Weekly Game Plan 1 Jul 19
Over the weekend China data was slightly lower than expected, but there was good news from the Trump/Xi front. The leaders agreed to call a temporary truce to the trade war: no further tariffs, more talks, and Trump will go easier on Huawei. Expect some risk-on (buying the rumour) into Monday. Also, Russia has agreed with Saudi Arabia to extend by six to nine months a deal with OPEC on reducing oil output. The news will likely take precence over the formal OPEC+ meeting that starts on Monday.
Finally, remember that the US will be closed on Thursday for Independence Day.
Themes for the Week:
Central Bank Watch: the US-China trade truce might reduce the Fed’s easing bias a tad. With bonds and gold pricing in bad news, we might see some respite (lower bonds, lower gold and higher USD). However, watch the ISM this week as traders will be quick to price in easing again if the PMI drops further. The NFP numbers will also play into FED expectations.
RBA: the market is expecting a cut on Tuesday and the data would justify it. This also means that any surprize reluctance to cut will result in a much higher AUD.
Data in the Week Ahead:
- CNY PMIs
- US ISM
- RBA decision
- UK PMI
- AU Retail Sales
- Cad Emloyment Report
- US Non-Farm Payrolls
On the Radar:
With the weekend news, I would expect risk-assets to receive a boost. I like Dax & SP500 longs; I like NZDJPY & CADJPY longs. I also like NZD strength vs. GBP & Eur weakness. USD will likely be exploited via news trades this week.
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