Weekly Game Plan 27 May 19

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:

Firstly, remember that the UK and the US are on holiday tomorrow (Monday) so all trading commences on Tuesday. Also, there will be a European bank holiday on May  30th. Politics will dominate again this week as the markets digest the outcome of the EU Elections and the EU will be holding an emergency meeting to discuss the implications, and what to do with the UK after May's departure. US/China trade debate will be the other main focal point with the upcoming G20 summit in focus.

Themes for the Week:

• Market participants are expecting more pain for the Pound as Boris Johnson is the main candidate to take May's place. He would support Brexit. But there is also a risk of general elections and a Corbyn-led government cannot be totally ruled out. Both situations would likely see the Pound lower. It is also unclear what the EU will do.
• The US/China trade debate is now turning into a technology debate as well. So tensions are increasing although Trump continues to say "a deal is in the cards, will happen soon". This will keep equity markets unstable.
• EU Election fall-out: anti-establishment/anti-immigration parties are forecast to do quite well at these EU elections. The implications will be digested by the markets after the results are known.
• FedSpeak:  the market is pricing in a more dovish scenario than the Fed is currently proposing. The Fed is "on hold" but the markets are pricing in ever lower inflation going forward, which means potential rate cuts. Fedspeak in the coming week will help ascertain whether there is any further preoccupation in their ranks.

Data in the Week ahead:

• RBNZ Financial Stability Report + Governor Orr Speech
• Fedspeak
• Bank of Canada Rates Decision
• US GDP Q/Q
• CNY Manuf. PMI
• CAD GDP

On the Radar:

Into last week's close, Jpy & Chf were leading whereas the USD was weakening alongside the Euro and the Pound. In equities, risk-off remained the predominant tone with Nasdaq lagging. Things may change based on the EU elections and other developments, but EurJpy & GbpJpy shorts could quickly become top picks if risk off and EU chaos ensues.

Weekly Game Plan 20 May 19

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:

A few develpoments to keep in mind from the weekend: Austria's 17 month old government collapsed yesterday after Chancellor Kurz quite and called snap election after a video showing Heinz-Christian Strache (the leader of his junior coalition partner) negotiating with the niece of a Russian oligarch for a public contract in exchange for party donations. Elsewhere, with the AU elections out of the way, and especially with a confirmation of the previous government, the RBA will feel free to make policy adjustments now.

Reminder: Canada is away tomorrow (Monday) and there will be an early close to US trading on Friday ahead of Memorial Weekend.

Themes for the Week:

• China/US trade debate. This has been the main theme over the past couple of weeks and it will continue to influence markets. Trade talks turned sour last week, and the Yuan has weakened tremendously. A break of the 7.00 level would likely generate another round of risk-aversion.
• NAFTA 2.0: there were some positive developments regarding the US/Canada/Mexican trade agreements into the end of last week. So markets will be looking out for any further news on this theme.
• FOMC: will Chair Powell sounds as positive as he did during his press conference back on May 1st? Will the trade war or global growth issues appear? The minutes of the April 30-May 1 meeting, due on Wednesday, could show if the escalating noise figured in the Fed’s discussions.
• RBA: potentially key RBA guidance kicks in after the election. It has always been thought that the RBA has been waiting until at least after the election before firming up guidance or policy action. Minutes to the May 7th RBA meeting will be released on Monday and Governor Lowe will deliver a potentially key speech on the outlook and monetary policy on Monday night eastern time.
• European Elections (May 23-26):  this was the event that UK politicians wanted to avoid, yet failure to reach a Brexit deal necessitated participation. Full results will likely not be available until Monday May 27th. However the results for the UK will likely be available late on Sunday May 26th and Nigel Farage’s Brexit Party is forecast to win the majority of UK seats. The key here is where other EU anti-establishment parties will gain enough space to create havoc in the EU Parliament.

Data in the Week Ahead:

• RBA Minutes
• UK inflation hearings
• NZD Retail Sales
• UK CPI
• Cad Retail Sales
• FOMC Minutes
• Eurozone PMIs
• EU Elections
• UK retail sales

On the Radar:

I continue to like GBP and AUD shorts against CHF, USD and CAD. I also like Silver shorts going into the week. The Euro might take a hit later in the week on PMIs, but don't expect too much movement until after the EU elections.

Weekly Game Plan 13 May 19

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:

With no influential developments over the weekens, markets will likely pick up where they left off last week. Markets remain nervous, though a true risk-off move has arguably failed to materialize so far. US/China headlines will be the main focus this week, despite the busy data calendar.

Themes for the Week:

US/China Trade Debate: Markets will be on guard for details to China’s pledge to retaliate and the risk of a spiralling effect. Analysts are also watching the 10yr/3mo spread again as it approaches an inversion.

Italy: a plethora of negative developments has impacted Europe’s largest bond market. Within the ruling coalition there has been a corruption scandal that cost a junior minister his job; BlackRock ditched a proposed rescue of Carige bank; European Commission has warned that Italian finances may deteriorate further. How talks on deficit targets may pan out could become clearer at the May 16 Eurogroup meeting of finance ministers. Watch BTPs and FTSEMIB.

Data in the week ahead:

• UK Employment
• GER ZEW & GDP
• CNY Industrial Production & Retail Sales
• EUR GDP
• CAD CPI
• US Retail Sales
• AU Employment & Elections

On the Radar:

I continue my short bias on Dow and FTSEMIB on trade jitters and potential Italian escalation. In FX, I still favour JPY and CHF longs vs. NZD and GBP.

Weekly Game Plan 6 May 19

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:

With no influential news out over the weekend, the start in Wellington should be relatively calm. Also, tomorrow (Monday) is a UK bank holiday so don't expect much out of the European Session either. But it will be an influential week, especially in the Southern Hemisphere with RBA and RBNZ due amidst other local data. The main theme for Friday's trading was USD weakness post-NFP, which was a little counter-intuitive given Powell's upbeat speech and decent NFP data.

Themes for the Week:

• Volatility remains compressed at record lows...but not in FX! Finally we have seen some movement and currency pairs seem to be waking up from their slumber - including GBP. However, VIX and other cross-asset volatility measures are still at record lows, so there is a cautious tone prevailing and everyone expects a volatility surge sooner rather than later

• Green shoots from China? We get Caixin Pmi data and CPI this week from China, and investors will be observing just how resilient China is (or isn't) amidst the current global slowdown. Keep an eye on Trade Talks as well, which start on Wednesday.
• RBA & RBNZ: they are both expected to reinforce their dovish stance but will the RBA cut rates or the RBNZ or both? With an election coming up soon, the RBA may decide to remain steady. So the RBNZ is the favorite for a rate cut this time round.

Data in the Week Ahead:

• China Caixin PMI & CPI
• AU Retail Sales
• NZD Inflation Expectations
• UK GDP
• CAD Employment
• US CPI

On the Radar:

I remain biased long on Dax and Nasdaq going into the week. I remain bearish on Crude Oil. I like the odds of further NZD weakness vs. GBP and JPY. I like GBP strength vs. Eur and CHF also.