Traders are bracing themselves for a busy start to the week on Monday morning as markets react to an escalation in tensions in the Middle East. Iran launched attack drones and missiles against Israel in apparent retaliation for a strike in Syria that killed top Iranian military officers, and investors are expecting to see risk assets hit on the open. Cryptocurrencies that trade through the weekend have already seen a sharp decline, with Bitcoin dropping nearly 8% on the back of the attacks.
In addition to the increased geopolitical risk across markets, the week ahead also has some key data releases and central bank speakers for markets to negotiate. Washington, D.C., is a major hub this week for central bankers as they pile on the air miles for various events and IMF meetings.
Traders are expecting gapping and much higher volatility on the Monday open as markets react to the weekend’s news. There is nothing on the event calendar in the first two sessions of the day, but we have some key US data releases due once New York opens, with the release of the latest Retail Sales data and Empire State Manufacturing Index due out early in the day.
Tuesday looks to be the busiest day in terms of scheduled events for traders this week. The Asian session will see investor focus firmly on Chinese markets with some key data updates due out midway through the session, led by the crucial Industrial Production number. The European session sees key employment data out of the UK, but the US session has the potential for more moves – not only are the Canadian CPI numbers due out, but we are also set to hear from a plethora of central bank big hitters, including the Fed Chair and the Governors of both the Bank of England and the Bank of Canada.
Things kick off early in the Asian session with key CPI numbers due out of the land of the long white cloud just after the handover from North America. There is little out in the rest of the session, but we have the same data set due out of the UK on the London open as well. The central bankers are still on the speaking circuit on Wednesday as well in the New York session, with Bank of England Governor Andrew Bailey speaking again along with FOMC members Mester and Bowman.
Thursday looks to be a quieter day ahead in terms of scheduled events. The Asian session will see early focus on the Australian market as the latest employment numbers are due out, with the unemployment rate expected to move up to 3.9%. The London session has very little scheduled, but once New York opens we have the usual weekly unemployment claims numbers as well as the Philly Fed Manufacturing Index release. Later in the day, we are due to hear from FOMC member Raphael Bostic as he speaks a couple of times in Florida.
It looks to be a quieter Friday to end the week this week with little on the calendar. There is nothing of note due out in the Asian session. The London session once again has a focus on the UK with the latest Retail Sales numbers due out. The focus remains on UK markets into the US day as MPC members Breedon, Ramsden, and Mann all speak in Washington before we hit the weekend.
