The Week Ahead – Economic Data, COVID-19 Updates and Geopolitics in Focus

Bob Mason

On the Macro

It’s a busy week ahead on the economic calendar, with 64 stats to monitor in the week ending 21st February. In the previous week, just 46 stats had been in focus.

For the Dollar:

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

Through the 1st half of the week, NY Empire State Manufacturing figures will influence on Tuesday, ahead of a busy 2nd half.

We saw Chicago PMI figures recently have a material influence on the Dollar and risk sentiment. Expect the same from the NY State figures.

On Wednesday, while wholesale inflation numbers are the key driver, housing sector figures will need to continue to support upbeat sentiment towards the sector.

On Thursday, the focus will then shift to the all-important Philly FED manufacturing numbers, which are due out ahead of a busy Friday.

While existing home sales figures will garner some attention, the U.S Services PMI will have the greatest impact on Friday.

For the housing sector, mortgage rates saw 3-consecutive weekly declines before a slight uptick last week, which should drive demand…

Outside of the numbers, expect market sentiment towards monetary policy and risk appetite to also influence.

The Dollar Spot Index ended the week up by 0.45% to 99.124.

For the EUR:

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

The markets will need to wait until Tuesday to digest business sentiment figures out of Germany and the Eurozone. The ZEW number will influence and we can expect businesses to factor in the coronavirus spread this time around.

Germany’s ZEW Economic Sentiment figure will have the greatest impact.

The focus will then shift to Germany’s GfK consumer climate figures due out on Thursday. Consumer spending continues to be a key area of focus for the ECB, so we can expect sensitivity to the numbers this week.

Wrapping up the week, we’ve got prelim February private sector PMI numbers out of France, Germany, and the Eurozone.

Upward momentum will need to continue towards a return to growth in the manufacturing sector to support the EUR.

The spread of the coronavirus in China and beyond, however, may give the EUR another blow.

Germany’s manufacturing PMI and the Eurozone’s composite will likely have the greatest influence.

Barring material deviation from prelim, finalized inflation figures out of France, Germany, Italy, and the Eurozone will likely have a muted impact in the week.

The EUR/USD ended the week up down by 1.05% to $1.0831.

For the Pound:

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

Key stats include employment and wage growth figures due out on Tuesday and retail sales figures due out on Thursday.

We saw last month’s employment figures temper market expectations of a BoE rate cut, which leaves the Pound exposed to this month’s numbers.

Off the back of labor market numbers, January inflation figures are due out on Wednesday that will also influence sentiment towards monetary policy. Forecasts are for an uptick in inflationary pressure that should further ease expectations of a near-term rate cut. Much will depend on employment and retail sales figures, however.

The retail sales figures will likely be the key driver on the data front. A bounce back in spending would support the BoE’s initial outlook on economic growth following Brexit.

Of less influence in the week is CBI Industrial Trend Orders due out on Friday.

Outside of the numbers, expect chatter on trade negotiations to also influence. While there may be no progress with the EU, progress elsewhere is a must early on.

The GBP/USD ended the week up by 1.20% to $1.3047.

For the Loonie:

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

December manufacturing sales figures due out on Tuesday will garner some attention ahead of an important 2nd half of the week.

Sales are forecast to fall by a further 0.2% in December, following a 0.6% slide in November. Positive numbers would be needed to deliver the Loonie with support.

In the 2nd half of the week, January inflation figures on Wednesday and December retail sales figures on Friday will be key.

A negative set of numbers and the BoC may well have a green light to ease policy further….

Outside of the numbers, the news wires and sentiment towards the global economy and oil consumption will also be key.

The Loonie ended the week up by 0.42% to C$1.3252 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s another relatively quiet week ahead.

Key stats include 4th quarter wage growth figures due out on Wednesday and January employment numbers due out on Thursday.

Expect both sets of numbers to influence.

Wage growth has been tepid, which has raised concerns over the outlook for domestic consumption.

The RBA sees that the current low in interest rates and a pickup in wage growth would drive spending.

On Thursday, the employment numbers will also need to reflect a tightening in the slack to support a positive outlook on wage growth.

While the numbers will influence, expect news from China and any further moves by Beijing and the PBoC to deliver support.

The Aussie Dollar ended the week up by 0.61% to $0.6714.

For the Kiwi Dollar:

It’s another quiet week ahead on the economic data front. Key stats are limited to 4th quarter wholesale inflation numbers due out on Thursday.

We can expect updates from China and beyond on the impact of the coronavirus on productivity to be key, however.

The Kiwi Dollar ended the week up by 0.59% to $0.6438.

For the Japanese Yen:

It’s a busy week on the economic calendar. Key stats include 4th quarter GDP numbers due out on Monday alongside February industrial production figures,

The focus will then shift to January trade data due out on Wednesday.

GDP numbers are forecasted to be quite dire, which may force the BoJ to show what it has on offer.

Trade data will also garner plenty of attention as the markets look to assess the impact of COVID-19 on regional growth.

At the end of the week, January inflation figures will likely have a muted impact, barring a spike…

Outside of the numbers, economic data from the U.S could continue to give the Dollar the upper hand.

A jump in COVID-19 related deaths and an increase in fatalities outside of China would likely drive demand for the Yen, however.

News from China on the weekend was market risk positive…

The Japanese Yen ended the week down by 0.03% to ¥109.78 against the U.S Dollar.

Out of China

It’s a particularly quiet week on the economic data front. There are no material stats due out of China to provide direction to the global financial markets.

The lack of stats leaves the COVID-19 updates, and impact analysis in focus. We are expecting the government to continue to drive liquidity near-term…

News of new cases in decline should provide early support.

The Chinese Yuan rose by 0.22% to CNY6.9869 against the U.S Dollar in the week.

Geo-Politics

Trade Wars: While the global financial markets remained gripped by the COMVID-19 spread, there was some chatter on the news wires of an imminent trade war between the U.S and the EU.

The U.S President will certainly want to return the narrative to making American great again, going into the campaign trail.

Any threat of tariffs on EU autos and expect tensions to rise.

UK Politics: The European Parliament laid down the gauntlet last week, calling on the UK to retain EU policies in a range of areas in exchange for that ambitious trade deal…

The EU’s opening position is scheduled to be agreed on 25th February, when EU ministers meet. This will be the starting point for the EU and will give the markets some idea of what lies ahead.

Iran and the Middle East: It’s been relatively quiet in the Middle East. In the U.S, however, the Senate has been busy debating a resolution to shackle the U.S President’s ability to go to war with Iran. Interestingly, a number of Republicans have supported the bill that is expected to pass. While Trump is expected to veto the bill, it’s the first chink in the Republican armor.

Corporate Earnings

It’s another busy week ahead on the corporate earnings calendar. Marquee names releasing earnings include:

From the U.S: Walmart Inc. (Tue) and Kraft Heinz (Thurs).

Out of Germany: Deutsche Boerse AG (Mon) Deutsche Telekom AG (Wed), and Allianz SE (Fri) are big releases in the week ahead.

From the UK: HSBC Holdings PLC (Mon), Anglo American PLC (Thurs), BAE Systems (Thurs), Barclays PLC (Thurs), Lloyds Banking Group PLC (Thurs), and Pearson PLC (Fri) also scheduled to release earnings results.

This article was originally posted on FX Empire

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