Market Event, Forex

Crunch time for Trade Wars

George Walker, Monday, 25 February 2019

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Source: Mohamed_Hassan (Pixaby)

By far and away the most important news investors and traders need to keep an eye out for next week will be the negotiations between China and the US. The end of next week marks the deadline for the proposed $200 billion worth of tariffs to be implemented by the US on China. This has been a cause for concern for many months now, with the main focus being on how the increased tariffs will affect global growth - with many speculating that the consequences will have a negative effect. Global indices were rocked by these concerns in the final quarter of 2018 but have since staged a comeback on optimism that a deal can be reached before the deadline. With fairly aggressive gains seen already in 2019, should a deal not be reached in time, will we see an equity market sell off or record highs if they manage to agree a deal? Any announcements regarding this could have dramatic effects on currencies, commodities and indices globally, so traders will need to keep a close eye on updates.

GBP/USD
Tuesday sees influential speakers take centre stage with the UK Prime Minister, Theresa May, due to make a speech regarding the ongoing negotiations for Brexit as we enter the critical end game before the UK is due to leave the EU. Historically speaking, Brexit-related news and updates have been the main driver for GBP strength or weakness, so the speech could provide some volatility. Later in the afternoon, the Chair of the Federal Reserve will be testifying in front of congress providing a broad overview of the economy and monetary policy. Although the Fed is expected to maintain a dovish stance regarding monetary policy in 2019, unscripted answers from questions posed by congress can have large impacts on the USD. A meaningful break above 1.33 could be seen as a return to strength for sterling as it has failed on multiple attempts to break above this level.

EUR/USD
Dollar strength has kept the euro pinned down since October, as there has been little reason for optimism of an increase in value in the single market currency. Lacklustre data from the Eurozone has meant the stance from the European Central Bank is not expected to change until the second half of 2019 at the earliest. An apparent range of 1.15 to 1.13 has been in play since October. German GDP followed by eurozone GDP could provide volatility on Thursday morning. Will this range continue? A breach below recent support of 1.13 could signal further downside to come; however, holding above this may give hope of another bounce. US PPI and Retail Sales data follows in the afternoon.

EUR/CAD
Since the turn of the year, the Canadian dollar has been going from strength to strength against the euro and continues to do so. The end of the week could be a busy day for this pairing as a whole raft of European data hits in the morning. Manufacturing PMI, German & European unemployment data followed by the all-important CPI inflation figures from the eurozone are the main ones to watch. Could strong numbers help the euro start to recover? Or will Canadian GDP data out at 13:30 keep the downward pressure on the Euro?

Brent Crude
As mentioned last week, a break above the $63 level has proven to be significant and daily gains have been made since taking the rally to 26% for the year so far. Oil prices were steady around 2019 highs last week with positivity coming from US sanctions on Iran and Venezuela and OPEC-led supply cuts. They were prevented from rallying further due to ongoing concerns about slowing growth in the global economy. The coming week will be critical for oil prices as investors and traders will be monitoring the progress between the two largest economies in the world, to see if a deal can be done before the deadline at the end of the week.


ECONOMIC CALENDAR (all times are GMT)

Monday, 25th February
06:45 CHF Gross Domestic Product
08:15 CHF Employment Level
09:30 GBP BBA Mortgage Approvals
13:30 USD Chicago Fed National Activity Index
15:30 USD Dallas Fed Manufacturing Business Index

Tuesday, 26th February
07:00 GER Gfk Consumer Confidence Survey
N/A GBP Inflation Report Hearings
N/A GBP UK Prime Minister Theresa May Speech
13:30 USD Building Permits
13:30 USD Housing Starts
14:00 USD S&P/Case-Shiller Home Price Indices
N/A USD Fed’s Chair Powell Testifies
14:00 USD Housing Price Index
15:00 USD Consumer Confidence
21:30 USD API Weekly Crude Oil Stock
22:45 NZD Imports/Exports
22:45 NZD Trade Balance

