1. Themes for the week
– Official Chinese data (Monday) is expected to reassure markets on the state of the economy. The recent boost in government spending since August, has raised the likelihood that China’s 7% 2015 target will be met. Of course this will impact risk-appetite and the S&P looks like the place to be for playing risk-on sentiment. NzdJpy and/or AudJpy might also be a good place to look. Vice versa, if data disappoints I would look to the European indices for shorts, and also EurJpy possibly.
– Earnings Season to Continue (and this will of course influence equity markets)
– ECB to stand pat (Thursday), but signal that further QE remains possible.Economic indicators have weakened recently, despite the Euro’s bullish price performance being dictated by momentum-models. Watch the press conference for any further clues…but I still prefer to play Euro weakness on the crosses (vs. Aud, Nzd, Gbp) rather than the major, especially if Draghi leans on the dovish side.
– US focus remains on FOMC policy differences. No US data on tap this week, but we do have fedspeak Monday, Tuesday and Wednesday to keep us alert. USD poised to be a spectator rather than a protagonist this week.
– Bank of Canada to stand pat (Wednesday). UsdCad still one of the stronger currencies out there. Caution before the meeting.
2. Charts in line with these themes