Weekly Game Plan – 16.1.17

Reminder: US markets are closed tomorrow for Martin Luther Kind Day. Instead, on Friday Donald Trump will take the Oath of Office and become the 45th President of the United States. It is quite a busy week on the data front as well.

USD: Fed Chair Yellen speaks (Wed) and might throw a wrench in the Pro-USD sentiment by cautioning against excessive fiscal stimulus. We also have a good amount of FedSpeak during the week. Data risk will be concentrated on CPI (Wed), which is expected to cross the 2% line. Also watch industrial production (Wed), Empire manufacturing (Tues), Philly Fed (Thur). Earnings season intensifies but much of the focus will remain on financials.

EUR: The ECB meets this week, but after extending the QE program to December 2017, no change is expected this time round. The sharp improvements in various growth and inflation indicators since then suggest that Draghi may adopt a more upbeat tone

GBP: UK Prime Minister Theresa May delivers what is being billed as a major policy speech on Tuesday. BoE Governor Carney speaks on Monday on “Policy Issues Affecting the Bank of England.” While Carney may sound somewhat upbeat, the real focus will be on May’s speech. We also have important data points: UK CPI (Tues), Employment Data (Wed) and Retail sales (Fri).

CAD:   Enter the BoC (Wed). This will be the full deal including the release of the Monetary Policy Report at the same time and a press conference hosted by Governor Poloz and Senior Deputy Governor Wilkins at 11:15amET. No change is expected and recent data has been quite supportive. Data risk will include manufacturing sales (Thur), retail sales & CPI (Fri). On net, we expect a sizeable jump in headline CPI from 1.2% y/y toward the 2% +/- range. The new core inflation measures, however, are impossible to forecast in advance and, from what I understand, no one within consensus will be attempting to do so.

Asia: China releases Q4 GDP growth figures which are not expected to generate much volatility. Alongside that, we also have Retail Sales, Industrial Production and Fixed Asset Investments. We also have AUD Employment data, expected to be decent (Thur) whilst NZD has a Dairy Auction (Tue) expected to show weakness.

It’s tricky going into the week. Gbp weakness is most evident against comm-dolls, but any Gbp bets are better left until after May sets the tone for the week. So whilst I do expect changes in the watchlist this week, my initial selection is Nasdaq longs & Copper longs, Gbp shorts vs Aud & Cad.

Good Luck!

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