Weekly Game Plan 29 Jul 19

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Here is this week's Game Plan:

It should be a quiet start when the markets open tonight, unless the weak China data released over the weekend weighs on sentiment. This week is full of data, but outside of the data-driven boosts I wouldn’t bet on much movement as we face month end and the summer doldrums. Moves are likely to be concentrated around FOMC and NFP. We enter the week on the back of a better GDP report/stronger USD, and stronger equities after decent earnings.

Themes for the Week:

• FOMC: this will be the main focus. Consensus is for a 0.25% cut and a dovish statement and presser. If we do get relatively benign US data plus an accomodative FOMC, expect the risk rally in equities to continue.
• Earnings: we will get results from 164 firms listed on the S&P500. Breadth deepens and some of the names will include Apple, Merck and Pfizer.
• BOJ is expected to be a non-event, with no changes expected (not that the previous stimumus did anything to help the Japanese economy…).
• BOE: no change is expected but the meeting will be watched for policymakers’ assessment of the British economy’s current downturn, and how they might respond should the UK exit the EU without a transition deal under Boris Johnson.
• US/China Trade War: U.S. and Chinese chief trade negotiators will lock horns on Tuesday in Shanghai in what will officially be their 12th round of meetings.

Data in the Week Ahead:

• BOJ Decision
• US PCE
• CNY PMIs
• AU CPI
• EUR CPI
• CAD GDP
• FOMC Decision
• BOE Decision
• US ISM
• AU Retail Sales
• US Non-Farm Payrolls

On the Radar:

Volatility in FX has been dropping further, and that does not inspire much action outside of data-driven moves. With that said, there have been directional closes last week and the best looking candidates for continuation are AUD,GBP,NZD (weakness) vs. USD & CAD (strength). Equity performance will hinge on earnings and the SP looks like the main candidate for longs.