Week ahead – Trade war, UK, RBNZ, Banxico, Spain

This week has been a little slow, trade deal speculation and baffling UK election gaffs aside. There’s a lot more economic data to come over the next week, with particular focus it seems on the UK and China. Unfortunately, both countries have a lot bigger issues to contend with that investors are far more concerned with than a few data pieces, even if one could – albeit not expected to – put the UK in recession.

Two central bank meetings next week, with a rate cut heavily priced in from the Reserve Bank of New Zealand, while Banxico in Mexico is expected to hold. Central banks have become a lot more active in the last 12 months, investors will be keen to see whether this will continue or if, like the Fed, the mid-cycle adjustment has run its course.

The sun is setting on earnings season, with more than 85% of S&P 500 companies having already reported. Only 16 companies reporting next week including Walmart.

Voters in Spain head to the polls this weekend but no party is expected to secure a majority.

Central Banks this week

Monday – No meetings

Tuesday – No meetings

Wednesday – RBNZ (New Zealand – High expectation of 25bps rate cut)

Thursday – Banxico (Mexico – High expectation of 25bps rate cut)

Friday – No meetings

Central Bank Head Speakers

Monday – No speeches

Tuesday – No speeches

Wednesday – Jerome Powell (Federal Reserve)

Thursday – Adrian Orr (RBNZ)

Friday – Stephen Poloz (BoC)


The US dollar has somewhat stabilized following last month’s Fed signal that interest rates will be on hold.  The mid-cycle adjustment playbook from the 1990s suggest we could see no changes in policy for a couple of meetings, but that should not suggest that the Fed is anywhere close to tightening.

Investors will closely watch the Wednesday release of inflation data followed by Friday’s retail sales report.  Persistent low inflation will motivate the Fed into delivering further rate cuts and possible additional measures in the coming year.  Inflation on a month over month basis is expected to rise 0.3% in October, while the reading 12-months through last month will remain steady at 1.7%.

Retail sales is widely expected to bounce back following last month’s surprise drop, which was the first decline in seven months.  Consecutive retail sales misses will yield calls that US consumer is weakening. If we see softer inflation data and another miss with retail sales, Fed rate cut bets will rise sharply.

Rising Fed rate cut bets combined with a bottom in the German industrial slowdown could be what is needed to help EUR/USD breakout above its tight range.

The Mexican peso could see extended losses as investors abandon peso exposure as the prospects of deeper cuts from the Banxico will grow as the economy continues to deteriorate. The peso has been relatively stable over the last few weeks after making considerable gains in the dollar in the previous six weeks.

Bitcoin has been relatively stable over the last couple of weeks since it bounced back towards $10,000. It’s coming under pressure at the end of the week but nothing outside the kind of moves we’ve been witnessing. It goes without saying that bitcoin is always prone to huge moves at any moment, regardless of how calm it’s looking.

What’s good for trade is good for oil prices. Brent rallied on Thursday as trade optimism spread but like it’s stock market buddy, it is paring gains already today on the back of those conflicting reports. The rally on Thursday wasn’t particularly strong, which may reflect waning momentum after a strong rebound from the early October lows.

Brent prices are up more than 10% from those lows and while sentiment has improved, the expectation is still that the global economy is going to slow next year, even if the US avoids recession.

Gold has finally broken out! The trade headlines over the last 24 hours triggered strong demand the dollar and risk, neither of which bode well for the yellow metal. It was already trading around the lower end of the range and this provided the catalyst to break the month-long consolidation and test the $1,460 lows of early last month.

We’ve already seen some profit taking but this will certainly give gold bears encouragement, while bulls may have had the wind knocked out of them just as optimism was starting to build. Support below here may be found around $1,440.


It’s been a remarkable start to the UK election campaign, one in which no party is yet to look anything other than inadequate. I’d be amazed but having watched the political drama play out over the last few years, it’s actually rather in-keeping with the nonsense we’ve become accustomed to. Even still, we are already seeing some quite incredible things unfold.

I don’t expect the next five weeks will be any different and, if anything, it will likely become more bitter and fierce. The BoE yesterday has already been forgotten, with future decisions likely to be dictated by events over the next few months. Even the new Governor can’t be chosen until we have a new government.

Sterling has consolidated since the extension was secured. While that can change in the coming weeks, traders are currently content in the belief that the Conservatives will secure the majority they need.

Voters in Spain head to the polls this weekend but no party is expected to secure a majority. The Socialists have a lead in the polls but are likely to be forced to try again to engage in negotiations with parties to avoid another election next year. Minimal, if any, market impact is expected with hung parliament the likely outcome.

We are well under 90 days until the Iowa Democratic caucuses which takes place on February 3rd 2020.  Right now, it appears to be a four-person race between Elizabeth Warren, Joe Biden, Bernie Sanders, and Pete Buttigieg.

Fears of a progressive candidate such as Warren or Sanders being the Democratic nominee are growing, but even if that happens, radical changes to healthcare and regulation seem unlikely as the Republicans will still hold the Senate.  Wall Street will eventually to start to price in the risk of Democratic candidate, with Biden likely being the most market friendly choice.

