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 Date Local Time Country Indicator Name Period Reuters Poll Prior
9 Nov 2019 01:30 China (Mainland) PPI YY Oct -1.5% -1.2%
9 Nov 2019 01:30 China (Mainland) CPI YY Oct 3.3% 3.0%
11 Nov 2019 02:00 China (Mainland) Total Social Financing Oct 1,000.00B 2,270.00B
11 Nov 2019 07:00 Norway Consumer Price Index MM Oct 0.2% 0.5%
11 Nov 2019 07:00 Norway Consumer Price Index YY Oct 1.8% 1.5%
11 Nov 2019 07:00 Denmark CPI YY Oct 0.5%
11 Nov 2019 08:00 Czech Republic CPI YY Oct 2.6% 2.7%
11 Nov 2019 09:30 United Kingdom GDP Prelim QQ Q3 0.4% -0.2%
11 Nov 2019 09:30 United Kingdom GDP Prelim YY Q3 1.1% 1.3%
11 Nov 2019 12:00 India Industrial Output YY Sep -2.0% -1.1%
12 Nov 2019 07:00 Turkey Current Account Balance Sep 2.000B 2.604B
12 Nov 2019 07:00 Norway GDP Growth Mainland Q3 0.8% 0.7%
12 Nov 2019 09:30 United Kingdom ILO Unemployment Rate Sep 3.9% 3.9%
12 Nov 2019 10:00 Germany ZEW Economic Sentiment Nov -13.0 -22.8
12 Nov 2019 10:00 Germany ZEW Current Conditions Nov -21.0 -25.3
12 Nov 2019 10:00 Euro Zone ZEW Survey Expectations Nov -23.5
13 Nov 2019 01:00 New Zealand Cash Rate 13 Nov 0.75% 1.00%
13 Nov 2019 07:00 Germany HICP Final YY Oct 0.9% 0.9%
13 Nov 2019 08:30 Sweden CPI MM Oct 0.0% 0.5%
13 Nov 2019 08:30 Sweden CPI YY Oct 1.6% 1.5%
13 Nov 2019 08:30 Sweden CPIF Ex Energy MM Oct 0.5%
13 Nov 2019 08:30 Sweden CPIF Ex Energy YY Oct 1.6%
13 Nov 2019 09:30 United Kingdom CPI YY Oct 1.6% 1.7%
13 Nov 2019 09:30 United Kingdom CPI NSA Oct 108.480
13 Nov 2019 13:00 Russia GDP YY Quarterly Prelim Q3 1.6% 0.9%
13 Nov 2019 13:30 United States CPI MM, SA Oct 0.3% 0.0%
13 Nov 2019 21:30 United States API weekly crude stocks 4 Nov, w/e #N/P #N/P
13 Nov 2019 23:50 Japan GDP QQ Q3 0.2% 0.3%
13 Nov 2019 23:50 Japan GDP QQ Annualised Q3 0.8% 1.3%
14 Nov 2019 00:30 Australia Employment Oct 15.0k 14.7k
14 Nov 2019 00:30 Australia Unemployment Rate Oct 5.3% 5.2%
14 Nov 2019 02:00 China (Mainland) Urban Investment (YTD)YY Oct 5.4% 5.4%
14 Nov 2019 02:00 China (Mainland) Industrial Output YY Oct 5.4% 5.8%
14 Nov 2019 02:00 China (Mainland) Retail Sales YY Oct 7.9% 7.8%
14 Nov 2019 02:00 China (Mainland) Industrial Production YTD YY Oct 5.6%
14 Nov 2019 02:00 China (Mainland) Retail Sales YTD YY Oct 8.16%
14 Nov 2019 06:30 India WPI Inflation YY Oct 0.00% 0.33%
14 Nov 2019 07:00 Germany GDP Flash QQ SA Q3 -0.1% -0.1%
14 Nov 2019 07:00 Germany GDP Flash YY NSA Q3 0.0%
14 Nov 2019 07:00 Germany GDP Flash YY SA Q3 0.5% 0.4%
14 Nov 2019 07:00 Turkey Industrial Production Unadj MM Sep -17.6%
14 Nov 2019 09:30 United Kingdom Retail Sales MM Oct 0.2% 0.0%
14 Nov 2019 09:30 United Kingdom Retail Sales Ex-Fuel MM Oct 0.3% 0.2%
14 Nov 2019 09:30 United Kingdom Retail Sales YY Oct 3.7% 3.1%
14 Nov 2019 10:00 Euro Zone GDP Flash Estimate QQ Q3 0.2% 0.2%
14 Nov 2019 10:00 Euro Zone GDP Flash Estimate YY Q3 1.1% 1.1%
14 Nov 2019 13:30 United States Initial Jobless Claims 9 Nov, w/e 215k 211k
14 Nov 2019 16:00 United States EIA Weekly Crude Stocks 4 Nov, w/e 7.929M
14 Nov 2019 19:00 Mexico Interest Rate Nov 7.75%
15 Nov 2019 04:00 Indonesia Trade Balance (Bln of $) Oct


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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam