Weekly Game Plan 20 Jan 20

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 the US-China trade deal in the rear-view mirror and the tensions in Iran fading from the market’s radar, risk-assets have been pushed higher on the combination of fiscal stimulus and monetary stimulus. The USD closed the week strong across the board, while GBP attracted selling on BOE easing bets. The focus this week will be on central banks (BOJ, BOC, ECB, Norway CB), key data, the Davos summit and US corporate earnings.

Themes for the Week Ahead:

• Central Banks: Japan on Tuesday, Canada on Wednesday, Norway and the euro zone on Thursday. On Friday, China sets loan prime rates. Unless there are any surprize moves, expect the focus to be on the 2020 forecast.
• Davos: the World Economic Conference will see top policy makers and fund managers meet and ski in Davos. Of course the reflectors will be pointed on Trump and just how disruptive he will be. Comments will be watched.
• PMIs: once again we get influential data from the EU and the UK, which will be closely scrutinized.
• Earnings: Netflix and Disney are but two names reporting earnings this week.

Data in the week ahead:

• Bank of Japan decision
• UK Employment Change
• CAD CPI
• Bank of Canada Decision
• AU Employment Change
• ECB Decision
• NZ CPI
• EU PMIs
• CAD Retail Sales

On the radar:

During such an influential week for the markets, what is in vogue now may not be in vogue by Friday. So with caution, I remain bullish on US equities and USDJPY, bearish on EUR, GBP and AUD vs. USD and CHF.  For the more commodity-inclined, Palladium and Platinum remain in a strong uptrend also.

Weekly Game Plan 6 Jan 20

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:

Welcome to 2020 trading. Markets were taken by surprise on Friday when news broke that the top Iranian military commander was killed by in Iraq by US bombs. Markets are now bracing for a possible retaliation by Iran against the US. Equity markets and other risk assets moved lower while oil along with safe-haven assets such as gold, bonds and Yen moved higher. Furthermore, concerns over the US economy were heightened by the worst ISM Manufacturing reading in a decade.
The coming week might prove to be volatile with whipsaw price action, as many participants may choose to sit out this first week of trading and wait until after NFP to start rolling out positions.

Themes for the Week:

• Iran Retaliation: the markets are currently NOT expecting Iran to do anything that would spur a serious military clash with the US. So it would seem that any further tensions could catch traders off-balance.
• US/China Trade War: markets are pricing in a Phase-1 deal by Jan 15th. For now, this is on the back burner.
• Brexit: UK lawmakers reconvene on Jan 7 and will debate the divorce deal PM Johnson has agreed with Brussels. The bill goes to parliament's upper house on Thursday and should allow Johnson to fulfil his pledge to "get Brexit done" by Jan. 31. In the meantime, GBP might start to react to normal macro data releases again.
• NFP-Friday: as usual, the health (or lack thereof) of the US labour market will be in focus and after a worse ISM employment component, traders are bracing for worse data.

Data in the Week Ahead:

• AIG PMI
• ISM Non-Manufacturing
• AU Retail Sales
• Cad Employment Change
• US Non Farm Payrolls

On the Radar:

The thematic trades would be Jpy long vs. Eur and Gbp and Gold longs. However, if tensions cool off there may well be a pickup in risk assets with stocks, Aud & Nzd returning bid. Best be prepared for either contingency.