Weekly Game Plan 17 Jun 19

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Here is this week's Game Plan:

We ended last week with big moves in FX: risk off (on worse China data and trade war jitters) and USD strength (on US Retail Sales). Over the weekend there was chatter from ECB that they "stand ready to act" if inflation does not rebound. This week is mainly about the FOMC meeting, with BOE and BOJ in the background.

Themes for the Week:

• FOMC: the market is pricing in a rate cut in July but Vanguard is already saying they have enough excuses to cut in June. In any case, expectations are for a FOMC rate cut. Hence, everyone and their dog is expecting dovish remarks from Powell this Wednesday. There is much room for a surprize if Powell does not deliver.
• US/China Trade War: the upcoming G20 summit on June 28/29 is quickly approaching and China has yet to confirm whether President Xi will meet Trump during the summit. No meeting would mean more tension and China appears to be preparing for a protracted trade war.
• ECB's Sintra Conference: two years ago Draghi used Sintra as a stage for forward guidance. Could it happen again this time round, given that it's his last Sintra Conference?
• In other markets, crure oil remains on watch after turbulent price action last week where it see-sawed between large inventory builds and shock attacks on tankers in the Gulf of Oman.
• In the UK, Conservative Party candidates to become the next Prime Minister will be whittled down in successive rounds of internal voting by MPs until just two remain at the end of the week. They will then begin their campaigns with the wider Conservative Party grassroots members, which will go on until late July.
• BOE and BOJ are expected to be non-events.

Data in the Week Ahead:

• FOMC, BOE, BOJ Rate Decisions & ECB Sintra Conference
• RBA Minutes
• UK CPI and Retail Sales
• CAD CPI and Retail Sales
• NZD GDP
• EU PMIs

On the Radar:

Evidently USD and JPY strength vs. Aud, Nzd, Gbp is at the top of the list. Things may change after FOMC but for the moment, those are the top picks in my book. For once, the clearest movers are in FX! No directional bets to point out in other markets as of yet.