.9% in December, which was at the same pace as in November, while coming up short of a forecasted 6%.

On the positive side, industrial production jumped by 5.7% in December, year-on-year, coming in ahead of a forecasted 5.3% rise and November 5.4% increase. Retail sales also impressed, rising by 9%, which came in well ahead of a forecasted 8.2% rise and November 8.1% increase.

The Aussie Dollar moved from $0.71552 to $0.71655 upon release of the figures, before rising to $0.7167 at the time of writing, down 0.01% for the morning. A pickup in U.S Treasury yields at the end of last week pinned back the Aussie Dollar ahead of the numbers, in spite of hopes of an end to the U.S – China trade war.

The impact of the numbers was telling across the Asian markets, with the Kiwi Dollar also finding support off the back of the numbers, rising from $0.67252 to 0.67371 at the time of writing, down 0.18% for the session. The Japanese Yen gave up some of its early gains against the U.S Dollar, falling from ¥109.515 to ¥109.64 at the time of writing, the Yen up 0.13% for the session.

In the equity markets, there were gains across the majors, following the upside in the U.S markets on Friday and this morning’s economic data out of China. At the time of writing, the CSI300 was leading the way, up 0.66%, with the Nikkei, Hang Seng and ASX200 seeing gains of 0.35%, 0.34% and 0.31% respectively.

The Day Ahead:

For the EUR, it’s a particularly quiet day ahead, with key stats limited to December wholesale inflation figures scheduled for release out of Germany.

We can expect the numbers to have an immediate impact, forecasts being EUR negative, while direction through the day will ultimately be hinged on market risk appetite, influenced by market reaction to this morning’s numbers out of China and hopes of a trade deal.

There will also be Brexit to factor in later today, with all eyes on Parliament later today. The EUR has been relatively insensitive to the trials and tribulations of the British PM but, should a no deal scenario become likely, some fallout could be on the cards.

At the time of writing, the EUR was up 0.13% to $1.1378.

For the Pound, there are no material stats scheduled for release through the day, leaving the Pound in the hands of Theresa May, Brexit Plan B, or lack of and chatter from Parliament.

At the time of writing, the Pound was down 0.10% to $1.2859.

Across the Pond, there are no stats scheduled for release, with the U.S markets closed.

Both the U.S equity and bond markets will be closed, leaving trading across the markets on the lighter side.

At the time of writing, the Dollar Spot Index was down 0.05% to 96.285.

For the Loonie, another quiet start to the week leaves the Loonie in the hands of market risk appetite driving crude oil prices, with this morning’s numbers out of China not being as disastrous as some may have thought, allowing the Loonie to cut back its early losses on hopes of a trade agreement.

The Loonie was down 0.04% to C$1.3265 against the U.S Dollar at the time of writing.

Optimistic Markets Are Waiting For Trade News, Global Indices Mostly Higher On Tuesday, Tech Stocks Lead In US

Asian Markets Are Mixed, Optimism And Earnings Are In Focus

Tuesday is the second of two days of trade-talks between US and Chinese representatives and so far those representatives have been tight-lipped. As yet no information has been given on progress or lack of it but the market remains hopeful. On Monday a Chinese spokesperson said China was ready to negotiate in good faith with the US.

The Japanese Nikkei led the session with a gain of 0.82%. The index was supported by positive movement in Nissan, one of the top traded issues in that market. Carlos Ghosn, former Nissan CEO, appeared before a Japanese court in defense of allegations he committed financial fraud. The Australian ASX was runner up in Tuesday action with a gain near 0.70% fueled by strength in the financial sector. The Hong Kong-based Heng Seng posted the smallest gain, 0.15%.

In China, the Shang Hai composite fell -0.26% on fear of slowing economic activity. An economist has stated the countries GDP rate has probably fallen below 6.0% which is well below the consensus target 6.5%. Korea’s Kospi fell -0.58% on weak guidance from Samsung and LG.

European Markets Surge On Optimism, Retail Strength

European indices were higher across the board at midday on optimism US/Sino trade talks would produce positive results. The word that many EU retailers saw stronger than expected holiday sales helped drive most indices up by 1.0% or more. The retailers, boosted by strong sales whispers, were up more than 1.5% although gains were not uniform. One major retailer, WM Morrison, missed its holiday sales forecasts and its shares fell -3.0%.

On the economic front, the EU Business Climate index fell over the last month as trade tariffs and slowing growth weigh on outlook. The index fell more than expected to 0.89 from 1.04 in evidence of said slowing growth. In political news, the Brexit deadline is fast approaching. The EU is now considering what action it will take if the UK asks to extend its Article 50 deadline. The UK parliament is expected to vote on the Brexit deal next week, the deal is not expected to pass muster at this time.

US Markets Up On Tech

US futures were indicated to open higher in early premarket trading. The average gain was near 0.80% for the major indices with tech in the lead. Shares of FAANG stocks were up an average 1.0% with Amazon leading. While economic data and outlook remain positive it is the trade talks that are lifting these stocks. Traders will be looking for news on the trade talks in today’s session, anything positive is likely to lift the indices further.

Later this week traders should be wary of the FOMC minutes, due out Wednesday afternoon, and an ECB decision due out on Thursday. Also, between now and the end of the week there are eight (8) speeches from FOMC members, any one of which could move equities and forex market.