Weekly Game Plan – 12.6.16

Themes for the week and potential opportunities

Don’t forget to factor in the outcome of Cameron interviewed by BBC’s Andrew Marr (09:00 PM GMT tonight). Sentiment will likely be driven by this tomorrow morning.

USD: busy week ahead. FOMC (Wed) is the main focus but no change is most likely. Yellen to hint at a “live” meeting in July. Retail sales (Tue) probably the most watched and expected positive although much smaller than previous (+0.3% vs. 1.3% prev). Empire State (Wed) expected higher to -5.0 from -9.0, while PPI is expected unchanged; finally industrial production is expected lower than previous. Philly Fed (Thur) is expected higher but CPI (Thur) is expected slightly lower m/m but unchanged y/y. Housing starts and permits (Fri) should show a mixed end to the week. Seeing as how it’s FOMC week, the market will want to see positive data and any negative data will most likely generate more impact.

EUR: no real news. Industrial production and final CPI not influential. There is some ECB jawboning but Draghi will be speaking only on Friday afternoon, when most players are gone for the week.

JPY: BoJ widely expected to stand pat. However, the presser will no doubt be watched and the language assessed. Industrial production (Tue) the only data due and previously was at 0.3% m/m.

GBP: busy week ahead, for data and speakers. First for the Bremain/Brexit debate, there are scheduled talks. Wednesday at 18:45 GMT Michael Gove will be on BBC TV `Question Time’ Program on EU Vote. On Thursdsay, Mark Carney and George Osborne speak at Mansion House. With Brexit risk, the BoE (Thur) will definitely stand pat. Beyond that, CPI (Tue) expected up 0.3% m/m, pushing the y/y to 0.4%. Employment data (Wed) likely to see the claimant count up by 3k with the claimant count rate down. Average weekly earnings are set to disappoint again, slowing to 1.7%.Retail sales (Thur) expected to drop. On balance, dovish expectations for GBP data this week, which will however be overshadowed by polls and Brexit/Bremain debate.

AUD & NZD: AUD Employment data (Thur) is the main release in Australia, total employment expected to post a strong +26.2k. The unemployment rate is however expected to rise to 5.8%. RBA Assistant Governor Debelle is due to speak on Tuesday. NAB’s May business surveys are also on Tuesday and WestPac consumer confidence on Wednesday. For NZD, there is a GDT Dairy Auction (Tue), current account data (Wed), Q1 GDP (Thur) expected lower than previous.

CNH: China is due to publish industrial production, fixed asset investment and retail sales next week. The market is looking for overall strength in the numbers.

Going into the week, cautious Gbp shorts look most evident but also the riskiest choice. European & Japanese equities look weak which could add pressure on Jpy crosses. Crude also looks like it is turning bearish and Kiwi still holding up. However FOMC will likely mix up the cards so I would prefer to stay on the crosses until after the event, avoiding direct USD exposure.

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