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With Christmas just days away, lawmakers across the world are finalising details of crucial policies and preparing for major events that will alter the FX landscape in 2018 before taking time off to celebrate the holiday.
Starting with events at home, the final day of debate on the highly contentious EU Withdrawal Bill takes place on Wednesday in the House of Commons. Following the Government’s first defeat in the Commons over a meaningful vote on the final deal last week, the last day of the committee stage will cover the issue of the precise withdrawal date.
Brexiteers want 29 March 2019 enshrined in the bill to avoid any attempts to delay or even halt Brexit, while the more pro-EU elements of Parliament – including members of the PM’s own Conservative Party – wish to avoid writing the leaving date within the legislation to avoid a cliff edge Brexit.
A last minute deal has supposedly been brokered behind closed doors by the PM which appeases both Leavers and Remainers, but will this truce hold up in the crucial vote after what will likely be a heated debate in the House beforehand?
Moving onto the continent, Catalonians will elect their new parliament in a forced vote following the regional government’s dissolution by the Spanish PM in reaction to October’s disastrous attempt at declaring independence.
Critically, a strong showing the pro-independence candidates will provide a fresh mandate to attempt a break-away from Madrid. However, a vote in favour of Spanish government supportive candidates, defeating the pro-independence element, will likely end the latest struggle for Catalonian independence.
The Euro is likely to reflect the outcome of the vote, with a victory for separatists likely to prompt a negative reaction similar to that which occurred in October when independence was declared. A victory for the pro-government faction, however, will likely curtail some concerns that the constitutional crisis will continue.
Finally, the focus for North America this week will be the final few tweaks to the proposed Republican tax reform bill before a final version is presented to President Trump. While reports are suggesting this will be done before the weekend, the bill itself is not expected to be written into law until next week.
Treasury Secretary Mnuchin further suggested the tax reforms – which include a lowering of the US corporate tax rate to 21% from the current effective rate of 35% – will come into effect in February of next year.
All eyes will now be on the Republican senators who have previously voiced opposition to the bill, in some form or another, to see if the final modifications ease former concerns for total backing from the party in power.
Whilst macro data is thin on the ground to start the week, a multitude of top tier releases in the latter half of the week will likely add some spice to FX markets before the Christmas break. These releases include UK CBI Distributive Trades (Wednesday; 11am), US Q3 GDP (Thursday; 1:30pm – final), UK Q3 GDP (Friday; 9:30am – final release) and US Personal Income & Spending, Inflation, Durable Goods Orders (Friday; 1:30pm).
Key data this week (Sign up here to receive our daily live macro-calendar)
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Intl Economic Announcements
09:00 IFO Surveys (Germany)
10:00 Construction Output, Labour Costs (Germany)
13:30 Housing Starts, Building Permits (USA)
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UK Economic Announcements
11:00 CBI Retail Sales
Intl Economic Announcements
07:00 Producer Prices (Germany)
15:00 Existing Homes Sales (USA)
15:30 Oil Inventories (USA)
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UK Economic Announcements
00:00 GFK Consumer Confidence
09:30 Public Finances
Intl Economic Announcements
13:30 GDP, Chicago Fed, Philly Fed, Jobless Claims, Personal Consumption (USA)
14:00 House Prices (USA)
15:00 Leading index (USA)
15:00 Consumer Confidence (EU)
UK Economic Announcements
00:00 Lloyds Business Barometer
09:30 GDP, Business Investment, Index of Services
Intl Economic Announcements
07:00 GFK Consumer Confidence (Germany)
07:45 GDP (France)
13:30 Personal Income & Spending, Inflation, Durable Goods Orders (USA)
15:00 New Home Sales, Michigan Consumer Sentiment (USA)
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