The Week Ahead – Brexit, Earnings and Trump in the Spotlight

For the Dollar, it’s a busy week ahead, with key stats including wholesale inflation and NY State PMI numbers on Tuesday, December retail sales figures on Wednesday and the Philly FED Manufacturing PMI and housing sector figures on Thursday. Following a choppy few weeks in the markets and with the government shut down extending into the week, prelim consumer sentiment figures on Friday will garner plenty of interest, with December industrial production numbers also of interest at the end of the week. Outside the numbers, Oval Office chatter and any further updates on trade will also be of influence through the week. FOMC members scheduled to speak through week could add some downward pressure on the Dollar as FED members look to hit the brakes. The Dollar Spot Index ended the week down 0.55% to $95.67.

For the EUR, it’s a busy week ahead. Outside of finalized December inflation numbers due out of France, Spain, Italy and Germany from Tuesday through Friday, Eurozone industrial production figures on Monday and trade data on Tuesday will provide direction ahead of the Eurozone’s inflation numbers on Thursday. Some disappointing numbers out of Germany may well filter through, which could pin the EUR back through the week, with 4th quarter GDP numbers due out of Germany and France on Monday. On the policy front, ECP President Draghi is scheduled to speak on Tuesday. The EUR/USD ended the week up 0.65% to $1.1469.

For the Pound, economic data scheduled for release includes December inflation numbers due out on Wednesday and retail sales figures on Friday. We will expect the numbers to be largely brushed aside, with focus being on the Brexit deal parliamentary vote on Tuesday and any immediate action needing to be taken should the deal fail to get through. The GBP/USD ended the week up 0.95% to $1.2844.

For the Loonie, it’s a quiet week ahead, with key stats limited to December inflation and ADP Employment Change figures that are due out on Friday. While we can expect some influence from numbers, direction through the week will hinge on crude oil prices and ultimately sentiment towards the global economy and near-term outlook. The Loonie ended the week up 0.80% to C$1.3267 against the U.S Dollar.

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

For the Aussie Dollar, it’s a particularly quiet week ahead, with key stats limited to November home loan and January consumer sentiment figures due out on Thursday. While consumer sentiment will be the key driver on the data front, economic data and Oval Office chatter will also be of influence, any risk aversion to weigh heavily on the Aussie Dollar. Trade data out of China at the start of the week will get things going at the start of the week. The Aussie Dollar ended the week up 1.43% to $0.7215.

For the Japanese yen, economic data due out in the week ahead is limited to November machinery orders on Tuesday and December inflation and November industrial production figures on Friday that are unlikely to have a material impact on the Yen or the BoJ, with risk sentiment through the week the key driver.  On the policy front, BoJ Governor Kuroda is scheduled to speak on Thursday, which could pin the Yen back early on in the day. The Japanese Yen ended the week up 0.03% to ¥108.48 against the U.S Dollar.

For the Kiwi Dollar, key stats through the week include 4th quarter business confidence numbers due out on Tuesday, electronic card retail sales figures on Wednesday and New Zealand’s business PMI on Friday, with all the stats expect to influence. Elsewhere, trade data out of China and sentiment towards the economic outlook will also provide direction through the week. The Kiwi Dollar ended the week up 1.49% to $0.6832.

Out of China, economic data is limited to December trade figures due out on Monday that will set the tone for the financial markets for the week ahead. Outside of the stats, any updates, or lack of, from Beijing on meeting agreements made during trade talks will also be of influence.

Brexit: It’s a big week ahead, with the Parliamentary vote on Theresa May’s Brexit deal scheduled to take place on Tuesday. A “No” vote will have the British PM scampering back to Brussels, with a 3-day window, but it may not be enough to save the Tories from a snap general election.

U.S – China Trade War:  Updates and early progress is going to be needed to maintain the optimism that has provided some relief to the global financial markets.

U.S Government Shutdown: The extended and longest government shutdown in U.S history will begin to take its toll on the Dollar and the U.S equity markets, the previously longest having been 21 days in Dec-95 through Jan-96.

On the monetary policy front,

With none of the major central banks delivering policy decisions, focus will be on speeches through the week, with Draghi and a number of FOMC members scheduled to speak.

Earnings:

Earnings season kicks off and it could be a dramatic one for the equity markets if the bears are right with their forecasts. The first major release will be Citigroup’s on Monday, with JPMorgan Chase & Co and Wells Fargo releasing their results on Tuesday.