China's economic data could affect US-China Trade war

Weekly Report - 29/10/2018

How Economic Data Impacts Relations


China's economic data is expected to create some positive or negative influences over the continuing trade conflict between China and the U.S. Some important economic drivers are also starting to reveal the harmful consequences ahead of the mid-terms like the corporate earnings and 3rd quarter GDP numbers for the U.S. No decision is expected this week and, tensions are expected to remain to weigh on market risk attitude. As for the GBP, as always news on Brexit will remain the important driver for the GBP this week though there isn't any improvement as we continue to get closer to the point of no return. For the Pound, stats are limited to manufacturing and construction PMI numbers coming out Thursday and Friday, and October house price figures due out on Thursday.

The Week that was

We had a very quiet week with MBS trying to balance the situation with the United States regarding the Journalist Kashoggi death. Who has the Journalist’s body? That is the main question that has been thrown around and pressure may build up for the Saudis to come clean. That could eventually not be a good thing for the Saudis or for market risk appetite in general. Now in Europe the Italian budget has been declined and the Italian alliance management went back to the beginning to find a better solution. There is going to be some chatter this week and we may witness some ranges among German and Italian government bonds that may extend further.


Main Focus This Week

The main focus will be on the two popular pairs GBP and JPY. For the GBP, they're going to have an amazing Thursday. The inflation report and Governor Carney press conference are in focus as well the Bank of England policy decision. Weaker inflation numbers in September and depressing retail sales numbers will have reduced the weight on the BoE. The outlook on inflation was anticipated to be in Brexit hands, the Bank of England holds a specific strategy now until there is some evidence for a decision on the Brexit matter. As for the Japanese Yen, Wednesday’s policy decision is questionable if it going to deliver any surprises, with inflation continuing to drop well below of the BoJ’s objective and concerns over the global economy, this is likely to become an important item of discussion.


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