By Ben Robson
UK Prime Minister Theresa May had a tough week of it last week, trying to gather enough support to push through her Brexit solution. Expect more tough questions, strong rhetoric, potential cabinet minister resignations, and calls for May's resignation this week as she continues to try and complete her version of what she feels is the best compromise for Britain. The British pound will again be front and centre of many trading opportunities and we will see whether it will react positively or whether withering support will give way. This week, on Tuesday several members of the Bank of England will be interviewed by parliament about last month's inflation report and their view of the economy. My feeling is that we are some way from a positive economic outlook in the UK; rather the contrary. There is a lot of uncertainty and nervousness and this is weighing heavily on the British Pound.
Over in Australia, Reserve Bank of Australia minutes of their recent policy meeting are published on Tuesday and a little later RBA governor Lowe speaks in Melbourne. He has already acknowledged an up turn in the Australian economy despite falling house prices in Sydney and Melbourne. Last week, Australia delivered an excellent employment report with unemployment at 5% and 42,300 full time jobs being created. Traders will be looking for clues as to when Australia may start to tighten its monetary policy.
The OECD gives its economic outlook for Europe on Wednesday and we also have minutes of the latest monetary policy meeting of 25th October released on Thursday. Eurozone Consumer Confidence for November will also be released and is expected to be negative.
The Bank of Japan’s Governor Kuroda speaks in Tokyo on Monday and Japan releases its Consumer Confidence number on Wednesday, expected at 1.4% year on year for October. Elsewhere, in Canada, we have retail sales month on month for September expected flat at 0% on Friday as well as Canada Consumer Price Index expected at 2.2% (Y.o.Y) for October. The US University of Michigan's Consumer sentiment Index out on Wednesday is expected to post 98.3.
In general, the tone this week is largely one of pessimism in the UK, and Eurozone releases will fail to spark any excitement. There is a lot to be positive about in Australia, but then managing house price expectations with raising interest rates is likely to constrain the RBA for a little while longer. Japan is a laggard and currently not a leader in the money markets and Canada is still processing the effects of its own interest rate hike of last month.
Markets this week are likely to focus heavily on the UK this week and there will be plenty of opportunities to trade the GBP against the dollar, the Euro the yen and also the Australian dollar. If there is any kind of meltdown in the UK then pay attention to both GBPJPY and the price of Gold.
Good luck and good trading. Watch out for me on video on Tuesday and Thursday.
This Article was prepared and accomplished by Mr. Ben Robson in his personal capacity. The opinions expressed in this article are Ben’s own and do not reflect the view of Equiti