Weekly Game Plan 28 Oct 19

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Here is this week's Game Plan:

Last week ended on a strong note for risk assets and the Loonie after speculation that US and China are on track to complete the easier phase 1 trade deal in November. These reports were confirmed on Saturday by the Chinese Ministry of Commerce. So the risk appetite may continue this week as well, ahead of key event risk. Beyond this, the Brexit situation remains fluid as the EU is said to agree to another Brexit extension, but hold back to the announcement, awaiting UK’s vote on a December election, which Johnson called for.

It will be a very busy week, which could result in a pick-up in volatility and volumes, with a plethora of risk events such as key US earnings, central bank meetings, and Non-Farm Payrolls.

Themes for the week:

• Brexit: extension, elections, or else? The situation remains fluid...what happens next is anyone's guess.
• US/China trade debate will continue to sway markets.
• FOMC: a rate cut is priced in, and the market is also expecting some hawkish commentary. So, it appears Powell's presser will be the core focus.
• BOJ:  Kuroda says the BOJ could “certainly” cut rates further, in order to face the slower economy. Analysts reckon a move to -0.2% or even -0.3% are possible from the current -0.1%. But no one is quite sure what it would take to make that cut.
• BOC: No change is expected but there will be new forecasts, the risks to the monetary policy report, and the press conference.
• US Earnings:  Apple, Alphabet, Facebook, GM and Starbucks among the many companies reporting.
• Civil Unrest: From Hong Kong to Beirut to Santiago, protests and civil unrest have been raging, posing a headache for investors as well as governments. This has yet to take it's toll on equites worldwide, but is still holding back money managers from committing to larger positions. It would seem that governments will make concessions going foward, in order to calm the masses.

Data in the Week Ahead:

• RBA's Lowe Speaks
• AU CPI
• US GDP Q/Q
• Bank of Canada Decision (no change expected) & Presser
• FOMC Decision & Presser (hawkish 0.25% cut expected)
• CNY PMI
• Bank of Japan Decision & Presser
• CAD GDP
• US PCE
• Non Farm Payrolls
• US ISM

On the Radar:

Equities closed on a strong note last week, so I remain biased long, always keeping an eye on earnings. There was also a revival in Crude last week, which could very well continue. In FX, with so much event risk due it's logical to expect some volatility, but for now we need to base our initial watchlist on Friday's closing prices. That would put Cad at the top vs Jpy & Chf.