The base case remains that US President Trump will be re-elected, however impeachment drama and a never-ending trade war could finally start to weigh on some of the voters in the key battleground states.

Bank of Japan unchanged. In watch and wait mode. Trade sensitive to negative US-China headlines.

Student dies today from fall in last weekend’s protests. Hong Kong elections 24th Nov, possibly postponed. China direct intervention remote. Protests may escalate this weekend after the student’s death.

Phase 1 trade deal looks locked and loaded with staged mutual reduction in tariffs. White House changes mind over weekend leads to sharp risk selloff on Monday morning.

Reserve Bank of Australia quarterly implies more easing needed with recovery slow and wage growth not on the horizon. Housing bubble. Increased chances of QE soon could combine to lower AUD.

Local Start DateLocal TimeCountryIndicator NamePeriodReuters PollPrior
9 Nov 201901:30China (Mainland)PPI YYOct-1.5%-1.2%
9 Nov 201901:30China (Mainland)CPI YYOct3.3%3.0%
11 Nov 201902:00China (Mainland)Total Social FinancingOct1,000.00B2,270.00B
11 Nov 201907:00NorwayConsumer Price Index MMOct0.2%0.5%
11 Nov 201907:00NorwayConsumer Price Index YYOct1.8%1.5%
11 Nov 201907:00DenmarkCPI YYOct0.5%
11 Nov 201908:00Czech RepublicCPI YYOct2.6%2.7%
11 Nov 201909:30United KingdomGDP Prelim QQQ30.4%-0.2%
11 Nov 201909:30United KingdomGDP Prelim YYQ31.1%1.3%
11 Nov 201912:00IndiaIndustrial Output YYSep-2.0%-1.1%
12 Nov 201907:00TurkeyCurrent Account BalanceSep2.000B2.604B
12 Nov 201907:00NorwayGDP Growth MainlandQ30.8%0.7%
12 Nov 201909:30United KingdomILO Unemployment RateSep3.9%3.9%
12 Nov 201910:00GermanyZEW Economic SentimentNov-13.0-22.8
12 Nov 201910:00GermanyZEW Current ConditionsNov-21.0-25.3
12 Nov 201910:00Euro ZoneZEW Survey ExpectationsNov-23.5
13 Nov 201901:00New ZealandCash Rate13 Nov0.75%1.00%
13 Nov 201907:00GermanyHICP Final YYOct0.9%0.9%
13 Nov 201908:30SwedenCPI MMOct0.0%0.5%
13 Nov 201908:30SwedenCPI YYOct1.6%1.5%
13 Nov 201908:30SwedenCPIF Ex Energy MMOct0.5%
13 Nov 201908:30SwedenCPIF Ex Energy YYOct1.6%
13 Nov 201909:30United KingdomCPI YYOct1.6%1.7%
13 Nov 201909:30United KingdomCPI NSAOct108.480
13 Nov 201913:00RussiaGDP YY Quarterly PrelimQ31.6%0.9%
13 Nov 201913:30United StatesCPI MM, SAOct0.3%0.0%
13 Nov 201921:30United StatesAPI weekly crude stocks4 Nov, w/e#N/P#N/P
13 Nov 201923:50JapanGDP QQQ30.2%0.3%
13 Nov 201923:50JapanGDP QQ AnnualisedQ30.8%1.3%
14 Nov 201900:30AustraliaEmploymentOct15.0k14.7k
14 Nov 201900:30AustraliaUnemployment RateOct5.3%5.2%
14 Nov 201902:00China (Mainland)Urban Investment (YTD)YYOct5.4%5.4%
14 Nov 201902:00China (Mainland)Industrial Output YYOct5.4%5.8%
14 Nov 201902:00China (Mainland)Retail Sales YYOct7.9%7.8%
14 Nov 201902:00China (Mainland)Industrial Production YTD YYOct5.6%
14 Nov 201902:00China (Mainland)Retail Sales YTD YYOct8.16%
14 Nov 201906:30IndiaWPI Inflation YYOct0.00%0.33%
14 Nov 201907:00GermanyGDP Flash QQ SAQ3-0.1%-0.1%
14 Nov 201907:00GermanyGDP Flash YY NSAQ30.0%
14 Nov 201907:00GermanyGDP Flash YY SAQ30.5%0.4%
14 Nov 201907:00TurkeyIndustrial Production Unadj MMSep-17.6%
14 Nov 201909:30United KingdomRetail Sales MMOct0.2%0.0%
14 Nov 201909:30United KingdomRetail Sales Ex-Fuel MMOct0.3%0.2%
14 Nov 201909:30United KingdomRetail Sales YYOct3.7%3.1%
14 Nov 201910:00Euro ZoneGDP Flash Estimate QQQ30.2%0.2%
14 Nov 201910:00Euro ZoneGDP Flash Estimate YYQ31.1%1.1%
14 Nov 201913:30United StatesInitial Jobless Claims9 Nov, w/e215k211k
14 Nov 201916:00United StatesEIA Weekly Crude Stocks4 Nov, w/e7.929M
14 Nov 201919:00MexicoInterest RateNov7.75%
15 Nov 201904:00IndonesiaTrade Balance (Bln of $)Oct


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years’ experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.

Craig Erlam

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