FXR Team

With no influential developments over the weekens, markets will likely pick up where they left off last week. Markets remain nervous, though a true risk-off move has arguably failed to materialize so far. US/China headlines will be the main focus this week, despite the busy data calendar.

Themes for the Week:

US/China Trade Debate: Markets will be on guard for details to China’s pledge to retaliate and the risk of a spiralling effect. Analysts are also watching the 10yr/3mo spread again as it approaches an inversion.

Italy: a plethora of negative developments has impacted Europe’s largest bond market. Within the ruling coalition there has been a corruption scandal that cost a junior minister his job; BlackRock ditched a proposed rescue of Carige bank; European Commission has warned that Italian finances may deteriorate further. How talks on deficit targets may pan out could become clearer at the May 16 Eurogroup meeting of finance ministers. Watch BTPs and FTSEMIB.

Data in the week ahead:

  • UK Employment
  • CNY Industrial Production & Retail Sales
  • US Retail Sales
  • AU Employment & Elections

On the Radar:

I continue my short bias on Dow and FTSEMIB on trade jitters and potential Italian escalation. In FX, I still favour JPY and CHF longs vs. NZD and GBP.

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.