Weekly Game Plan 26.11.18

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:

The EU has approved PM May's final Brexit deal...but the game isn't over. Now the UK Parliament needs to approve it sometime in December. It is still unclear whether PM May has the support to pass the deal. Junker said "this is the only deal possible" so it's either this or a hard Brexit. GBP might gain some traction into the week but Parliament has the final say.
Downunder, the Labor government in the Australian state of Victoria won an unexpectedly large majority in an election. The anti-establishment movement is alive & well, and we'll probably see more of this in Australia as the national elections (6 months away) draw near. Aussie was one of the weakest currencies last week and it may come under a bit of pressure on this outcome.
Meanwhile, civil unrest is growing in France against Macron's Diesel tax. Violence will grow proportionally to the lack of food on people's tables. And this brings me to a fairly aggressive comment that finds it's roots in the US Declaration of Independence. Our biggest danger is Government. In France the police shot tear-gas at the protesters, but what will they do if government doesn't make adequate changes and civil unrest grows even more? Government has  the tanks and the bullets! Also, politiians constantly deny that they are the cause of the situation and blame everybody else for their own failures in an attempt to retain power. Will we really degenerate into a "V for Vendetta" kind of situation?
Themes for the Week:

• GBP: While clearing the EU hurdle is a positive development, UK PM May still faces a grueling task of getting the deal through UK Parliament. I am not expecting much form GBP yet, although some positive movement would make sense as we're one step closer to a deal.
• I don't know what to make of the civil unrest in France and Salvini's latest bluff against the EU (let our budget pass or we will force a collapse in government). I think the Euro will take it's cue from the positive Brexit outcome for now. But things just aren't moving in a positive direction here in Europe.
• FOMC Minutes: the USD has stalled since rejecting 98.00 but it remains in a broad uptrend. We expect the FOMC minutes to add some hawkishness to the picture - which the market isn't really discounting as of yet. To note, Black Friday sales started off pretty well - an encouraging sign.
• Trump/Xi meeting on November 30 at the G20 in Buenos Aries. Market expectations of a “deal” to end the US/China trade war have receded following the tense showdown between US Vice President Pence and China President Xi at the APEC Summit. However, Trump's own comments have been upbeat so we would expect a positive outcome.
• Equity market woes: Nasdaq leads the way as tech stocks continue to suffer. I do believe that only a Trump/Xi resolution has the potential to end the correction in the near-term.

Data in the Week Ahead:

• NZD Retail Sales (Sunday)
• RBNZ Financial Stability Report
• UK Bank Stress Tests
• US GDP (revision)
• FOMC Minutes
• CAD GDP.

On the Radar:
After Thanksgiving, markets usually start to wrap up ahead of Christmas but this year I do believe we will continue to trade (cautiously) into mid-December given the outstanding issues. In the meantime, going into the week I remain bearish on Nasdaq, Dow & Crude Oil. I am bearish on EurUsd and EurJpy and will see what happens on GBP.

Weekly Game Plan 19 Nov 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:

The only news from the weekend wasn't on Brexit. The US/China trade dispute was still very much alive at the APEC summit on Saturday, suggesting little prospect of consensus. Watch risk assets, although the Trump/Xi meeting at the end of the month will be much more influential. The Pound will likely remain under pressure as PM May will have to face a confidence vote on Tuesday perhaps. At the time of writing, only 21/22 letters (of the 48 required in order to challenge PM May) have been officially noted so there really isn't anything substantial yet.
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Themes for the Week:

• Brexit Mess: PM May could face a no-confidence vote on Tuesday, and she also has to get her Brexit plan approved by Parliament. After key resignations last week, it seems difficult that she will succeed.
• US/China trade jitters: the APEC summit did nothing to resolve the tension between the 2 parties. Will Trump be able to deescalate tensions with Xi at the G20? His comments certainly suggest it's possible, and have recently aided risk assets (EM & global equities, base metals, Aud & Nzd).
• Crude Oil: we all know that Crude Oil is a key component of inflation expectations, so it wouldn't be a surprize if the recent dovish talk from Fed speakers was due the big drop in Crude. We'll see just how far this goes. For now it remains on everyone's radar.

