Weekly Game Plan 7 Oct 19

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Here is this week's Game Plan:

With no influential news released over the weekend, the open in Wellington tonight should be smooth. Friday saw markets react positively to the "goldilocks" NFP report: it's not bad enough to scare policymarkers, and not good enough to generate much enthusiasm. However, FED rate cut probabilities for October fell to 76% from over 80% on Thursday.

I personally think the risk-recovery was driven more by Trump's positivity regarding the coming week's US/China trade talks than NFP. We now know that headlines on trade will be influential. At the same time, Brexit news will also impact the markets as the EU has rejected PM Johnsons' latest plan.

Themes for the Week:

• US/China trade talks: on Oct. 10-11 President Xi Jinping's top economic adviser, Vice Premier Liu He, will be in Washington. Investors' expectations are low, given Trump's unpredictability.
• FOMC Minutes and Powell: markets will also be following Powell's speeches and FOMC minutes closely. The Minutes may be less influential this week since Powell will be speaking on Tuesday.
• Brexit: October 11th is the deadline for the UK to deliver an acceptable proposal..so there probably won't be one. Investors generally think that British lawmakers' move to force Johnson to seek an extension will be enough to avert a no-deal Brexit at the end of this month. What The situation remains fluid.

Data in the Week Ahead:

• Powell Speeches
• Carney Speeches
• FOMC Minutes
• UK GDP
• ECB Minutes
• US CPI
• Cad Employment

On the Radar:

I don't have a lot of convinction on anything going into the week since there really wasn't a whole lot of directionality in last week's closes. Jpy maintains it's strength despite the recovery in stocks, and Cad had a bad week. This would suggest CadJpy shorts. But the risk-on/risk-off dynamic will be decided by the US/China trade news. Crude Oil remains in a downtrend despite having bounced a tad and we need to see a return to sub-52.00 prices to have faith in another leg down.

Basically, this week don't be in any rush to put on positions. Keep your ears on the wires instead!