Welcome to November Trading!
1. Themes for the Week
– Will the Fed finally pull the trigger? The Fed felt comfortable transmitting a more hawkish statement to the markets. However, for a hike we would need to see data confirming that the US economy will grow above potential and/or suggesting that inflation pressures are starting to build. In this light, observe the October NFP & Avg. Earnings, and the ISM surveys this week. We also have vice chair Stanley Fischer’s speech on Thursday and board member Lael Brainard’s comments on Friday.
– Due to monetary policy divergence, the EurUsd should remain weak(er) and the UsdJpy strong(er) after the Ecb and the BoJ maintain an easing bias compared to the hawkish stance of the Fed. As far as Euro data goes, we get German factory orders and industrial production, along with EU retail sales and PMIs. The market is of course looking for extra excuses to short the Euro, and will be in pain if data is good.
– Chinese manufacturing is expected to bottom soon. This can also reduce uncertainty over the global economy and thus make Fed tightening more likely. Equity markets will be supported by good Chinese data.
– In the UK, the main event is the BoE’s rates decision and inflation report. No change is expected, although there is a possibility of a 7-2 split. We will also get the PMIs this week to keep things lively.
2. Charts in line with these Themes
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