What is moving the markets this week

[Kaitsu]

This is an ongoing thread highlighting what are the key issues currently likely to affect our markets. Hopefully everyone will add their insights as we go.

[Kaitsu]

The upcoming week 23-27 Sept is rather thin on economic releases but some things to look out for:

- the decision from the UK Supreme Court regarding the legality of Boris Johnson's prorogation of parliament

- EU/UK Brexit meetings and comments (negotiators meeting)

- further developments between US, Saudi Arabia and Iran

- comments/tweets regarding the US-China trade negotiations coming up in October

In general, EURUSD has been rather directionless, and GBP has tried to do better against other currencies. Oil is in a state of confusion bordered by slow economic growth on one hand and threats of war and outages on the other. The SP500 is near its record highs from July this year but seems stalled here.

[Kim]

The US/Saudi/Iran and US/China issues are complicated by Trump having to be aware of any negative impact his actions may have on next years elections

[Kaitsu]

The US/Saudi/Iran and US/China issues are complicated by Trump having to be aware of any negative impact his actions may have on next years elections

Yes, and that is most certainly an important matter with respect to deploying troops to the middle east. Mr Trump is a businessman and is not interested in prolonged wars. He prefers to play the deals. His interests are a strong domestic stock market, low interest rates, low energy prices, and a competitive value for the dollar.

But the trade war with China is beginning to hurt some sectors of the US economy and some of its regions and is pushing some voter loyalties to the limit right now.  As the election campaigning gets nearer and stronger we are likely to see greater focus on bringing home the goodies (rather than the body bags from some distant war).

[Caesar]

Sterling is , by recent standards at least, treading water while the politicians comment and counter one another on Brexit. Factor in that we are now into Party Conference season, and things are pretty well just drifting along.
Not a great time to be betting your house on Sterling moving in any particular direction.

[Kaitsu]

The UK Supreme Court will be announcing their verdict this morning on whether the UK parliamentary suspension was unlawful.

If it is found to be illegal then parliament may well be reinstated, opening up fresh debating and pressures on Boris Johnson's plans for a 31.10. exit.

Expect some volatile activity in GBP-based currency pairs and FTSE as no one knows what a resumption of parliament would actually achieve.

[Caesar]

Personally, I would be surprised if they found it unlawful. However, if they did it would bring pressure to bear on Johnson to resign.
Could be an interesting day

[Caesar]

Well, not only found to be unlawful but a unanimous verdict of all 11 judges.

[Kaitsu]

Week 7.-11.10

Looks like another unpredictable, politically- driven week lies ahead.

Although no one yet seriously considers the Senate would end up with a 2/3rd majority in any impeachment trial, the impeachment drive against Mr Trump continues and deepens, now with a second "whistleblower" appearing and more documents to be released for scrutiny.

US-Nth Korea talks in Sweden got nowhere and terminated prematurely.

PM Boris Johnson and French President Macron also met and continued the EU-UK stare-out to see who blinks first before the 31.10. deadline. More comments likely during this week and possible negotiation developments on the UK's new proposals.

Can expect some lubricating comments on the upcoming US-China trade talks, most likely upbeat in market terms.

Fed chairman Jerome Powell speaks on occasions during the week prior to the release of the FOMC minutes on Weds 9.10. Also BoE 's governor, Mark Carney speaks on Tues.

The usual calendar releases, including US CPI on Friday.

In general, it seems the key sentiment of markets is focused on any signs of further economic weakness around the globe. The US remains strong and with high employment levels, but cracks are now beginning to appear there, too. Which suggests particular attention will be given to Jerome Powell's comments during the week.

[Kim]

I don’t think we will see any US-China trade agreement this side of the election, it’s not in China’s interest to give Trump anything he can spin as a success to the voters.

[Kaitsu]

I don’t think we will see any US-China trade agreement this side of the election, it’s not in China’s interest to give Trump anything he can spin as a success to the voters.

That is very possible. And means markets will be very uncertain across the board for a long time still to come.

