Weekly Game Plan 28 Oct 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:

Last week ended on a strong note for risk assets and the Loonie after speculation that US and China are on track to complete the easier phase 1 trade deal in November. These reports were confirmed on Saturday by the Chinese Ministry of Commerce. So the risk appetite may continue this week as well, ahead of key event risk. Beyond this, the Brexit situation remains fluid as the EU is said to agree to another Brexit extension, but hold back to the announcement, awaiting UK’s vote on a December election, which Johnson called for.

It will be a very busy week, which could result in a pick-up in volatility and volumes, with a plethora of risk events such as key US earnings, central bank meetings, and Non-Farm Payrolls.

Themes for the week:

• Brexit: extension, elections, or else? The situation remains fluid...what happens next is anyone's guess.
• US/China trade debate will continue to sway markets.
• FOMC: a rate cut is priced in, and the market is also expecting some hawkish commentary. So, it appears Powell's presser will be the core focus.
• BOJ:  Kuroda says the BOJ could “certainly” cut rates further, in order to face the slower economy. Analysts reckon a move to -0.2% or even -0.3% are possible from the current -0.1%. But no one is quite sure what it would take to make that cut.
• BOC: No change is expected but there will be new forecasts, the risks to the monetary policy report, and the press conference.
• US Earnings:  Apple, Alphabet, Facebook, GM and Starbucks among the many companies reporting.
• Civil Unrest: From Hong Kong to Beirut to Santiago, protests and civil unrest have been raging, posing a headache for investors as well as governments. This has yet to take it's toll on equites worldwide, but is still holding back money managers from committing to larger positions. It would seem that governments will make concessions going foward, in order to calm the masses.

Data in the Week Ahead:

• RBA's Lowe Speaks
• AU CPI
• US GDP Q/Q
• Bank of Canada Decision (no change expected) & Presser
• FOMC Decision & Presser (hawkish 0.25% cut expected)
• CNY PMI
• Bank of Japan Decision & Presser
• CAD GDP
• US PCE
• Non Farm Payrolls
• US ISM

On the Radar:

Equities closed on a strong note last week, so I remain biased long, always keeping an eye on earnings. There was also a revival in Crude last week, which could very well continue. In FX, with so much event risk due it's logical to expect some volatility, but for now we need to base our initial watchlist on Friday's closing prices. That would put Cad at the top vs Jpy & Chf.

Weekly Game Plan 21 Oct 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:

Once again, what should have been a defining moment for Brexit was instead a non-event. There was no meaningful vote on Saturday and Boris Johnson was forced to request an extension to the EU...however, he didn't sign the letter(!). Instead he sent another letter (signed) saying that an extension was against his own will. It is likely that the UK PM will declare he has been coerced, hence  blocking any further progress.

In the meantime the clock is ticking. Parliament could have avoided a No Deal by voting for Johnson's deal. Now, it's either No Deal or a delay + new elections (which Boris Johnson would win, and then he would pull a quick Brexit).

What we are witnessing is truely the end of Democracy as we knew it in the West. Political parties are no longer working towards common ground. Indeed, as Ray Dalio has been saying for some time now, there is political polarization and extremism. And since common citizens see their leaders bickering against each other, this whole polarization and extremism filters through the population and spreads hatred and violence.

Themes for the Week:

• Brexit: it is unclear what will go down this week. Surely we will see more debates, possibly another Meaning(less) vote, more bickering. GBP influenced all of FX last week with it's tremendous ascent on speculation/hopes of a Deal. That might fade or at least pause after yet another stalemate over teh weekend. The EU's response to Johnsons's 2 letters will be key.
• ECB: There are no influential measures to be released or debated at this Thursday's ECB meeting, but it will be Draghi's last.
• US Earnings: more than 130 S&P 500 companies and over one-third of the Dow industrials will be reporting results, according to IBES data from Refinitiv. Reports flow in from many corners of Corporate America, from industrial bellwethers Boeing and Caterpillar to internet retailing titan Amazon.com. Biotech leaders Biogen and Gilead Sciences and carmaker Ford are among others to post results.
• EU Earnings: Europe's Q3 season too opens in earnest next week and is likely to again elicit unfavourable comparisons with corporate America. Thursday will see some infliuential German companies report.
• Canada Elections: while much calmer and cleaner than Brexit, Canada  kicks the week off with political developments. Voters head to the polls to elect a new Federal government. Significant data risk will ensue but could get lost in the reporting of the election results. A minority Liberal government is expected. The count will start at 10PM EST tomorrow, so as London opens up on Tuesday the results should be confirmed.

