Weekly Game Plan - 27.7.2015

July is almost finished - last week starting. Here are some thoughts for anyone attempting to stick a finger in the air and decipher the things to come. 

a) the FED is expected to  hike in September despite short term interest rates not yet reflecting this scenario. This will be USD-Bullish and the key is deciding what to sell against dollars. The Euro is rangebound and there's not much interest to play the euro directionally, so Aud and Cad remain the best candidates (for now) to short vs. USD.

b) BOE wants to track the FED, but how hawkish can the BOE can really be?  I am still waiting for clearer drivers.

c) Aud is the worst performer and the runner-up is Cad. It is hard to pin this underperformance on domestic factors since the CPI was largely a non-event and Governor Stevens disappointed doves by flagging upside risks. Citigroup believes that external forces, as well as positioning, have likely been the dominant drivers of the depreciation. Also, any further declines in commodities will weigh on Aud,just as further declines in Crude will weigh on Cad.

1. Who Said What

-  BoJ DepGov Nakaso – Inflation around zero now, to pick up pace post-summer,  to meet 2% target in H1 FY’16, export slowdown temporary, eyeing both up-down  risks to scenario, BoJ to adjust policy as needed, effect of Fed rate hikes/China growth to be eyed closely - Reuters.

-  Mitsubishi Motors to transfer some of US output to Japan – Reuters.

-  BoE ChiefEcon Haldane – No need for rush to raise rates – BBC.

- Debt conundrum to keep Greek banks in months-long freeze – Reuters

2. Themes for the Week

- Fed statement will be watched for signals of a near-term policy rate hike

-  First estimates of UK and US Q2 GDP to show a pickup in growth

-  Euro area inflation to hold steady in July despite decline in oil price

- Remain cautious on Cad: the near-term outlook for CAD and other risk-correlated

and commodity G10 currencies remains rather subdued. 

3. Calendar

GMT Times - Source: Investing.com

4. Look around the markets

Vix heading back up as the markets decline. 

Choppy moments in equities but as long as the recent lows hold,

the uptrend isn't dead yet.

Energy sector not looking good.

In FX, we've already spoken about the main themes:

weakness in Aud & Cad; strength in USD even though

we're currently retracing.