FOMC, BOE, BOJ, Dutch elections, Article-50, G20 all condensed in a very busy week
The G-20 meeting (from Fri) takes place in Germany. New US Treasury Secretary Mnuchin will be in attendance. The meeting will be watched for any changes to the draft communique which rejects protectionism and commits to refraining from competitive devaluations. Earlier in the week (Tue), US President Trump will host German Chancellor Merkel at the White House.
USD: It’s clear that the FED will raise by 0.25% (Wed) but the USD will take cue from forward guidance: is June in the cards or not? So far the market is not convinced of a June hike and unless Yellen appears overly hawkish, the USD might deflate somewhat. Beyond the FED we have the debt ceiling resolution to be aware of, and data: CPI (Wed), Retail Sales (Wed), Building Permits & Philly Fed (Thur).
EUR: Dutch elections (Wed) might not be that influential. Rutte (moderate candidate) is the top contender with Wilders (anti-EU) following in the polls. However, the winning candidate will face a highly fractured Dutch parliament so passing legislation, in any case, will prove slow and as such, the markets have little interest.
Draghi will be on the wires Monday afternoon and may provide further clarity after his hawkish Q&A last week. Ger ZEW (Tue) also due.
GBP: Employment data (Wed) might confirm the BOE’s comments on more subdued wage growth. BOE (Thur) to keep policy unchanged.
CAD: The Loonie will most likely take it’s cue from external developments, such as the recent drop in Crude oil & the FOMC.
Asia: Chinese retail sales and industrial production (Tue) are expected to show momentum continuing in early 2017.
BOJ to remain still as well. In Japan, core inflation remains close to zero, which means the BoJ is unlikely to step back from its ultra-accommodative policy.
In Australia, RBA Assistant Governor Bullock will speak on Tuesday morning, and Employment data is due on Thursday.
New Zealand will see Current Account data (Tue), GDP (Wed) and Business Manufacturing data (Thur).
Going into the week, I remain bearish on NZD vs Eur & Aud. I remain bearish on GBP vs. Eur & USD. I remain bearish on Cad vs. Euro. Crude Oil remains a sell on rallies, as do Gold & Silver.
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