The Week Ahead - 15th November 2021

Hello to all. I hope everyone has had a relaxing weekend away from their computer screens. Unfortunately not the case for me bogged down with my macroeconomics coursework... Nonetheless, at least I have another exciting week for financial markets ahead of me. Clearly wasn't a busy week for Elon earlier... abusing Bernie, poor chap. For me the question is, should a CEO really be engaging in this kind of behaviour? Sure it pumps the stock, but it does serious damage to the reputation of the company, and raises questions about his fitness to be CEO. 

Highlights for the week ahead: 

We're getting a raft of financial data from China and with all the concern spreading around re Evergrande and property market crises it will be interesting to see whether this weighs on broader activity. Highlights below (all this data comes tonight so one to watch tomorrow morning). 

Source: Trading Economics

The rest of Monday looks pretty quiet, but Tuesday is busier with significant data on the employment situation coming from the UK. Consensus is expecting the unemployment rate to take another tick lower to 4.4%. We also get claimant count data for October. This data is still being released with a fair lag though, so I'm not entirely sure how much furlough ending etc is featuring in the numbers. 

One thing which is clear with the UK is that the £ has really taken a beating lately. 

Source: cTrader FxPro - 1.38 feels far... far... away (queue the non-sequitur)

Couple of questions last week fired my way about my short-term beliefs on GBP. To be honest, I feel like we've moved quite a long way already and I'd be surprised to see another sharp leg lower without a big of a retracement - maybe back to 1.35. Longer-term though, I really do not see any bull case at all for GBP. 

Also Tuesday, watch out for some inflation data from Europe (France & Italy). We also have US Retail Sales & IP data (I may try and get a preview out depending on time...). Bostic / Barkins / Daly from the Fed speaking also so expect noise. 

UK Inflation Wednesday: 

This I will definitely try and get a preview out for you. This is expected to come in at 3.9% at the moment, but we shall see and don't be surprised if we see a 4% handle on CPI!

This could be a short-term bullish manoeuvre for GBP but I'm not convinced it'll last. Standing by my earlier 1.35 before lower. 

Eurozone Aggregate Inflation Wednesday: 

It's been a rough few weeks for EURUSD too (chart below), and inflation is expected to come in at 2.1% on the core measure (above the ECB's 2% target), but this is one where I wouldn't be surprised to see a miss - the Eurozone is fundamentally disinflationary and I stand by my call that I'll be surprised if the ECB hikes in the next 5 years. That said, I still see a retracement in EURUSD to around 1.16 by year-end now, mainly based on my view that the market is still too aggressive with pricing for Fed hikes. 

Source: cTrader FxPro - EURUSD - I'm In for a Penny

Wednesday will be another big day for Fed Speakers too, and we have Schnabel speaking from the ECB so expect the usual rates hikes pushback etc. Schanbel modestly hawkish, not that that says much for the ECB ;). Also have Lagarde speaking Wednesday. 

Source: ITCMarkets 

Then UK Retail Sales Friday to round out the week. Lagarde also speaking Friday but again I don't expect much movement from the central banker rhetoric. Couple of interesting EM central bank decisions, maybe I'll try to be brave and write on Turkey or South Africa (both Thursday)... no promises though :). 

I stand by my general views though on central banks... pricing is too aggressive for hikes. I'd be surprised to hear of any hikes before Christmas... otherwise that wouldn't be a Merry Xmas Everybody. 

Non-Sequitur: 

Hopefully you all got to this by the end with my carefully placed song titles throughout the article. Slade is the Non-Sequitur. No real reason, I just heard In for a Penny for the first time over the weekend and thought it pretty aptly summed up my EUR view. 

They had a total of 6 number ones through the 70s but more impressively to me they had 17 consecutive songs in the top 20. Not bad. Too early for the below?...

For those not into Slade, you can always try Andrew Lloyd Webber... although again this perhaps isn't quite what you're used to.