Brexit talks continue to stall and markets await Trump announcement
European Union leaders met on Friday at the EU summit to discuss Britain’s exit from the bloc. They declared there had not yet been ‘sufficient progress’ to move the talks onto trade, meaning a decision to progress the talks will now have to wait until December. The divorce bill is still the main topic of conversations. French President Emmanuel Macron, still believes more needs to be done in regards to the financial commitments before talks can turn to trade, however UK Prime Minister Theresa May mentioned to the leaders that she will be willing to offer more.
Across the pond, Fed chair Janet Yellen delivered a speech on Friday at the Herbert Stein Memorial Lecture, titled ‘Monetary policy since the financial crisis.’ In her speech, she explained how the low inflation levels are still an unexplainable surprise, however the removal of stimulus has worked well. Yellen did not touch on specific changes to the future monetary policy nor the appointment of the next Fed chair. US President, Donald Trump is still yet to make his highly anticipated announcement of the next Fed chair as the markets continue to speculate who he will decide. The polls are showing current FOMC member Jerome Powell as leading the race, whilst they are also showing the markets believe Trump should choose Yellen to remain at chair.
Very quiet start to the week with no high tier data on the economic docket. The continued Dollar strength trend should therefore continue throughout the day.
On Tuesday, the focus will be on the Eurozone, with the release of the flash manufacturing and services PMIs, expected to post 57.9 and 55.7. Individual manufacturing and services PMIs will also be released from two of the EU’s largest economics, France and Germany.
Wednesday will start with the release of the CPI figure from Australia, expected to increase from last month’s 0.2% to 0.8%. The focus will then switch to the UK for the release of the prelim GDP figure, forecasted to post 0.3%. Across the pond, the US will be releasing their core durable goods orders and crude oil inventories. Whilst the bank of Canada will be releasing their rate statement and monetary policy report.
On Thursday, the European Central Bank will be releasing their rate decision followed by a press conference. It is expected the ECB will announce their tapering plans, however due to the euro strength lately, Mario Draghi might be wary of sounding too hawkish and boosting the Euro further. Across the pond, the US will be releasing their weekly unemployment claims figure expected to post 236k.
Friday the focus will be on the US, with the release of the advance GDP figure, forecasted to post 2.7. Also released is the revised University of Michigan consumer sentiment expected at 101.