Weekly Game Plan - 30.8.2015

1. Themes for the week

1. Will be interesting to view the takeaways from Jackson Hole and the likely implications for US rates and USD. Vice Chair Fischer’s (much desired) remarks suggest September is still in play. Obviously a hawkish slant if compared with market pricing and the consensus take on Dudley earlier last week. Should be Usd bullish. At the same time, Carney kept a "turn of the year" rate hike in the card. Could be bullish Gbp (although tomorrow is a UK bank holiday).

2. A gradual recovery in China and oil prices should stabilise the emerging market turmoil. Should be more upside in equities.

3. US and Euro growth data still robust. In particular, we will see if NFP lends a hand to the rate hike scenario or the delay scenario. EurUsd likely weaker in the coming days.

4. External developments (weak commodities, China jitters, etc.) to add pressure for more QE from the ECB - although no move is expected in this week's meeting - point to lower yields short term. Euro could be under some additional pressure.

2. Charts illustrating those themes

Vix between 20 and 40 is "risk neutral" territory...not risk averse

and not complacent. We're heading higher although still just above 20.

This means equities are likely to be in "retracement" mode before another

attempt at the downside.

I like the S&P/Dow for playing the retracement move higher;

I like the Dax for playing any kind of rotation downwards.

What do you know! Crude is finally showing a decent bounce!

Momentum is to the upside but we're not out of the woods yet.

Buy dips for now...but as we bump up against key levels, 

watch for the reaction. More weakness is still possible.

So long as Crude rallies, equities are easier to buy as the 

"emerging market slowdown" fears get reconsidered.

Watching EurUsd and AudUsd to the short side, and UsdCad to the long side.

Good Luck!