Data in the Week Ahead:

• UK inflation report hearings
• RBA Minutes
• OPEC Meeting
• ECB Minutes
• CAD CPI & Retail Sales

On the Radar:

GBP remains volatile and I only suggest touching it if you're plugged into a news squawk all day long. Any rogue comment can spur intraday volatility in either direction. It's potentially simpler to get aboard the US/China theme via AUD or NZD vs USD or Euro...and yes for the temerary GbpAud and GbpNzd are the intraday vehicles of choice. Crude Oil remains a sell if we can breach 56.00 once again.

Weekly Game Plan 12.11.18

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:

The Sunday Times is reporting that Four British ministers who back remaining in the European Union are on the verge of quitting Theresa May's government over Brexit as the EU rejected once more May's plan. The Irish border remains the main stumbling block.  Over the weekend Senior Brexiteer Jacob Rees-Mogg and UK Trade Minister Liam Fox were quite bearish on the developments. GBP should come under pressure as the new week opens.
Themes for the Week Ahead:

• As of Friday, the combination of higher US yields, higher USD and tightening in the Libor/OIS started putting pressure on emerging markets and risk assets once again.
• The Brexit issues will continue to dictate Sterling flows in the week ahead amongst influential data releases.
• Italy has until Tuesday to submit a budget to the EU. Both sides remain far apart – with the EU requiring Italy to revise its 2019 budget so that it falls to 0.6% of GDP while Italy insists a rise of 0.8% is needed to support growth for its economy. Expect pressure on the Euro if the stalemate continues.
• China growth concerns are on the rise again and concerns are growing that China will allow the Yuan to weaken to offset the impact of slowing activity and impact of US trade tariffs. A break above the 7.00 level in the USD/CNH would likely put the entire EM complex under pressure. Comments from Trump  regarding the coming meeting with Xi at the G20 will be closely watched by the markets, as will be some key China growth data to be released in the week ahead.

Data in the week ahead:

• Bank Holiday for US & Canada Monday
• UK sees Employment, CPI, Retail Sales
• AU sees Wage Price Index & Employment
• US CPI
• China IP, Retail Sales and Urban Investment will be released in the coming week, as the markets gauge whether or not recent stimulus has helped China maintain growth.

On the radar:
Given the Brexit headlines, I will have GBP (short) vs. USD/AUD/NZD high on the agenda this week. I also like EUR shorts vs. USD/AUD/NZD. Dow remains a buy on dips. Silver, amongst metals, turns to a sell on rallies.

Weekly Game Plan 5.11.18

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:

The main preoccupation this week is the US Mid-Term Elections. Amongst market participants there is nervousness that a Democratic victory in the House will undermine the current US recovery. There seems to be an extreme partisanship brewing in both the ranks of the Republicans and Democrats, which means neither party will easily accept the outcome, and this could lead to further civil unrest. The probability of a political gridlock seems to be highest as neither side can easily win a strong majority.
Over the weekend, we initially saw a report suggesting an all-UK customs deal will be written into the legally binding agreement governing Britain's withdrawal from the EU to avoid the need for an Irish backstop. However, shortly after this was defined as "speculation" by Prime Minister Theresa May's office.  More confusion and more doubts regarding Brexit...will we get a deal around the end of November as Raab had suggested?
Themes for the Week:

• US Mid-Terms: markets will likely remain dormant ahead of the elections. Long story short, a Republican  majority in both Houses will likely result in a knee-jerk reaction to buy equities in anticipation of more tax cuts and bank deregulation; vice-versa, a Democrat majority in both Houses will likely result in a knee-jerk reaction to sell equities, as political gridlock will prevent the rolling out of market friendly policies and there would be a higher probability of deeper probes into the dealings of the Trump admistration.
• US-China trade war: the market is still reacting to this theme in hope of a breakthrough when US President Trump meets China President Xi later this month at the G20 meeting in Argentina. 
• EU-UK deal or no-deal? GBP will remain extremely sensitive to this theme.
• FOMC rates decision: no one is expecting the Fed to move at this meeting and the statement will likely remain the same. There won’t be a press conference by Fed Chair Powel. Nor will there be a release of the “dot-plots”.
• The RBA and RBNZ also meet and neither central bank is expected to move rates, nor are they expected to signal a change in policy anytime soon.

Data in the Week Ahead:

• NZD employment and Inflation Expectations
• UK GDP
• China Trade data and CPI.

On the Radar:
It's tough to make a watchlist ahead of key events. So things may change but I do see weakness in the Euro vs. GBP, NZD, AUD. Jpy pairs also want to rally but they will be even more impacted by the Mid-Terms. The best bet will be to remain flat and re-assess after the elections.