Week Ahead: Brexit delayed, growth concerns raised
Fawad Razaqzada March 22, 2019 5:15 PM
But after an eventful week, next week is understandably quieter from a data point of view. However, the ongoing Brexit situation should keep traders busy all week, while the Reserve Bank of New Zealand will garner some attention as it is the sole major central bank meeting next week.
Friday saw the euro and European stocks sink as investors fretted over a potential recession in the single currency bloc after the latest PMI data there missed expectations quite badly. Yields fell further as investors piled into safe-haven bonds. It came after the Fed revised down its growth forecasts and suggested rates would remain low for even longer than expected. Although stocks on Wall Street initially rose as investors welcomed the news, Friday’s sell-off in Europe weighed on US equities. Things could turn uglier in early next week for stocks, although with all the major central banks being dovish the downside could be limited in the medium term. But after an eventful week, next week is understandably quieter from a data point of view. However, the ongoing Brexit situation should keep traders busy all week, while the Reserve Bank of New Zealand will garner some attention as it is the sole major central bank meeting next week.
The UK was meant to officially leave the EU with or without a deal next Friday, March 29. But the deadlock in parliament meant an extension was required. The EU agreed to delay the Brexit date until 22 May but only if Theresa May's deal is approved by MPs in the next week. However, if MPs reject May's deal yet again, then the UK will have a shorter delay of April 12, by which date it must tell the EU what it wants to do next. A third rejection of May’s divorce bill would further raise the prospects of a no-deal Brexit, which could be pound-negative.
Will RBNZ join dovish central banks?
Despite the RBA joining the Fed and ECB in delivering dovish assessments of the economy and interest rates outlook, the RBNZ was more neutral at its previous meeting last month. In February, we learnt that Q4 was a disappointing quarter for jobs but a good one for retail sales. This month we had some mixed-bag data, although quarterly GDP came in at a good +0.6% after a disappointing +0.3% in Q3. Overall, though, not a lot has fundamentally changed in New Zealand, but the RBNZ may want to align itself closer to the other major central banks, or risk accepting a higher exchange rate. So, don’t be surprised if the RBNZ becomes the latest central bank to turn decidedly dovish.
Next week’s data highlights:
- German Ifo Business Climate
- US Building Permits and CB Consumer Confidence
- Canadian trade balance
- ANZ Business Confidence
- German Prelim CPI
- US Final GDP
- UK Final GDP
- Eurozone Flash CPI
- Canadian GDP
- US Core PCE Price Index, Personal Spending and Chicago PMI
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.