No real market moving events over the weekend, so expet a calm start to the week. More difficulties for Trumponomics ahead: healthcare bill might never pass given Republican defections. Markets seem immune to the stalemate in Washington so if per chance the bill passes, expect a strong revival of the Trump trade. US earnings season heats up this week with the tech sector in the spotlight. ECB and BoJ will be the main focus in FX this week, and both likely to sit pat.
USD: despite Yellen saying “nothing suggests that the expansion will die anytime soon.”, retail sales and CPI make it tough to believe her. So dollar weakness may continue into the week, with a fairly bare calendar. Housing data (WEd), Philly Fed (Thur) the only interesting points.
EUR: on the contrary, EU data has been strong with retail sales, manufacturing and service sector activity improving. Inflation is the only weak spot but might surprize higher this week. We also have GER ZEW (Tue) and Current Account (Thur). The market believes Draghi may indicate a scaling back of QE efforts in September (Thur).
GBP: Pound strength has recently come from a weaker USD but also hawkish rhetoric from Mcafferty. This week we have the all important CPI, PPI and RPI (The), and Retail Sales (Thur).
CAD: again a top performer after BoC delivered a “hawkish hike” – suggesting the hike may be the start of a tightening cycle rather than a tweaking or adjustment. This week we have Manuf. Sales (Wed), then CPI & Retail Sales (Fri) which will be closely watched for confirmation of the Bank’s stance. earnings season also starts in Canada.
Aussie data has been healthy recently but the RBA speakers (Heath, Debelle and Bullock) might try to talk down the currency this week. The RBA minutes are scheduled for release along with Australia’s employment report which may underwhelm as there has been slower job growth in manufacturing and construction vs. stronger growth services.
Kiwi has benefitted from carry trade demand but local data has disappointed. This week we get the influential CPI print which should also underwhelm.
China data will also influence the region with GDP, retail sales and industrial production.
Going into the week, I remain bullish on the Dow and cautiously on Copper; in FX, I remain bullish on Cad, Aud & Gbp vs. USD.
by Jul 16, 2017 – 10.16 am|
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