Geopolitical events could weigh heavily on markets

December 10, 2018

The week ahead is packed with data, while geopolitical events may play a big role in market direction.

The EUR/USD open the day at $1.13712 and remained flat early, dipping to a low of $1.13594 mid-session. The euro rallied late in the session, climbing to a high of $1.14227. It pulled back just before the close and is currently trading at $1.13915. The GBP/USD struggled on Friday as uncertainty continues over Brexit. The pair opened at $1.27731 and started to decline early before climbing to a high of $1.27892. The gains were short-lived as the pound dropped to lows of $1.27098. It is not far off those lows at the moment, currently trading at $1.27134.

The Dow was again hammered on Friday after opening the day at 24,909.27. The index declined mid-session before climbing as it headed into late-session trading, peaking at 25.088.10. Things turned to mud after that as an 800-point sell-off got underway, with the Dow crashing to a low of 24,272.20 before closing at 24,391.10. The Dax continues to struggle under the weight of a falling Dow, Brexit concerns and Italian budget woes. The German index opened the day at 10,930.52 before bumping up to a high of 10,935.60 during the opening hour. It dropped slightly from there and remained flat for most of the session before falling late. The Dax fell to lows of 10,678.60 before closing at 10,709.60.

This week shapes as a huge one for markets as geopolitical events dominate headlines. The UK parliament votes on Theresa May’s Brexit proposal mid-week in what shapes as a pivotal moment in Brexit negotiations as-well-as Theresa May’s leadership. There is a growing sentiment that her plan will be rejected, throwing the whole process in chaos. Protests in France over a hike in fuel taxes continue to add to the instability of Europe, with many people calling for President Macron to resign.

The data released today and the most significant this week includes:

Today – UK GDP, Manufacturing Production, Good Trade Balance, Index of Services, Industrial Production and MPC Member Jon Cunliffe speaks, Japanese Bank Lending, Current Account, Final GDP, Final GDP Price Index and Economy Watchers Sentiment, Australian Home Loans, Swiss Unemployment Rate, German Trade Balance, Italian Industrial Production, European Sentix Investor Confidence, Canadian Housing Starts, Building Permits and Governing Council Member Tim Lane speaks, US JOLTS Job Openings

Tuesday – UK Average Earnings Index, US PPI

Wednesday – UK Parliament Brexit vote

Thursday – US CPI & Core CPI, Swiss Libor Rate, SNB Monetary Policy Assessment and Press Conference, ECB Main Refinancing Rate and Press Conference

Friday – Retail & Core Retail Sales


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