January 23, 2021

The Week Ahead – U.S Politics, Trump, Brexit, and Economic Data in Focus

Out of Asia

For the Aussie Dollar:

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

On Tuesday, business confidence figures are in focus ahead of August trade data on Tuesday.

The main event of the week, however, will be the RBA’s interest rate decision on Tuesday.

Economic data has been largely positive since the last meeting, which should leave the RBA promising support if needed.

The Aussie Dollar ended the week up by 1.85% to $0.7161.

For the Kiwi Dollar:

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

Key stats include 3rd quarter business confidence figures on Tuesday and Business PMI numbers on Friday.

Expect both sets of numbers to influence in the week.

While the stats will influence, market risk sentiment and updates from Washington will be the key driver.

The Kiwi Dollar ended the week up by 1.45% to $0.6641.

For the Japanese Yen:

It is another busy week than usual on the economic calendar.

Key stats include finalized service sector PMI numbers, GDP figures, and household spending data.

Expect the GDP and household spending figures to have the greatest influence in the week.

Of greater influence in the week, however, will be the vice-president’s debate and updates from Washington. While progress towards a COVID-19 relief Bill would be Yen negative, Trump’s health will need to improve, else expect the Yen to find support.

The Japanese Yen ended the week up by 0.27% to ¥105.29 against the U.S Dollar.

Out of China

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

Service sector PMI numbers for September are due out at the end of the week.

In a shortened week, expect plenty of influence from the numbers. As things stand, economic indicators have pointed to a robust economic recovery from the COVID-19 lockdown. Any disappointing numbers will test market risk appetite.

Away from the economic calendar, chatter from the U.S will also draw interest in the week.

The Chinese Yuan ended the week up 0.48% to CNY6.7910 against the U.S Dollar.

Geo-Politics

UK Politics:

From the weekend, high-level talks between Boris Johnson and Ursula von der Leyen should support the Pound. The British PM and EU Commission President agreed on the importance of a trade agreement. During Saturday’s talks, it was also agreed to extend Brexit negotiations for another month.

With some progress having been made last week, Michel Barnier will travel to London this week. The following week, David Frost is then scheduled to travel to Brussels.

Ahead of talks this week, Barnier will reportedly visit Angela Merkel on Monday.

While the news is positive for the Pound it could be a choppy week, with updates from Germany and London to provide direction.

U.S Politics

While Election fever is picking up, the markets will now be looking for updates on the U.S President’s health.

On the campaign trail, the VPs go head to head this week. For Biden and the Democrats, Harris’s performance is particularly important. Now that Trump has been infected with COVID-19, however, Pence will also be in the spotlight.

Away from the campaign trail, there is also the COVID-19 relief Bill that will influence risk sentiment. There was no reported progress over the weekend, with Pelosi stating that the two sides continued to disagree on key areas.

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