Weekly Game Plan 6 May 19

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Here is this week's Game Plan:

With no influential news out over the weekend, the start in Wellington should be relatively calm. Also, tomorrow (Monday) is a UK bank holiday so don't expect much out of the European Session either. But it will be an influential week, especially in the Southern Hemisphere with RBA and RBNZ due amidst other local data. The main theme for Friday's trading was USD weakness post-NFP, which was a little counter-intuitive given Powell's upbeat speech and decent NFP data.

Themes for the Week:

• Volatility remains compressed at record lows...but not in FX! Finally we have seen some movement and currency pairs seem to be waking up from their slumber - including GBP. However, VIX and other cross-asset volatility measures are still at record lows, so there is a cautious tone prevailing and everyone expects a volatility surge sooner rather than later

• Green shoots from China? We get Caixin Pmi data and CPI this week from China, and investors will be observing just how resilient China is (or isn't) amidst the current global slowdown. Keep an eye on Trade Talks as well, which start on Wednesday.
• RBA & RBNZ: they are both expected to reinforce their dovish stance but will the RBA cut rates or the RBNZ or both? With an election coming up soon, the RBA may decide to remain steady. So the RBNZ is the favorite for a rate cut this time round.

Data in the Week Ahead:

• China Caixin PMI & CPI
• AU Retail Sales
• NZD Inflation Expectations
• UK GDP
• CAD Employment
• US CPI

On the Radar:

I remain biased long on Dax and Nasdaq going into the week. I remain bearish on Crude Oil. I like the odds of further NZD weakness vs. GBP and JPY. I like GBP strength vs. Eur and CHF also.