Data in the Week Ahead:

• CAD Retail Sales
• CAD Business Outlook Survey
• EU & Ger PMIs
• GER IFO
• ECB Decision

On the Radar:

It's quite tough to have any convinction in the moves seen up to Friday, which were mostly GBP-inspired. We saw evident USD weakness vs. Eur, Gbp, Chf and Cad. Whether this will continue or not is yet to be seen.

Weekly Game Plan 14 Oct 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:

Global markets were boosted strongly last week on the back of positive developments on both Brexit and the US/China trade war. With no other influential news out over the weekend, we should pickup where we left off on Friday.

Themes for the Week:

US/China: phase 1 negotiations went well. For now the markets are trading with a risk-on tone. The trade-war is far from over however, but for now let's enjoy the moment of truce.

Brexit: the situation  took a dramatic step forward with the meeting between UK PM Johnson and Irish PM Varadkar on Thursday. However, a big question forward is that Johnson would need support from Northern Ireland DUP to secure enough votes in the parliament. Here are the key dates and events this week that will sway the Pound:

• Oct. 13 -  Merkel and  Macron meet to prepare for upcoming summits where Brexit will top the agenda.
• Oct 13-14 - The 27 EU ambassadors are briefed by EU chief Brexit negotiator Michel Barnier after a weekend of intensive, so-called “tunnel” talks with Britain.
• Oct. 14 – British parliament reconvenes, setting the stage for further attempts by lawmakers to ensure the Oct. 31 deadline for withdrawal is extended.
• Oct. 15 - European affairs ministers from the EU27 discuss the state of play of Brexit with an update from Barnier to prepare the leaders’ summit of Oct. 17-18.
• Oct. 17-18 - EU government leaders meet in Brussels for a European Council summit. If a Brexit agreement is struck, it will have to be approved by the British parliament.

Earnings: the biggest U.S. banks are expected to kick off the earnings season on a sour note due to falling interest rates, which may have pressured net interest margins enough to cause the sector’s first year-over-year earnings per share decline in three years. Tuesday brings third quarter profit reports from Citigroup Inc, Wells Fargo and Co, JPMorgan Chase & Co, and Goldman Sachs. Bank of America reports on Wednesday.

Turkey: watch out for any escalation between Turkey and Syria. Ergodan launched a military campaign against Kurdish forces to which Trump replied: "I say hit Turkey very hard financially & with sanctions if they don't play by the rules! I am watching closely".

Data in the Week Ahead:

• RBA Minutes
• BOE's Carney Speech
• UK Employment Change
• NZ CPI
• UK CPI
• CAD CPI
• US Retail Sales
• AU Employment Change
• UK Retail Sales
• CNY GDP

On the Radar:

Going into the week I will cautiously bet on GBP strength and Cad strength vs. Jpy and Chf. I will also remain biased long on equities until we see the colour of US earnings.

Weekly Game Plan 7 Oct 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 released over the weekend, the open in Wellington tonight should be smooth. Friday saw markets react positively to the "goldilocks" NFP report: it's not bad enough to scare policymarkers, and not good enough to generate much enthusiasm. However, FED rate cut probabilities for October fell to 76% from over 80% on Thursday.

I personally think the risk-recovery was driven more by Trump's positivity regarding the coming week's US/China trade talks than NFP. We now know that headlines on trade will be influential. At the same time, Brexit news will also impact the markets as the EU has rejected PM Johnsons' latest plan.

Themes for the Week:

• US/China trade talks: on Oct. 10-11 President Xi Jinping's top economic adviser, Vice Premier Liu He, will be in Washington. Investors' expectations are low, given Trump's unpredictability.
• FOMC Minutes and Powell: markets will also be following Powell's speeches and FOMC minutes closely. The Minutes may be less influential this week since Powell will be speaking on Tuesday.
• Brexit: October 11th is the deadline for the UK to deliver an acceptable proposal..so there probably won't be one. Investors generally think that British lawmakers' move to force Johnson to seek an extension will be enough to avert a no-deal Brexit at the end of this month. What The situation remains fluid.

Data in the Week Ahead:

• Powell Speeches
• Carney Speeches
• FOMC Minutes
• UK GDP
• ECB Minutes
• US CPI
• Cad Employment

On the Radar:

I don't have a lot of convinction on anything going into the week since there really wasn't a whole lot of directionality in last week's closes. Jpy maintains it's strength despite the recovery in stocks, and Cad had a bad week. This would suggest CadJpy shorts. But the risk-on/risk-off dynamic will be decided by the US/China trade news. Crude Oil remains in a downtrend despite having bounced a tad and we need to see a return to sub-52.00 prices to have faith in another leg down.

Basically, this week don't be in any rush to put on positions. Keep your ears on the wires instead!