Weekly Game Plan - 31.7.16

Themes for the Week and Potential Opportunities

Going into the week, Chinese PMIs (late Sunday, early Monday) will likely dictate risk appetite in early trade.

USD: it's NFP week and the market is expecting a more conservative 175K (Fri). Alongside that, US ISM (Mon, Wed) will be key for US rate hike expectations after the worse GDP print and are alsoe expected slightly worse than previous. It will take some evident positive surprizes to shake off the current negative vibes on the USD.

GBP: big week with the BoE's much expected decision (Thur).  The market is looking for a cut of 0.25% to 0.25% and increase the QE target by £50bn by renewing its programme of Gilt purchases over a four-month period. Expect a split vote within the MPC. 7-2 or 8-1 are likely. Ahead of the vote, we have UK PMIs (Mon, Tue, Wed) which are expected to remain stable with only Construction Pmi expected lower.

EUR: "Final" PMIs this week will likely be non-influential as we've already seen the "flash" estimates. Euro likely to be a passenger this week.

JPY: More volatility might be seen after last week's BoJ disappointment, as we should see the actual size of the stimulUs package this week. Beyond that, watch risk appetite.

Comm-Dolls: the RBA policy announcement (Tue) and Statement on Monetary Policy (Fri) are the main focus. The market expects the RBA to cut 0.25% but it's language may not be all that dovish given that data has not been terrible recently.  For Canada, Merchandise trade and Employment (Fri) will be the focus. A modest improvement in employment & trade are expected.

Going into the week, I will be looking for further USD and GBP weakness vs JPY and NZD, and also more downside in Crude and potentially some upside in bullion as the USD falls.

Weekly Game Plan - 24.7.16

Themes for the Week and Potential Opportunities

The G20 ended with a sour tone. Brexit has added more than a touch of uncertainty and the IMF has downgraded global growth forecasts. Overall not a positive start to the trading week.

USD: All eyes will be on the FOMC (Wed) although no move and a cautious tone are expected. The recent data has been better however, and this week's Q2 GDP (Fri) is expected to confirm solid growth. Durable Goods (Wed) are expected soft, yet slightly better than previous.

EUR: Busy week ahead. IFO (Mon) will most likely set the tone for expectations on Q2 GDP (Fri) as both are expected lower. CPI (Fri) is expected stable along with Unemployment (Fri). German Employment (Thur) is expected to weaken slightly and CPI is expected robust.

GBP: Q2 GDP (Wed) is likely to be strong as Brexit hit only the end of the business quarter. So there might be some room for volatility,  but again we're looking at old data. GFK consumer confidence (Fri) will likely show more information on consumer sentiment post-Brexit.

JPY: Another likely protagonist this week as the BoJ is expected to ease policy (Fri) but there will be a data dump at the same time which will have to be taken into consideration. To be honest, a BoJ underwhelm might be in the cards.

Comm-Dolls: Australia will issue CPI (Wed) which is expected stronger than previous, but not strong enough to take an August rate cut off the table.  Canada will issue GDP (Fri) expected lower. New Zealand has June trade data on Monday, building permits on Thursday and NBNZ business confidence on Friday but none of these data points are likely to generate much interest.

Going into the week, US indices are still quite bullish, Crude is weak. In FX, USD still shines and the weakest ccys out there are still Euro, Gbp and Cad. Jpy might surprize on Friday - be nimble.

Weekly Game Plan 17.7.16

Themes for the week and potential opportunities

Earnings will be a major highlight of the coming week. In fact it’s the first of three heavy weeks during the peak of the Q2 earnings season that brings out 96 reports, followed by 194 the week after and 114 the week after that before the momentum then wanes.

Also, don't forget the RBNZ ‘special’ statement where it most likely will not simply reiterate the status quo (or make hawkish adjustments), so this should shade expectations to the downside approaching the event.

USD: quiet week ahead.

GBP: first thing, watch BoE's hawkish Weale (Mon) to see if he contraddicts anything Haldane said on Friday. CPI (Tue) is expected to rise on the recent decline in GBP. Retail  sales (Thur) encompasses post-referendum data and is expected lower. Also, there will be a one-off UK Markit ‘flash’ PMI survey (Fri) which may confirm a negative impact on confidence in manufacturing and services.

EUR: big week ahead. The focus will be on the ECB (Thur) with no change expected but with all ears on Draghi's assessment of Brexit impact and the Italian Banking sector. Before that we have Ger ZEW (Tue), EU Consumer Confidence (Wed) and then EU flash PMI (Fri) with confidence levels expected to decline.

Comm-Dolls:  The July RBA Board meeting minutes are due but nothing new is expected.  The New Zealand CPI is expected to show feeble NZ price pressures, rising by 0.5% to be up a negligible annual 0.5%. Thre will also be a GDT Auction (Tue) where a modest bounce is expected. For CAD, we have retail sales & CPI on Friday, both expected weaker but it will take more than that the change the BoC's mind on the "robustness" of the economy. So Crude will probably impact Cad more than data.

Going into the week I'll be looking for Euro, Nzd and Gbp weakness vs. Cad and USD initially. Equities still seem buoyant, as do bullion.

