Weekly Game Plan 14 Oct 19

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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.