Weekly Game Plan - 26.6.16

Themes for the week and potential opportunities

Any data this week will take back seat to risk appetite based on Brexit tone.  The result of the general election in Spain on Sunday and the EU leaders’ summit on Tuesday and Wednesday offer two near-term flashpoints: if the Podemos party does well in Sunday’s election it could be the start of a general wave of "separatist contagion" in the EU. Furthermore, German, French and Italian leaders meet in Berlin on Monday. BoE Governor Carney is due to speak at an ECB forum in Portugal on Monday while Draghi, Yellen & Carney will be attending a panel in Portugal on Wednesday.

UK: The only thing I have to say about UK data this week (and potentially in the coming weeks) is that negative data will exacerbate the downwards bias for Gbp since Brexit is currently seen upon as negative.

EU: we have data this week but the impact is complicated by the results of the referendum in the UK. German and Eurozone sentiment surveys (Wed) are expected to remain more or less stable along with the PMIs on Friday. Flash Ger June inflation is expected higher and EU HICP is also due higher. German labour market data is on Thursday, expected to see a further 5k fall in unemployment with the rate stable at 6.1%. Thursday we will also see the ECB June meeting minutes. Eurozone unemployment is on Friday, expected to fall to 10.1% in May from 10.2%. Overall positive expectations on the data front but risk-appetite and potential for "contagion" will likely dominate the agenda.

Jpy: there is an increasing feeling of looming intervention if UsdJpy falls below 100 and EurJpy below 110. If CPI on Friday fails to impress, and more stimulus seems necessary, that might also give more of an excuse to the MoF to proceeed.

Comm-Dolls: no real data out except Cad GDP (Thur) which is backward looking and will not incorporate the effects from Alberta Wildfires. So instead, traders will watch China's PMI data on Friday.

We are likely due for volatile times. I'd expect more downside on Gbp and Euro, matched with strength in Jpy & USD.  Indices will also be volatile and overall look negative going into the week.

Weekly Game Plan - 19.6.16

Themes for the week and potential opportunities

The latest Brexit polls will need to be factored in upon market open: BMG on Saturday put the Remain camp in a slight advantage but it's still close: http://www.scotsman.com/news/uk/remain-campaign-pulls-ahead-of-brexit-in-eu-referendum-poll-1-4158264 while the Observer/Opinium poll has both sides at 44% and a 10% undecided http://www.theguardian.com/politics/2016/jun/18/eu-referendum-britain-voting-campaign-jo-cox.  As a final note to incorporate into tomorrow's trading, Cameron will be on BBC TV `Question Time' Programme at 18.45 GMT today.

You can look at it however you want: it's going to be a close call. 

Also, with a quiet week on the data front, there is little to deflect attention away from the referendum. As we have seen in the past couple of weeks, the referndum and hence GBP are impacting all markets. So whatever you trade this week will hinge upon GBP's temper. Trade small, don't be a hero, survive to fight another day.

USD: with no meaningful data out, eyes will be on Yellen at the semi-annual testimony to the House (Tue) & the Senate (Wed) where she is expected too confirm the more cautious approach seen last week, and leave options open on data and global events.

EUR: busier week in the EU. German ZEW (Tue) expected higher at 10 from 6.4, current conditions at 55 from 53.1. EU equivalents also expected higher. The flash PMIs from across the Eurozone (Thur) are also expected sturdy. Finally the Ger Ifo (Fri) is expected higher.  So overall, the market is poised positively on the Euro, despite the fact that the Euro will suffer if we get a Brexit. If not, all the more reason to push higher.

JPY: the market is expecting an intervention post-Brexit/Bremain so the BoJ jawboning this week might prove to be influential. Kuroda speaks on Monday, Kiuchi on Thursday and Nakaso on Friday.

GBP: It's all about the referendum. The vote closes at 21.00gmt on Thursday with preliminary estimates expected from 23.00 gmt. The final declaration is expected at around 07.00gmt on Friday. The only data releases are May PSNB and June CBI industrial trends (Tue) and will be quite meaningless until the market's focus returns to fundamentals post-referendum. I personally find it hard to believe a Brexit will happen although the sole fact that the vote is this close means that we'll be living in a different world going forward.

Comm-Dolls: for Aussie, we have RBA's Debelle and Heath (Tue) along with the RBA minutes. We will hear from Ellis and Debelle again on Thursday.  Q1 house price index is expected to increase QoQ.  There is no major data due in New Zealand, while Canada just has April retail sales so focus will mostly be on the usual US oil inventory data. 

Going into this week, since Brexit/Bremain is the only game in town, my focus will be on sentiment towards polls and the vote. Bremain is generally positive so I would favour Crude/YM longs along with Gbp, Nzd or Aud longs vs. Jpy. Brexit is generally negative so I would favour Dax shorts along with Gbp weakness vs. USD.  

But sitting on the sidelines isn't a bad choice either.

