Weekly Game Plan 8 Apr 19

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Here is this week's Game Plan:

Over the weekend, PM May has moved further away from the original promise to “deliver what the population has requested” and has now said there is a “greater risk of no Brexit the longer it takes to find compromise”. Needless to say that both May and Corbyn are encountering more and more internal resistance and there is no guarantee that the EU will play ball. The EU Council will hold an emergency meeting on Brexit this week.

On a more positive note, China’s CCTV reported “new progress” made between US and China in the round of trade talks that wrapped up on Friday in Washington. Risk assets may continue to be supported into the week on this.

Themes for the Week:

• Brexit uncertainty: the saga continues with much confusion. Headlines will be influential, and the EU Council will hold an emergency meeting on Brexit this week. (Wednesday).
• Risk-on: assets rallied through the week in part due to US-China trade deal optimism, but no firm date has been set for the much-anticipated Trump-Xi Summit. The US Jobs numbers were also decent and could add to the positive tone.
• Fed Minutes: the recent statement veered on the dovish side, so the market will be looking for more details on Fed balance sheet reduction plans, inflation projections and future rate path. Fedspeak and US data will also be worked into the picture.
• ECB time: the ECB took markets by surprize last time, with the dovish stance. This week no change is expected in either rates, statement or TLTRO details. Could be a non-event unless the statement turns even more sour.
• US earnings:  focus will be on reports from major US banks including Wells Fargo and JPMorgan Chase. The bar has been set quite low this time.

Data in the week ahead:

• UK GDP
• ECB Rates Decision
• US CPI
• FOMC Minutes
• OPEC Meeting

On the Radar:

Going into the week I remain bullish on equities and Crude Oil in line with the risk-on sentiment. I’m also bullish USD on the back of NFP, and will look to NZDUSD and EURUSD shorts, as well as USDJPY longs. As a cross, NZDCAD shorts still look interesting.