Weekly Game Plan 18 Sep 17: by Justin Paolini

With no significant news over the weekend, market should be muted into the Wellington open also considering the bank holiday in Japan. The main event this week is the FOMC decision (statement/dot plot/press conference) on Wednesday. The other main focus will be BoJ and UK PM May’s speech on Brexit in Florence. Influential macro data out is: UK Retail Sales, NZD GDP, CAD CPI & Retail Sales.

Before going into the usual market mover list, a few words on the political debates heating up:

  • Catalan independence vote on October 1st: PM Rajoy is doing everything he can to stop this vote because of course the central government would lose quite a slice of taxes in the case of Catalonia’s independence. The only thing left he can do is send in the military, but will it really come to that? Voting intentions are strongly in favour of independence, in search of increased autonomy, a belief that Catalonia would be better off on it’s own, and a desire for a new model for running a country.
  • German elections: violent protests are rising in Germany against Merkel and this is unusual. Merkel will likely win the vote given her lead in polls over Schulz, but in order to form a government she will definitely need to make back-door deals. The fact is that neither Merkel nor Schulz are confronting the key issues that are at top of mind for the population: lack of integration of immigrants, pension sustainability, social equality.
  • New Zealand Elections: a change of government is entirely possible given the flip flops in polls. The main scenario is a coalition between National/NZ First with likely tightening of immigration rules, more focus on retional development, tougher law enforcement and minor/no change to RBNZ policy. The National party has governed since 2008, and the main opposition comes from Labour.

USD:  it’s all about FOMC, where the markets are expecting  the Fed to announce it will begin reducing its balance sheet (“quantitative tightening”) in October.

EUR: we get final CPI readings, Ger ZEW and the Flash PMIs. These are not expected to be overly market moving.

GBP:  Carney gives a speech on Monday, Retail Sales are out on Wednesday, and PM May speaks in Florence on Friday.

CAD: the influential data points are CPI & Core Retail Sales on Friday.

AsiaPac: On Tuesday we get RBA minutes; on Thursday we get NZD GDP and the BOJ decision & statement. Friday we get the elections in Nzd.

Going into the week I’ll be looking to follow the risk-on theme from last week, with a bullish bias on Dow, Dax & Crude Oil and a bearish view on JPY. I thing GBP has run a bit much so I’ll only be looking to pick it up on deep pullbacks.

by | Sep 17, 2017

About the Author

Justin is a Forex trader and Coach. He is co-owner of www.fxrenew.com, a provider of Forex signals from ex-bank and hedge fund traders (get a free trial), or get FREE access to the Advanced Forex Course for Smart Traders. If you like his writing you can subscribe to the newsletter for free.

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