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With last week’s three course helping of major central banks updates now behind us, politics will establish itself as the primary driver of foreign exchange markets throughout the week as macro data gets thrust into the back seat.
Barely three weeks into his tenure, US President Donald Trump is facing continued backlash against his controversial immigration ban on seven predominantly Muslim countries that had put the US Dollar on the back foot coming into the beginning of last week. An unchanged Fed last Wednesday did little to help the cause of Dollar bulls – eventually contributing to the Dollar decline to fresh two month lows in the meeting’s aftermath – and, despite the largest single jump in Non-Farm Payrolls since June, an increase in the unemployment rate from 4.7% to 4.8% failed to reignite the greenback’s cause.
As a result, the onus once again falls upon the President and his team to inspire confidence in Dollar investors. However, with the administration already branding the Euro as over-valued while continuing its spiky foreign policy stance, bulls might be left with their tails between their legs for another week.
Meanwhile, UK Parliament will enter the second stage of its Article 50 approval process, as members of the House of Commons engage in the committee stage. Amendments will be proposed by MPs from Monday through until Wednesday, when the parliament will then vote on the final outcome. While it is expected that most, if not all, of the proposals will be rejected by the government, it will still provide a gauge as to the strength of the opposition amongst Theresa May’s backbenchers and opposition parties.
The final vote on Wednesday will mark the final impasse for the government before the bill is passed onto the House of Lords. The vote, however, is not expected to move Sterling pairings to the same degree as previous Brexit events – most notably the PM’s speech outlining her objectives – in a carbon copy of last week’s supposedly market-moving debates in the first phase of the parliamentary approval process that ultimately yielded an underwhelming impact on the Pound.
Finally, the campaigning ahead of the April French Presidential election took an unexpected turn as scandal embroiled front-runner Francois Fillon. Dubbed “Penelopegate” by European media, the uncovering of payments to the wife of the conservative candidate has vastly damaged his campaign and much to the joy of his rivals. The vehemently anti-EU and right wing candidate Marine Le Pen has benefited immensely from the scandal, with surveys suggesting that the National Front leader will win the first round of voting, however will lose in the run off to a more mainstream candidate, now expected to be independent candidate Emmanuel Macron.
Any further twists and turns in the race for the premiership of the second largest EU economy could place the Euro on the back foot against its Anglo-American peers, especially if Le Pen ekes out more gains as a result of the Fillon debacle.
The highlights from a light week of macro data predominantly come on Friday, including UK Manufacturing and Industrial Output, the UK NIESR GDP Estimate and US University of Michigan Confidence, however this late deluge of data may be overshadowed by ongoing central bank commentary on both sides of the Atlantic. Of particular note, a trifecta of Fed speakers due over the course of Thursday and Friday, including infamous dove Evans, will most likely be used by markets to assess the view of the central bank following last week’s Non-Farm Payrolls release. Will they remain as noncommittal as ever or pander towards a March rate hike?
Key data this week (Sign up here to get our daily live macro-calendar)
Intl Economic Announcements
01:45 Caixin PMI Services (CN)
07:00 Factory Orders (DE)
08:30 Construction PMI (DE)
09:30 Sentix Investor Confidence (EZ)
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UK Economic Announcements
00:01 BRC LfL Sales
08:30 Halifax House Prices
Intl Economic Announcement
05:00 Leading & Coincident Index (JP)
07:00 Industrial Production (DE)
13:30 Trade Balance (US)
15:00 IBD/IPP Economic Optimism, JOLTS Job Openings (US)
23:50 Trade Balance (JP)
—
Intl Economic Announcements
02:00 Foreign Direct Investment (CN)
12:00 Mortgage Applications (US)
15:30 Crude Oil Inventories (US)
23:50 Machine Orders (JP)
—
UK Economic Announcements
00:01 RICS House Price Balance
Intl Economic Announcements
07:00 Trade Balance (DE)
13:30 Jobless & Continuing Claims (US)
15:00 Wholesale Inventories (US)
—
UK Economic Announcements
09:30 Construction Output, Industrial & Manufacturing Production, Trade Balance
15:00 NIESR GDP Estimate
Intl Economic Announcements
N/A Trade Balance, Imports, Exports (CN)
04:30 Tertiary Industry Index (JP)
13:30 Import/Export Price Index (US)
15:00 University of Michigan Confidence (US)
18:00 Baker Hughes Rig Count (US)
Technicals
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