Key notes for the week ahead: Brexit is the key focus and data events become the name of the game

• We are entering the realms of data dependency once again and while today's schedule is pretty much void of scheduled calendar events, bar Chinese trade as the main focus, the week ahead is packed and has the potential to create some decent opportunities in volatility.

On the US front, we have US retail sales, industrial production, new home sales, housing starts, factory orders and regional PMI data for January. However, Wednesday’s scheduled retail sales and business inventories numbers could well be delayed due to the U.S. government shutdown that has now entered a record for length. 

Brexit saga

Elsewhere, Brexit is likely to be the main driver. This is now crunch time for the Brexit saga as the clock runs down to when the UK is due to leave the EU, scheduled for 11pm UK time on Friday, 29 March 2019. As we count down the days to the meaningful vote to be held on the 15th January where Theresa May is doomed to fail in getting her deal through parliament, on Friday, markets got long of the pound in expectations that Brexit will be delayed until at least July while concluding that Theresa May is doomed to fail in getting her deal through parliament. Brussels is likely writing off 29th March as the deadline for exiting the EU given the domestic opposition facing PM May. The deal is very unlikely to pass (15%), setting off a sequence of events that will require a Plan B by 21 Jan. Markets are now expecting a request from London to extend article 50 in the coming weeks. An EU official was reported saying, “Should the prime minister survive and inform us that she needs more time to win round parliament to a deal, a technical extension up to July will be offered.” 

Draghi in focus

Meanwhile, in Europe, ECB President Draghi appears at the European Parliament on Tuesday. His comments will be closely watched. "ECB speakers last week held to the line that the basic story of expansion remains in place and that the ECB may wait until spring’s next macroeconomic projections to make a new policy assessment. We continue to dispute how long the ECB can hold back from addressing forward guidance on interest rates in this climate. A sharp drop in manufacturing and broader growth momentum is increasingly evident across Europe, which brings the ECB’s forecast of steadily increasing inflation under the spotlight," analysts at ANZ Bank explained.