You can always find my weekly analysis in the FXRENEW Blog each week, along with articles and thought leadership pieces. My new Coaching Page is also online.
Here is this week's Game Plan:
A few political notes going into the week:
- The German elections are under way, and Merkel is almost guaranteed to win. However, she will also need to forma new "grand coalition" in order to form a government and the AfD are poised to take 15% of votes and as such it will be the first time in decades that a far right movement will make it into the bundestag. I wouldn't expect the Euro to be too excited until the actual coalition is formed. Also, the German election campaign has been disappointing to many voters apparently, given the lack of any discussion surrounding major issues like the Euro crisis, disintegration of the EU, refugee crisis, pension crisis, taxation.
- NZD may be vulnerable into the week, due to a hung parliament. The NZ National Party secured 58 seats in the parliament while Labour secured 45. All Parties fell short of the 61 seats needed to form government in New Zealand’s 120-seat Parliament. New Zealand First will take on the role of kingmaker, as both Labour and the National Party will need his backing to form government.
- GBP might also see more weakness after PM May’s Florence speech was seen by many as a betrayal of Brexit. A longer transition period and the fact that Europeans will still be able to come and work in Britain were not welcome.
- Finally, Bloomberg reports Spain Rebuffed in Boosting Control Over Catalonia’s Police. While sending in troops demonstrates just how much the central government can turn against it's people, we need to remember that the Spanish Constitution does not contemplate independence referendums. So what Catalonia is doing is, actually, anti-constitutional but the government is definitely overreacting.
- Finally, the "war of words" between NoKorea and the US has heated up so keep your squawk active.
USD: busy week in the US. “Fed-speak” in the week ahead will be influential. Also, markets await the outline of the Republican tax reform plans due Wednesday. Important data to be released include the final estimate for Q2 GDP growth; personal income and spending; PCE inflation; Chicago PMI and final figures for Q2 corporate profits.
EUR: GER & EU CPI, GER IFO and GER Retail Sales are due.
GBP: we only get the final GDP growth for Q2.
CAD: we will only see the monthly GDP and PPI figures.
AsiaPac: China will release figures for official manufacturing and non-manufacturing PMI. Caixin manufacturing PMI will also be closely watched.
Going into the week I remain cautiously bullish on EU equities, bullish on Crude Oil, bearish on Silver & bearish CAD. USD still needs to decide where it wants to go.
You can always find my weekly analysis in the FXRENEW Blog each week, along with articles and thought leadership pieces. My new Coaching Page is also online.
Here is this week's Game Plan:
With no significant news over the weekend, market should be muted into the Wellington open also considering the bank holiday in Japan. The main event this week is the FOMC decision (statement/dot plot/press conference) on Wednesday. The other main focus will be BoJ and UK PM May's speech on Brexit in Florence. Influential macro data out is: UK Retail Sales, NZD GDP, CAD CPI & Retail Sales.
Before going into the usual market mover list, a few words on the political debates heating up:
- Catalan independence vote on October 1st: PM Rajoy is doing everything he can to stop this vote because of course the central government would lose quite a slice of taxes in the case of Catalonia's independence. The only thing left he can do is send in the military, but will it really come to that? Voting intentions are strongly in favour of independence, in search of increased autonomy, a belief that Catalonia would be better off on it's own, and a desire for a new model for running a country.
- German elections: violent protests are rising in Germany against Merkel and this is unusual. Merkel will likely win the vote given her lead in polls over Schulz, but in order to form a government she will definitely need to make back-door deals. The fact is that neither Merkel nor Schulz are confronting the key issues that are at top of mind for the population: lack of integration of immigrants, pension sustainability, social equality.
- New Zealand Elections: a change of government is entirely possible given the flip flops in polls. The main scenario is a coalition between National/NZ First with likely tightening of immigration rules, more focus on retional development, tougher law enforcement and minor/no change to RBNZ policy. The National party has governed since 2008, and the main opposition comes from Labour.