Weekly Game Plan - 10.7.16

Themes for the Week and Potential Opportunities

The first thing to note is that the Monday post-NFP is usually quite a dull day. So don't be eager to jump in. Equities are buoyant after NFP failed to show any decent wage inflation (lower for longer sentiment). Metals are still bid as a safe haven. Crude still weak.

EUR: There are no major Eurozone economic reports scheduled for release in the coming week leaving the focus on the EU Finance Ministers meeting in Brussels (Mon), Italian bank stocks and risk appetite. Overall, the tone is slightly negative.

GBP: BoE (Thur) expected to be dovish but not cut rates until the Inflation Report in August. The market is pricing in a 0.25% rate cut already, but from what Carney has said, it's more logical to see an August cut. So we should also look at the voting stance and evaluate the unanimity or lack thereof. Carney will appear in Parliament (Tue) as well. As far as data goes, BRC (Tue) and RICS House Price Survey (Thur) might attract some attention as they are now reflecting post-Brexit sentiment. Construction output (Fri) instead is still pre-Brexit data. 

USD: Retail Sales (Fri) expected strong and CPI (Fri) expected positive but weaker than previous. We have a good amount of Fedspeak this week: Fed's George (Mon), Mester-Tarullo-Bullard-Kashkari (Tue), Mester-Kaplan-Harker (Wed), Lockhart & George (Thur),  Kashkari & Bullard (Fri). The market will pay attention to the Fedspeak after the recent employment data, to understand how likely a rate hike is and when it is most likely to happen. Tone seems positive overall.

Comm-Dolls:  Aussie & Kiwi remain strong on quest for Yield & Quality. On Monday & Thursday RBA's Ellis will be giving speeches on Financial Stability - which might be influential post-Brexit; on Thursday we have Australia unemployment data expected positive but not as good as last month's as the unemployment rate is expected to rise to 5.8% from 5.7%. For Cad, BoC meets on Wednesday and will be of interest after the recent poor jobs report, WildFires in Alberta and the market is expecting dovish remarks from Poloz but no rate cut. Nzd has a light calendar but we will hear from RBNZ's McDermott on Wednesday.

CHN: Sunday we will see CPI and PPI which will have to be incorporated into Monday's sentiment. Wednesday we see the Trade Balance; Friday we see Industrial Production, Retail Sales, GDP and Fixed Asset Investments. All the Chinese data will likely influence risk appetite and also Aud and Nzd.

Going into the week, it could be a potentially busy week with US indices clearly bullish, Crude weak, Bullion bid. Aud, Nzd & Jpy strength can be matched with Gbp, Eur and Cad weakness. So risk will likely be well diversified this week.

Weekly Game Plan - 3.7.16

Themes for the Week and potential opportunities

Reminder: Wall Street closed Monday for Independence Day. 

Global equities strong amongst "lower for longer" sentiment. Precious metals higher amongst risk aversion & central bank action. Crude helped by marginally weaker USD.

US: It's NFP week, and the market is expecting a better print, in the 150K range. Average Earnings are also expected higher by 0.2% driving annual growth rate to 2,7% even though unemployment might rise a tad. Before NFP we have a speech by Fed's Dudley (Tue), who'se comments will be important and should be representative of the top ranking members of the Fed. FOMC Minutes (Tue) will be less influential as they are pre-Brexit. Base case is that rate hikes are off the table for 2016. ISM Non-Manuf. (Wed) expected firm. Overall, the market is already discounting no hikes this year and until we start seeing data from the post-Brexit vote, not much should change.

EUR: More than the Services PMI (Wed) what might be interesting is the Sentix Confidence index (Mon) which will take into account post-Brexit vote sentiment. The market is expecting quite the deterioration (5 vs 9.9 previous). All other data this week (retail sales on Tue, Factory Orders Wed and Ind. Prod. on Thurs) are from before the vote so less influential. 

GBP: Services PMI (Tue) would usually be influential but with the vast majority of the survey responses being pre-Brexit, it's unlikely to provide much forward-looking insight. UK data on industrial production (Thu) and external trade (Fri) are even less timely.

Comm-Dolls: election should not influence Aud much but look to verify ruling coalition still in power after Sunday's vote. RBA (Tue) expected to stand pat, acknowledging impressive Q1 GDP but incorporating Brexit risk. On the data front, building approvals (Mon) expected to fall,  retail sales ( Tue) expected to rise as well as trade data. Finally,  RBA's Debelle on Wednesday will attend a Thomson Reuters event to examine the FX Code of Conduct.

NZD traders have a GDT dairy auction to watch on Tuesday.

Cad unemployment is out alongside NFP while the  trade balance (Wed) is set to see the deficit widen sharply due to a hit on energy exports from the Alberta wildfires. 

CNY: data over the past week has remained mixed. This week we have Caixin PMI (Tue) to skew risk appetite even thoguh the focus is likely to remain on trends in the Yuan. 

Jpy: a speech from Kuroda (Thu) might surprize the markets if he (finally) brings fourth hints on stimulus, to weaken the Jpy. 

So going into the week, I will be looking for more Gbp weakness vs. Aud and Nzd mainly; but also AudJpy or NzdJpy longs depending on any surprizes from Kuroda. And eyes on USD after Dudley. US equities still bullish, metals also strong.