I think along with most people I’m suffering from Brexit fatigue. And last week’s comedy in the UK’s House of Commons was just a re-make of a badly made film I’d seen sometime in December. Frankly, I feel it’s a shocking waste of taxpayer’s money that a month has been lost on a vote for a Brexit deal which was destined to be rejected in the first place and I’m also stunned at the sheer pathetic impotence of a Parliament that seems totally divided but lacks the will to replace the existing leadership. Bearing in mind the magnitude of the Brexit deal defeat and the fact that so many Conservative MPs voted against the deal, I’m also staggered at the hypocrisy that these same people are somehow “confident” in the Prime Minister. Poor Theresa May- a Brexit “remainer” at heart- who continues to hold on to the poisoned Brexit chalice! This week, however, she may finally have to drink from it!
Monday turns out to be a big trading day- not least because the UK Government will deliver its “Plan B.” If it fails to appeal to the House, then I can see calls for another vote of “No-confidence” in the Government and then calls for a General election. At this juncture, political parties will have to spell out their manifestos. And increasingly that is looking like “No-deal” or a new referendum. A softer Brexit faces similar problems to the existing deal. In short, what this means in effect is more time wasting. And I tend to think that the small GBP rally of last week will be short lived.
China also releases 4th quarter GDP on Monday morning and this is expected at 6.4% Y/Y. As impressive as this may seem, unless we see a higher print then analysts will remark that China’s economy is “slowing down.” China GDP will in my mind set the tone for equity markets for the week. That of course and also any further developments in trade discussions between China and the US. US President Trump will be looking for a deviation from the bad press he is receiving over his Mexican wall obsession and partial Government shutdown. The China GDP announcement as well as any trade discussion updates, will allow him an outlet to Tweet some kind of remark.
Negative news from China could well impact both the Australian and New Zealand economies. This week New Zealand releases its 4th quarter Consumer Price Index late on Tuesday evening (expected at 1.8% Y/Y) and Australia releases employment figures early on Thursday morning which are expected to show an increase of 18,000 jobs. Canada releases Retail sales data for November on Wednesday which is likely to be negative 0.7% for the month. The Bank of Japan will also release its interest rate decision on Wednesday morning expected to remain at negative 0.1%.
Euro traders should watch out for Eurozone Januray PMI numbers on Thursday morning expected at 51.3 for Manufacturing and 51.5 for Services. These will be delivered prior to the European Central Bank interest rate decision. Eurozone Interest rates are likely to remain on hold at 0%. The press conference shortly afterwards is also likely to create a small amount of volatility for the Euro.
Gold retraced some of its recent gains to finish last week at $1281 per oz . With all the current uncertainty in the market I feel that $1280 per oz is a reasonable support level for Gold to spring higher and once again test $1300 oz.
Watch out for me on Video on Tuesday and Thursday. Good Luck and Good Trading, Ben Robson
Ben Robson is the CEO of Spectrex Commodities and author of Currency Kings- How Billionaire Traders Made Their Fortune Trading Forex And How You can Too.