Themes for the week and potential opportunities
The fears of China’s clowdown, the oil supply glut and aggressive Fed rate hikes that were driving down emerging markets, US high yield and USD-oil pegs seem to be reversing. The calendar is quite full this week so going into detail:
US: the FOMC (Wed) is expected to stand pat and sound slighty dovish after mixed/worse US data. Q1 GDP will also be highly watched and is likely to be weak. On Friday we’ll also see Chicago PMI (expected to slip to 52.5 from 53.6).
UK: UK GDP (Wed) is expected slower, but in the UK, everything continues to be driven by the upcoming EU in/out referendum. On Thursday, Chancellor of the Exchequer George Osborne is questioned by the House of Commons Treasury Committee about the cost/benefit of EU membership.
NZD: The RBNZ meets on Thursday and is expected to keep interest rates unchanged. Both Australia and New Zealand are closed on Monday.
EU: Monday we will have IFO We will be seeing Q1 GDP (Fri) which will be quite influential alongside the CPI print.
Cad & Aud: GDP will also be the highlight in Canada, while CPI will be the focus in Australia.
Going into the week I favour Jpy & Nzd weakness vs. Gbp and Cad strength. Euro is marginally weak as well, so EurGbp and EurCad also look interesting.
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