Wednesday, 27th February
09:00 CHF ZEW Survey – Expectations
13:30 USD Durable Goods Orders
13:30 CAD Consumer Price Index – Core
13:30 CAD BoC Consumer Price Index Core
N/A USD Fed’s Chari Powell Testifies
15:30 USD EIA Crude Oil Stocks Change

Thursday, 28th February
00:30 AUD New Home Sales
01:00 CNY Non-manufacturing PMI
01:00 CNY NBS Manufacturing PMI
13:00 GER Consumer Price Index
13:30 GER Harmonized Index of Consumer Prices
13:30 CAD Current Account
13:30 USD Initial Jobless Claims
13:30 USD Continuing Jobless Claims
13:30 USD Gross Domestic Product
13:30 USD Core Personal Consumption Expenditures
14:45 USD Chicago Purchasing Managers Index
21:30 AUD AiG Performance of Mfg Index
21:45 NZD Building Permits
23:30 JPY Tokyo Consumer Price Index
23:30 JPY Unemployment Rate
23:50 JPY Industrial Production

Friday, 1st March
00:30 JPY Nikkei Manufacturing PMI
01:45 CNY Caixin Manufacturing PMI
05:00 JPY Consumer Confidence
08:00 EUR Markit Manufacturing PMI
08:30 GBP Markit Manufacturing PMI
08:30 GER Markit Manufacturing PMI
08:55 GER Unemployment Rate
08:55 GER Unemployment Change
09:30 GBP Consumer Credit
09:30 GBP Mortgage Approvals
10:00 EUR Unemployment Rate
10:00 EUR Consumer Price Index – Core
13:30 USD Core Personal Consumption Expenditure – Price Index
13:30 USD Personal Income
13:30 USD Personal Spending
13:30 CAD Gross Domestic Product Annualized
14:45 USD Markit Manufacturing PMI
15:00 USD Michigan Consumer Sentiment Index
15:00 USD ISM Manufacturing PMI
18:00 USD Baker Hughes US Oil Rig Count


CORPORATE CALENDAR

Monday, 25th February
Bunzl PLC
Centamin PLC
Hammerson PLC
Associated British foods PLC
ONEOK Inc

Tuesday, 26th February
Croda International PLC
Drax Group PLC
Meggitt PLC
Persimmon PLC
Standard Chartered PLC
Travis Perkins PLC
Babcock International group PLC
AutoZone Inc
Bank of Montreal
Cheniere Energy Inc
Discovery Inc
EOG Resources Inc
GW Pharmaceuticals PLC
Home Depot Inc
J.M. Smucker Company
Jazz Pharmaceuticals PLC
Mylan N.V.
Macy’s Inc
Palo Alto Networks Inc
Planet Fitness Inc
Sempra Energy
Veeva Systems Inc
Worldpay Inc

Wednesday, 27th February
International Personal finance PLC
ITV PLC
Provident Financial PLC
Rio Tinto PLC
St James’s Place PLE
Taylor Wimpy PLC
Weir Group PLC
American Tower Corporation
Apache Corporation
BeiGene Ltd
Best Buy Co Inc
Booking Holdings Inc
Churchill Downs Incorporated
HP Inc
Liberty Global PLC
Public Service Enterprise Group Incorporated
Square Inc
TJX Companies Inc
Universal Health Services Inc

Thursday, 28th February
Aston Martin Lagonda PLC
British American tobacco PLC
Howden Joinery Group PLC
International Consolidated Airlines Group PLC
Inchape PLC
Merlin Entertainments PLC
Mondi PLC
Rolls-Royce Group PLC
RSA Insurance Group PLC
Rentokil Initial PLC
ABB Ltd
Anheuser-Busch Inbev SA
Autodesk Inc
Canadian Imperial Bank of Commerce
Dell Technologies Inc
Edison International
Gap Inc
JD.com Inc
Marriott International
NRG Energy Inc
Splunk Inc
Toronto Dominion Bank
Vistra Energy Corp
Vmware Inc
Workday Inc

Friday, 1st March
Rightmove PLC
WPP Group PLC
Foot Locker Inc

Sources: Bloomberg/Companies

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