Growth issues remain at top of mind with central banks easing and PMIs slowing down across the globe. Risk assets remain bid on Central bank support and a lower US dollar. After a dull weekend, we will have a busy week with US company earnings in focus alongside central bank guidance and decisive event risk. The USD should remain offered ahead of the July 31 FOMC meeting, and UsdJpy (short) will come into focus if/when the growth issues start to affect risk assets.
Themes for the Week Ahead:
- Data dependancy: a plethora of data is due in the week ahead and it all comes back to growth concerns and inflation. Are central banks correct in their cautious stance or not?
- Earnings: Fifty-seven S&P500 firms release earnings over the coming week. It’s not expected to be a robust season, with the consensus estimate for a 2% year-ago drop in earnings. Among the key names are Citigroup, JP Morgan, Goldman Sachs, Wells Fargo, Bank of America, Morgan Stanley, eBay, Netflix, Microsoft, BlackRock, United and Amex. With valuations stretched and lingering worries about the economic impact of protracted U.S.-China trade tensions, disappointing results could pour cold water on the rally.
- Tariff Threats: last week French lawmakers approved a tax on big tech companies, potentially creating more tension on the trade front. Trump has ordered an investigation into the French tech tax plans, a probe that could lead to the U.S. imposing new tariffs or other trade restrictions. The trade war continues and Europe has entered the battle field it seems...
Data in the Week ahead:
- China GDP
- NZD CPI (should be better)
- RBA Minutes (could be dovish)
- UK Employment change (tough call)
- Ger ZEW (tough call)
- US Retail Sales (could be lower)
- Powell Speech
- UK CPI (tough call)
- CAD CPI (could be lower)
- AU Employment Change (could be lower)
- UK Retail Sales (could be lower)
- CAD Retail Sales (could be higher)
On the Radar:
Dow (longs), Crude (longs), UsdCad shorts, EurCad shorts, NzdUsd longs, EurNzd shorts, perhaps EurJpy shorts.
About the Author
Justin is a Forex trader and Coach. He is co-owner of www.fxrenew.com, a provider of Forex signals and Education 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.