Themes for the Week and Potential Opportunities
Going into the week, Chinese PMIs (late Sunday, early Monday) will likely dictate risk appetite in early trade.
USD: it’s NFP week and the market is expecting a more conservative 175K (Fri). Alongside that, US ISM (Mon, Wed) will be key for US rate hike expectations after the worse GDP print and are alsoe expected slightly worse than previous. It will take some evident positive surprizes to shake off the current negative vibes on the USD.
GBP: big week with the BoE’s much expected decision (Thur). The market is looking for a cut of 0.25% to 0.25% and increase the QE target by £50bn by renewing its programme of Gilt purchases over a four-month period. Expect a split vote within the MPC. 7-2 or 8-1 are likely. Ahead of the vote, we have UK PMIs (Mon, Tue, Wed) which are expected to remain stable with only Construction Pmi expected lower.
EUR: “Final” PMIs this week will likely be non-influential as we’ve already seen the “flash” estimates. Euro likely to be a passenger this week.
JPY: More volatility might be seen after last week’s BoJ disappointment, as we should see the actual size of the stimulUs package this week. Beyond that, watch risk appetite.
Comm-Dolls: the RBA policy announcement (Tue) and Statement on Monetary Policy (Fri) are the main focus. The market expects the RBA to cut 0.25% but it’s language may not be all that dovish given that data has not been terrible recently. For Canada, Merchandise trade and Employment (Fri) will be the focus. A modest improvement in employment & trade are expected.
Going into the week, I will be looking for further USD and GBP weakness vs JPY and NZD, and also more downside in Crude and potentially some upside in bullion as the USD falls.
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