Weekly Game Plan 13.8.18

You can always find my weekly analysis in the FXRENEW Blog each week, along with articles and thought leadership pieces. Our best pieces can be found in one placehere. If you want to get an idea for how I trade trends, this webinar will help. If you want to know how I Trade the News, this plan will help. 

Here is this week's Game Plan:

Themes for the week ahead:

• The coming week looks likely to be another eventful one, with the Turkey crisis dominating.

The Eu is exposed to Turkish banks and the ECB is worried about non-hedged exposure to Turkish companies and if Turkish banks fail, there will be a contagion effect. The only solution is to remove Erdogan by force, because after his discourse on Friday, he seems quite reluctant to do so himself or change course.



Some analysts say a big hike by the Turkish Central Bank will end the Lira rout. I disagree. Central bank intervention works so long as there's confidence in government. But confidence in government is the main reason for the Lira's issues in the first place. I do believe there's a hyperinflation risk around the corner. Here's a chart with key levels going into the week:

• Turkey aside, BREXIT will be back in focus. EU negotiators are due to meet their British counterparts on Thursday and Friday, with concerns growing about the likelihood of a no-deal Brexit if the talks break down.
• China will also be under scrutiny (again) with investors trying to understand what kind of reaction (if any) the Tariff War is generating. To China's benefit, they have been developing a domestic market for goods & services, and are not as dependant on exporting to the US as other countries are.
• Stocks may be vulnerable if Emerging Markets feel more of a squeeze on Turkey (risk-off/contagion) and a stronger USD.

Data in the week ahead:

• Wages and employment data are the focus on the Australian economic calendar
• China releases data on retail sales, industrial production and fixed asset investment.
• In the US there is data out on retail sales.
• The June UK employment report will be released, as well as the CPI for July.

On the Radar:
I don't particularily suggest trading TRY around here. But if you must trade it, ONLY maintain a long-bias on USDTRY and keep positions extremely small, and keep your ear on the wires.
I like the odds of further losses in the Dax due to the European exposure to Turkey, but for those that can, I'd suggest a more granular watchlist of the more exposed European bourses like the IBEX (Spain) or the FTSEMIB (Italy).  In FX I continue to like USD longs vs. Euro and NZD.
Good Luck!

Weekly Game Plan 6.8.18

You can always find my weekly analysis in the FXRENEW Blog each week, along with articles and thought leadership pieces. Our best pieces can be found in one placehere. If you want to get an idea for how I trade trends, this webinar will help. If you want to know how I Trade the News, this plan will help. 

Here is this week's Game Plan:

GBP might be taken to the shed again this week after British trade minister Liam Fox said "intransigence" from the European Union was pushing Britain towards a no-deal Brexit, in an interview published on Saturday by the Sunday Times. The No-Deal Brexit seems to be a real possibility, which would throw more uncertainty into the picture, and weigh on BOE decisions.

Themes for the Week:

GBP weakness may continue based on the above drivers.

The US/China trade dispute continues after the US threatened to increase tariffs on 200 BLN USD worth of China imports from 10% to 25% while China said on Friday they were looking at increasing tariffs on 60 BLN USD worth of US imports. "Such methods of extreme blackmail will not bear fruit against China." was the reply from Beijing. China will be in focus in the week ahead, as the market gauges reaction to the surprise PBOC decision to raise reserve requirements for FX settlements to 20%. China authorities hope the move will cap the USD/CNY and discourage outflows.

The Euro may also be under pressure as we get Italian Bank earnings this week. Last week BTPs were lower on the speculation that the new populist government might push the boundaries of EU rules regarding the next budget plan. The threat of a fresh financial market crisis in Italy has been weighing on the EUR and could start to alter ECB expectations.

Data in the Week Ahead:

• The RBA and RBNZ meet next week and both central banks are expected to remain on hold. The recent run of Australian data has been mostly positive and this might be acknowledged by the RBA.
• US CPI
• UK GDP
• CAD employment

What's on the Radar:

Although the USD is gaining traction, we're not yet clear of the recent range and as such, trading the crosses is probably a better solution for now.

DXY: https://www.tradingview.com/chart/DXY/1euIyK4z-DXY-Pressuring-top-of-Range/

Going into the week I like GBP and EUR weakness vs. AUD & CAD. There's something going on in the JPYs also, but not as evident. SP500 seems poised for further gains.


Good Luck!