USD: it's all about FOMC, where the markets are expecting the Fed to announce it will begin reducing its balance sheet (“quantitative tightening”) in October.
EUR: we get final CPI readings, Ger ZEW and the Flash PMIs. These are not expected to be overly market moving.
GBP: Carney gives a speech on Monday, Retail Sales are out on Wednesday, and PM May speaks in Florence on Friday.
CAD: the influential data points are CPI & Core Retail Sales on Friday.
AsiaPac: On Tuesday we get RBA minutes; on Thursday we get NZD GDP and the BOJ decision & statement. Friday we get the elections in Nzd.
Going into the week I'll be looking to follow the risk-on theme from last week, with a bullish bias on Dow, Dax & Crude Oil and a bearish view on JPY. I thing GBP has run a bit much so I'll only be looking to pick it up on deep pullbacks.
You can always find my weekly analysis in the FXRENEW Blog each week, along with articles and thought leadership pieces. My new Coaching Page is also online.
Here is this week's Game Plan:
On Saturday, China inflation data came in better than expected, despite the recent strength in the Yuan. Higher PPI reflects some underlying strength in the economy and higher commodity prices. No news is good news: NoKorea didn't launch any missles (yet) but the tensions are far from over. US political developments will continue to be a focal point with Congress debating the debt ceiling and (lack of) progress surrounding tax reform. We'll also continue to hear about the impact of Hurricane Irma. Some decent market moving events this week including BoE, Aud Employment and US CPI/Retail Sales.
USD: busy week with CPI, retail sales, industrial production and the preliminary reading of Michigan consumer sentiment.
EUR: Dull week for EU data, perhaps only the ECB speakers this week will attract attention, after the ECB's decision last week.
GBP: the Bank of England will meet to deliver its latest policy decision. Other important releases include CPI, unemployment rate and wage growth.
CAD: Nothing useful on the Loonie, which may take it's cue from Crude this week and broader USD dynamics.
AsiaPac: In China, analysts are eyeing industrial production, retail trade, fixed asset investment and foreign direct investment. In Australia, we will get the unemployment rate, NAB business confidence and Westpac consumer confidence.
Going into the week I remain bullish on GBP&JPY vs USD&NZD. Interesting action on the Dow...we may be in for a correction.
You can always find my weekly analysis in the FXRENEW Blog each week, along with articles and thought leadership pieces. My new Coaching Page is also online.
Here is this week's Game Plan:
The only piece of potentially market-moving news over the weekend was North Korea saying it has successfully tested a hydrogen bomb. The response from USA, South Korea, China, France was harsh. Trump said "The United States is considering, in addition to other options, stopping all trade with any country doing business with North Korea".There may be scope for an escalation of these tensions yet. Going onto the usual market moving events due this week, we have the RBA, BOC & ECB rate announcements. Just don't expect much from Monday with the US closed for Labour day.
USD: In the United States, investors will be listening to Fedspeakers in order to better understand the implications of Friday's dismal NFP report. We also get Trade Balance and ISM non-manufacturing PMI.
EUR: The ECB will provide an update on its monetary policy, but we will also see Germany factory orders and industrial production, foreign trade and construction PMI.
GBP: This week we get the 3 big PMI reports (Construction, Services & Manufacturing).
CAD: All eyes will be on the BoC interest rate decision, but don't forget the other influential data points: Trade Balance, Ivey PMI and unemployment rate.
AsiaPac: In China, participants will be watching external trade, inflation rate, producer prices and Caixin services PMI. But more action will come from Australia. We get the RBA rates decision, GDP, balance of trade, current account, retail sales. For New Zealand we get the usual GDP auction.
Going into the week, pending any distraction from North Korea, I will remain bullish on Nasdaq, Crude Oil and Gold. I remain bullish on the Loonie and bearish on Nzd.
