Weekly Game Plan - 28.8.16

Themes for the Week and potential opportunities

Reminder: Monday the 29th is a UK bank holiday - expect little to no movement in FX. Also, some contacts are reporting that many players were back for Yellen and will be in the office this week planning for positions for Sept. Based on recent Jackson Hole comments, it seems that unless this week's NFP is dismal, there's scope for a 0.25% hike in September. 

Kuroda is instead taking the BoJ on the opposite path, and may aid UsdJpy rise http://www.bloomberg.com/news/articles/2016-08-27/kuroda-says-boj-won-t-hesitate-to-act-decisively-again-if-needed

USD: busy week ahead, including NFP (Fri), consumer spending (Mon), construction (Thu) and international trade (Fri), along with ISM manuf (Thu). The week also brings several public appearances by FOMC members: Rosengren (Wed), Lacker (Fri). Any comments about monetary policy will be followed closely up to the FOMC meeting in mid-September.

GBP: The coming week will see the Lloyds Business Barometer and GfK consumer confidence (both Wed), the manufacturing PMI (Thu) and construction PMI (Fri). Market participants will be observing just how much Brexit influenced the economy - and so far data has held up well.

EUR:  ‘Flash’ CPI data for August (Wed) will provide an update on the extent to which inflation in the Eurozone. Before that (Tue) we have German CPI.

Comm-Dolls: AUD has a busy calendar: QII private capex numbers (Thur), monthly building approvals (Tue), retail sales (Thur) and RBA private sector credit (Wed) will afford market watchers snapshots of the economic growth pulse early in QIII. For NZD we have ANZ Business Outlook & Credit Growth (Wed) as well as Terms of Trade (Thur).

CHN: Finally both official and unofficial August PMI data in China (Thu) will be watched closely for signs that economic growth is stabilising. As almost all of the data in July surprised on the downside, markets will be looking for more reassurance from the latest set of indicators.

I don't expect the market to be back into full gear until next week, and it's effectively slim pickings still. So Aud weakness looks like one of the more evident things out there, along with USD strength. Watchlist has AudUsd/GbpAud and UsdJpy as initial candidates. 

AudUsd Daily Chart

UsdJpy Daily Chart

Weekly Game Plan 21.8.16

Themes for the week and potential opportunities

USD: Jackson Hole will be the main event this week. The 3-day meeting starts on Thursday, but FED's Yellen will be the main focus on Friday. The market is discounting a 22% probability of a hike in September. If Yellen is going to raise rates, she will definitely drop hints on Friday although recent data basically rules out a September (and even November) hike.

EUR: basically the only other data of interest beyond Jackson Hole. We have Flash PMIs (Tue), Ger IFO (Thur) which are expected positive.

Going into the week, it looks like Gbp and Usd weakness along with Euro and Jpy strength are the most evident plays out there. Crude is evidently strong (but expect a pullback) and equities are consolidating at/near highs.

Weekly Game Plan - 14.8.16

Themes for the Week and Potential Opportunities

Recall that the summer doldrums are in full fledge. I still do not expect much volatility this week.

GBP: we will see the first ‘hard’ post-Brexit readings. Retail sales (Thu), Public finance data (Fri), inflation data (Tue), Employment data (Wed) which might be the least interesting data print as it's the less timely.

USD: FOMC’s Minutes (Wed) might be less interesting as they preceed the conflicting signals given by the soft Q2 GDP, and the strength in employment. Fedspeak might be more infulential, with Dudley, Lockhart, Bullard and Williams. US CPI (Tue) are likely to see some headline drag from lower oil.

EUR: Beyond German ZEW there's nothing worth noting.

JPY: Q2 GDP (Mon) are backward looking and can't shed any light on prospects for further BoJ easing in September.

Comm-Dolls: for the AUD we have RBA August Board minutes (Tue),Wages Price Index (Wed) and, importantly, the August employment data (Thur). What might also be interesting is to read Governor Stevens Speech http://www.rba.gov.au/speeches/2016/sp-gov-2016-08-10.html.  CAD has Retail Sales and CPI (Fri).

Going into the week, Crude remains strong and might keep equity markets buoyant and also support Cad. Gbp weakness remains pronounced and GbpCad/GbpJpy might provide further downside. UsdCad is also under scrutiny as we have broken 1.3000. 

Weekly Game Plan - 7.8.16

Themes for the Week and Potential Opportunities

The markets are now in holiday-mode so volatility is expected to fall and opportunities will become less abundant. 

USD: The only really significant release in the coming week will be July retail sales (Fri) and coupled with the holidays, I don't expect much action at all.

GBP: we have some data out, but the most important release is the NIESR GDP estimate for July (Tue) which usually is a good indicator for actual GDP growth and the expectations are for a lower print. Ind. prod. (Tue) and construction output (Fri) are expected robust, but they are pre-Brexit indicators.  

CHN: The coming week will see a Chinese data-dump: international trade (Mon), inflation (Tue) and industrial production, retail sales and fixed investment (Fri). The consensus expectation is that the economy may be finding a bottom. This may provide opportunities on the indices and Jpy crosses.

EUR: Very thin calendar. Nothing influential.

Comm-Dolls: RBNZ meeting will be the highlight of the week. There is risk of a hawkish cut (similar to the RBA in the past week) as the market has not decided on a 0.5% cut or simply a 0.25% cut. But a hawkish cut is to be expected given the underlying economic strength, persistent concerns on housing and recent buoyancy in milk prices. In Australia, confidence and lending data are among the highlights but Governor Stevens will also be making an address to the Anika Foundation.

Going into the week, indices remain bullish and Crude is supportive. I also continue to favour Gbp shorts vs. Nzd and Aud and will continue to monitor Nzd into - and out of - the RBNZ announcement as it should be the highlight of the week.