This week should pick up where we left off last week: the return of trade war fears, afterreports indicated the US will go ahead with imposing tariffs on another 200 BLN USD worth of China imports despite resuming talks with China on contentious trade issues. Stocks may come under more pressure, USD may remain buoyant and EM currencies (alongside the comm-dolls) may come under pressure. However, tariffs are apparently being reduced to 10% instead of the 25% feared. So the markets may not react as violently.
Themes for the Week:
- The US/China trade debate will most likely be the main focus after Trump confirmed 200 Bln worth of Tariffs, but apparently is reducing the impact to 10% from 25%. There is much uncertainty still, so stay nimble.
- A Reuters report said that legal experts believe the Mueller investigation may get energized by news that former Trump campaign chairman Paul Manafort has agreed to fully cooperate with US prosecutors. The saga has the potential to impact markets, as the early November US midterm elections comes into focus.
- The Bank of Japan will decide on monetary policy, but no change and no impact are expected.
Data in the week ahead
- Bank of Japan policy decision
- UK CPI & Retail Sales (the mood is quite negative on Retail Sales after sector bellwether John Lewis told investors that its first-half profit was all but wiped out)
- CAD CPI & Retail Sales
- Draghi speaks
- NZD GDP
What’s on the Radar:
Depending on what happens between the US and China, things may change intraweek, but for now here’s what is on my list: US equities remain biased to the long side, as do UsdJpy and GbpJpy; Silver remains biased to the short side; AUD & NZD remain weak vs. USD and GBP.
Good Luck!
About the Author
Justin is a Forex trader and Coach. He is co-owner of www.fxrenew.com, a provider of Forex signals from ex-bank and hedge fund traders (get a free trial), or get FREE access to the Advanced Forex Course for Smart Traders. If you like his writing you can subscribe to the newsletter for free.