The Week Ahead – a Trump – Xi Truce, Brexit and Monetary Policy in Focus

It’s a big week ahead, with plenty of stats out of key economies, policy decisions, Brexit debate and market response to a trade war truce to consider.

Geo-Politics

Brexit: It’s a big week ahead for the Pound, with 5-days of debates on the deal kicking off on Tuesday, ahead of 11th December vote, likely to garner plenty of attention through the week.

U.S – China Trade War:  There will be some market relief following Saturday’s Trump – Xi truce, with the U.S and China now needing to make some progress to bring an end to the tariffs imposed over the course of the year to restore some market optimism.

The Rest

On the monetary policy front,

For the Aussie Dollar, the RBA interest rate decision and rate statement will be in focus on Tuesday. While rates are expected to be left unchanged, the devil will be in the detail, the RBA unlikely to be signalling a shift in policy this time around.

For the Loonie, the BoC has been particularly hawkish, while the economic indicators have yet to support another rate hike before the end of the year, which does leave the Loonie ripe for a bounce should the BoC stand firm on its forward guidance and talk up a turn of the year move.

For the U.S Dollar, FED Chair Powell’s testimony on Wednesday will be of material influence, particularly when considering a recent shift in opinion on where policy neutral sits that has led to a more dovish outlook on rates for next year.  U.S President Trump’s animosity towards the FED Chair could also be discussed, which will likely draw out a Tweet or two from the U.S President. Other FOMC members scheduled to speak through the week include Kaplan, Bostic and Brainard.

It’s a busy week ahead on the data front, with key stats including November private sector PMI numbers due out on Monday and Wednesday. Other key stats include November’s ADP nonfarm employment change figures on Wednesday, trade and factory order numbers on Thursday and the all-important wage growth and nonfarm payroll figures on Friday that are released ahead of prelim December consumer sentiment figures. Outside of the stats, FED Chair Powell’s testimony on Wednesday and market response to a trade war truce between the U.S and China will also influence. The Dollar Spot Index ended the week up 0.37% to $97.272.

Crude oil: OPEC’s meeting on Thursday will have the futures market on tender hooks, a ramp up in U.S shale production and larger than anticipated output by Iran expected to force the Saudi and Russia’s hand to cut back in order to avoid another week of losses.

(source: fxempire.com)