Mr Trump is very good at starting large, aggressive and sweeping battles all over the globe, but as next year's elections loom ever larger on the radar, people will start to look for the results and benefits from these political and economic forest fires.

So far heavy sanctions and tariffs have been directed towards Venezuela, Iran, North Korea, China, Russia, and now renewed tariffs against the EU, and others. But, apart from the Mexico/Canada trade agreement, there are few bull-eyes chalked up on the scoreboard. The US agricultural industry is suffering and manufacturing is showing cracks. So there is a need for some results in the near future but the question is who will end up conceding to whom to achieve these?

[Kaitsu]

Week 7.-11.10

Looks like another unpredictable, politically- driven week lies ahead.

And looks like that is what we got. There are a lot of major things coming together at the same time but nothing concrete has yet surfaced.

The US-China negotiations followed the normal "Trump" formula. First show the big stick (possible new sanctions related to human rights issues), then a carrot that is not actually a carrot at all (postponing, not cancelling, imminent increases in tariffs), then praising China as his best friends in a new "Lovefest".  But nothing concrete or contractual yet.

The EU-UK Brexit talks are looking far more positive than we have seen for a long time with a lot of encouraging comments from both sides, but nothing concrete or contractual yet.

In the meantime, Mr Trump is getting busy with threats of new tariffs against his other economic enemy, the EU, as well a new economic battleground with Turkey following the withdrawal of US troops from Kurdish Syria.

But despite the increased US visibility in global matters, the domestic issues such as impeachment are not going away.

[Kaitsu]

Week 14.-18.10

On one hand this promises to be an eventful week with many defining events on a number of fronts. But on the other hand it is likely to be an extremely difficult week to actually trade.

UK:
Today, Monday, is pageantry day in the UK with the Queen's Speech in the House of Lords. This speech will outline 22 new bills that form the government's plans post-Brexit, which is still assumed to happen on 31.10.

Whilst it is refreshing to hear talk on other subjects than just Brexit, it is rather meaningless coming from a government that is not really a government at all with such a significant parliamentary minority and a strong likelihood of a general election in the near future.

So the UK is most likely this week to be totally focused on the final Brexit negotiations with the EU in the run up to the summit at the end of the week and UK parliament meeting on Sat. So the GBP is likely to be reacting to news and rumours as and when they appear.

US
A lot of good news was built into the markets late last week based on the reported successful completion of a "Phase 1" of a US-China trade agreement. But nothing is yet in writing and it is too soon for hype about a "stage 2". So markets may well be back to watching for signs of the global slowdown both in the US and around the globe, especially in China.

Domestically, the impeachment enquiries will continue and probably intensify and, of course, the rhetoric will sharpen accordingly.

The decision to withdraw US troops from Syria and the subsequent invasion by Turkey is a potentially significant event, especially with news that Syrian government forces are being sent to face the Turkish forces. This is yet another destabilising event in the Middle East alongside the SA and Iran issues.

But it is also a destabilising issue within the EU as well. Turkey, a NATO country, is sending defiant messages to both the US and the EU which, from a trading perspective, only serves to blur the underlying traditional currency fundamentals.

EUR
I still find it difficult to identify specific issues relating to the Euro when its pair currencies have such strong issues of their own, such as the GBP. I am sure that Brexit is going to be the top issue for this week at least and the other issues in the end-of-week summit will take second place from a currency perspective.

I don't personally follow the Far East markets very closely, so if anyone else wants to add something about those then please do so!

 

[Caesar]

Asian markets
Asian markets in general have been badly affected this year by the China-USA spat and by a slowing down of the Chinese economy on which a lot of them are heavily connected.
However,  talk of an improved outlook in the China-USA trade talks improved sentiment last week.
Having narrowly avoided recession, Singapore eased monetary policy for the first time in 3 years.

There is a lot of high-impact data due from China during the course of today,  worth keeping an eye on our Economic Calendar for these as they are released

[Caesar]

It looks like we can't expect resolution of the China-US trade talks until mid-November at the earliest

https://m.investing.com/news/economy/trump-says-likely-wont-sign-china-trade-deal-until-he-meets-with-xi-1997147