Weekly Game Plan - 12.6.16

Themes for the week and potential opportunities

Don't forget to factor in the outcome of Cameron interviewed by BBC's Andrew Marr (09:00 PM GMT tonight). Sentiment will likely be driven by this tomorrow morning.

USD: busy week ahead. FOMC (Wed) is the main focus but no change is most likely. Yellen to hint at a "live" meeting in July. Retail sales (Tue)  probably the most watched and expected positive although much smaller than previous (+0.3% vs. 1.3% prev). Empire State  (Wed) expected higher to -5.0 from -9.0, while PPI is expected unchanged; finally  industrial production is expected lower than previous. Philly Fed (Thur) is expected higher but  CPI (Thur) is expected slightly lower m/m but unchanged y/y. Housing starts and permits (Fri) should show a mixed end to the week. Seeing as how it's FOMC week, the market will want to see positive data and any negative data will most likely generate more impact. 

EUR: no real news. Industrial production and final CPI not influential. There is some ECB jawboning but Draghi will be speaking only on Friday afternoon, when most players are gone for the week. 

JPY: BoJ widely expected to stand pat. However, the presser will no doubt be watched and the language assessed. Industrial production (Tue)  the only data due and previously was at 0.3% m/m.

GBP: busy week ahead, for data and speakers. First for the Bremain/Brexit debate, there are scheduled talks. Wednesday at 18:45 GMT Michael Gove will be on BBC TV `Question Time' Program on EU Vote. On Thursdsay, Mark Carney and George Osborne speak at Mansion House. With Brexit risk, the BoE (Thur) will definitely stand pat. Beyond that, CPI (Tue) expected up 0.3% m/m, pushing the y/y to 0.4%. Employment data (Wed) likely to see the claimant count up by 3k with the claimant count rate down. Average weekly earnings are set to disappoint again, slowing to 1.7%.Retail sales (Thur) expected to drop. On balance, dovish expectations for GBP data this week, which will however be overshadowed by polls and Brexit/Bremain debate.

AUD & NZD: AUD Employment data (Thur) is the main release in Australia, total employment expected to post a strong +26.2k. The unemployment rate is however expected to rise to 5.8%. RBA Assistant Governor Debelle is due to speak on Tuesday. NAB's May business surveys are also on Tuesday and WestPac consumer confidence on Wednesday. For NZD, there is a GDT Dairy Auction (Tue), current account data (Wed), Q1 GDP (Thur) expected lower than previous.

CNH: China is due to publish industrial production, fixed asset investment and retail sales next week. The market is looking for overall strength in the numbers. 

Going into the week, cautious Gbp shorts look most evident but also the riskiest choice. European & Japanese equities look weak which could add pressure on Jpy crosses. Crude also looks like it is turning bearish and Kiwi still holding up. However FOMC will likely mix up the cards so I would prefer to stay on the crosses until after the event, avoiding direct USD exposure.

Weekly Game Plan - 5.6.16

Themes for the Week and potential opportunities

BoC's Poloz still cautious on Canadian Economy over the weekend: http://in.reuters.com/article/us-canada-economy-idINKCN0YQ0P4

USD: Quiet week ahead. Highlight likley Yellen's speech Monday (17.30 GMT), with Rosengren also speaking from Helsinki. No useful data for the US this week.

EUR: Quiet week for the EU as well.  Ger factory orders (Mon) are expected lower, but Industrial Prod. (Tue) is expected higher. EU final GDP (Tue) not likely to surprize, and Ger CPI (Fri) also unlikely to surprize. Overall, dull week expected.

GBP:  Industrial prod. & Manuf. Prod. (Wed) expected marginally higher as well as trade data (Thur). Construction output (Fri) expected higher as well. So on balance, a positive tilt in expectations for Gbp. However, Brexit/Bremain risk is still the main driver so first & foremost watch Prime Minister David Cameron and UKIP leader Nigel Farage answer questions from the audience on an ITV EU referendum programme (Tue). On Thursday, ITV stages an EU referendum debate between leading politicians from both ‘remain’ and ‘leave’.

Comm-Dolls: major action this week will be on the Comm-Dolls. The RBA (Tue) is the main event in Australia, with no change & a mildly dovish tone expected. Then we have AU lending (Wed) expected higher.  RBNZ (Thur) also expected to leave policy unchanged. As for Canada, employment data (Fri) is the key release with limited impact from Alberta Wildfires expected. Ivey PMI (Tue) the other focus, along with BoC's financial system review & Poloz speech (Thur). 

CHN: comm-dolls and risk appetite will be impacted by CHN Trade data (Wed) and CPI (Thur)

Going into the week I'll be focused on Aud & Nzd strength vs. USD and Gbp weakness. I'll also look to match risk on/off attitude with the recent JPY strength and play UsdJpy or GbpJpy shorts. Finally, I'll be monitoring Cad for potential developments as  data emerges during the week.