Weekly Game Plan – 12.12.16

We are entering quite a busy week! Central Banks will take center stage. RBA, FED, BoE, SNB, RCB, Norges Bank & more. Almost all will follow the FED meeting.

Eyes on Crude Oil: last week, OPEC agreed to slash output by 1.2 million barrels per day from Jan. 1, with top exporter Saudi Arabia cutting as much as 486,000 bpd. On Saturday, producers from outside the 13-country group agreed to reduce output by 558,000 bpd, short of the initial target of 600,000 bpd but still the largest contribution by non-OPEC ever.

USD: dovish hike time. The FOMC will “finally” raise rates by 0.25% but I expect profit taking on the USD in a “sell the fact” manner. USD will probably only hold onto it’s gains if the Dot Plot shows more than 2 rate hikes planned for 2017. We also have Retail Sales (which will include Black Friday, Thanksgiving, Cyber Monday effect), CPI (post-FOMC), Industrial Production (pre-FOMC but won’t matter), Philly Fed & Housing Starts (less influential).

EUR: this week we will have the German ZEW (Tue) and flash manufacturing PMI (Thu). Importantly, any firming in data has yet to impact inflation readings so these data prints will not likely change the Euro’s trajectory.

GBP: enter the Bank of England. No changes to policy are expected, but we might get some hawkish rhetoric signalling the end of easing. Ahead of the meeting, CPI (Tue) may continue to rise and retail sales face a high bar set against continued growth after a large gain in October. Unemployment (Wed) may also rise a tad, but so should weekly earnings.

CAD: with marginal data output, the Loonie will likely be driven by Crude Oil.

Asia: following a sharper contraction in Q3 GDP, focus now shifts to the November jobs report at the start of the week, ahead of the RBA. Consensus expects a solid employment gain.

China has released aggregate financing figures over the weekend but while the potentially more significant growth signals will include industrial production and retail sales (Tue).

My initial watchlist for this week includes: EurCad & EurUsd shorts, UsdJpy & CadJpy longs, along with longs on the Dow and on Crude.

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