Over the weekend, FED’s Yellen sketched a bright outlook for the U.S. economy and for inflation prospects. A bit less enthusiasm from BOJ’s Kuroda who believes markets are underestimating geopolitical risk. He also said the BOJ’s inflation target is still far from being achieved.
Meanwhile, in Spain, Rajoy has given Puigdemont until tomorrow to clearly state whether he has declared independence from Spain. Recall that Puigdemont had suspended the independence process, wanting to discuss with Rajoy – but was ignored. It’s not Puigdemont that’s in a bad position: it’s Rajoy because unilaterally ceising control of Catalonia will demonstrate to the whole world that Spain has returned to a dictatorship.
Across the Channel, a powerful cross-party group of MPs is drawing up plans that would make it impossible for Theresa May to allow Britain to crash out of the EU without a deal in 2019.
USD: dull calendar for the US this week, so focus will likely be elsewhere. In China, the focus will be on China’s National Party Congress and GDP growth, inflation, industrial production and retail trade figures. Investors will also be waiting for: UK retail sales, inflation, unemployment and wages; Eurozone inflation and trade balance; Australia employment data and results of general election in Japan.
EUR: the main focus in Europe this week will be Ger ZEW. Beyond that, keep an eye on Spanish politics, Brexit talks and banking sector woes. Much is still “background” sentiment for now, but there are many straws that could break the camel’s back so to speak.
GBP: investors will be closely watching retail sales, inflation, unemployment and wages in an attempt to guesstimate the next move at the BOE. We will also have a speech by Carney (Wed).
CAD: we will have to wait until Friday to get retail sales and inflation data.
AsiaPac: In China, the focus will be the 19th national congress of the Communist Party and the release of GDP. Other key data include consumer and producer prices, industrial production, retail trade and fixed asset investment. Japan will come into focus as the general election will take place at the end of the week. In Australia, RBA meeting minutes and employment data will be in the spotlight. NZD will release the Quarterly CPI print.
Going into the week I remain bullish on the Dow. I’m now bullish on Aud vs. USD, EUR and potentially GBP depending on the Brexit negotiations.
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