Weekly Game Plan 16 Sep 19

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Here is this week's Game Plan:

The first thing that will be on everyone's mind tonight at the open will be the attack on the Saudi Arabia Oil fields. This will be bullish for oil, bearish for equities and global growth. In other news, UK PM Boris Johnson said huge progress had been made on resolving the Northern Irish backstop sticking point in Brexit talks.

Themes for the week:

• Crude Oil: the attack on Saudi Arabia will disrupt oil production in the near term. Expect a large gap up in Crude, and other energy prices. Also, higher inflation (from oil prices) might inflate global growth issues (since higher prices are a drag on consumption & savings) and send indices lower. Expect Cad to outperform.
• FED: the market is expecting a 0.25% cut already, so the more important parts will be the dot-plot (will there be enough voters to hypothesize a third cut by the end of 2019?) and Fed Chair Powell’s press conference (will the Fed be data-dependant - the hawkish case - or will the Fed be preemptive - dovish case?).
• BOJ:  the markets are expecting the BOJ to keep their powder dry, but equally there is a consensus that more easing is due this year. So the BOJ could actually surprize markets on Thursday if it wants to.
• BOE: the Bank of England also meets on Thursday, but it should be a non-event, as the Brexit drama will keep the MPC sidelined.
• Brexit: the situation remains fluid but BoJo spoke about significant progress regarding the Irish backstop, which could further enhance the odds of a deal with the EU.

Data in the Week Ahead:

• China Industrial Production, Retail Sales
• RBA Minutes
• GER ZEW
• UK CPI
• CAD CPI
• FOMC
• NZD GDP
• AU Employment Change
• BOJ
• UK Retail Sales
• BOE
• CAD Retail Sales

On the Radar:

Things will be much different when we approach the markets tomorrow, after the weekend developments. Last week we closed with risk-on, strong equity markets and a weak JPY; instead this week may open with the opposite: risk-off, strong crude oil prices, weak equity markets, strong CAD and stronger Jpy.  The only continuation may be seen in GBP and Euro (on the long side) going into the week.