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Trading Week Ahead: 16th-20th December 2019

jeffriess
December 15, 2019
by Joseph Jeffriess, Market Analyst

Article Recap

Key Events This Week

Monday
EUR French Flash Services PMI, German Flash Manufacturing PMI, German Flash Services PMI
GBP Flash Manufacturing PMI, Flash Services PMI

Tuesday
USD Flash Manufacturing PMI
GBP Bank Stress Test Results
NZD ANZ Business Confidence
AUDMonetary Policy Meeting Minutes

Wednesday
EUR ECB President Lagarde Speaks
GBP CPI

Thursday
CAD CPI
NZD GDP
AUD Employment Change, Unemployment Rate
JPY Monetary Policy Statement
GBP Retail Sales, MPC Official Bank Rate Votes, Monetary Policy Summary

Friday
GBP Current Account, Monetary Policy Report Hearings
Saturday
CAD Retail and Core Retail Sales
USD Final GDP

European PMI Data

Last week there were some green shoots so to speak with the German ZEW Economic Sentiment jumping 12.8 points to 10.7. Will we see a continuation? A raft of important flash PMI data comes out today in France, Germany and the UK. Eyes will be looking closely at the German data to see if recovery has started, with any positive growth seen as very important to the EU as it’s the largest bloc economy. Looking at the solid week the EUR/USD has just experienced, could positive data maintain the current buyer drive?

Trade Deal Phase 1

There were positive developments in the trade discussions last week with President Trump agreeing in principle to the deal, leading to new records on the S&P500 and Nasdaq. The US signalled it was looking at scrapping the proposed December 15th tariffs and rolling back up to 50% of some of the current duties. China has also agreed to buy 50 billion agricultural products in 2020. With the deal done,  what’s next for stocks this week? Will we see a buy the rumour, sell the fact or a grind higher from US indexes?

Impeachment Vote

On a lesser note, this will be something to watch in the coming week. Could it have any effect on the current stock index rally? For now, it certainly hasn’t, but the house is expected to vote on the impeachment articles this week, and that would send them to the Republican-held Senate for a 2020 trial. President Trump is believed to be looking to be exonerated and not just acquitted. Any surprises could put up short-term worry for stock indices.

Chart to Watch

What will the week hold for the GBP/USD? Looking at the current weekly chart, we can see how strong Friday’s session was after exit poll results hit. The GBP/USD jumped 2.40% in morning trade – a massive move for a forex pair! It moved the pair back to levels not seen since May 2018. The question is, now that we’ve seen the build-up, had the result and the GBP has soared, is this move currently overextended? Key UK data is coming up this week which could worry buyers and lead to higher intensified profit-taking if it disappoints. On the other hand, if the GBP is devalued long-term due to Brexit, could we see further gains to test the 1.3600 level?

GBPUSD.iWeekly (1)

All times are AEST.