1. Themes for the Week
– Many investors hoping we’ve seen a bottom in Crude Oil and Equities. It may be easier to play the risk-on/off roller coaster via indices than FX in these conditions.
– FOMC (Wed) will most likely stand pat. However, in December it seemed like March was a “live” meeting, but now the market has toned down it’s expectations given the volatile start to the year.
– RBNZ (Wed) expected to stand pat. However, we’ve seen dairy prices and CPI fall so the market is expecting some kind of dovish slant by Wheeler.
– BoJ (Fri) still expected to stand pat. Some rumours say the BoJ is seriously considering expanding it’s stimulus measures, since stocks have been falling and the Jpy rising. And last week we also heard that the BoJ was “checking prices”…so there is somewhat of a risk of intervention here.
– We also have US & UK GDP, as well as EU CPI which should take the back seat relative to all the Central Bank news.
2. Charts in line with these themes
It seems easier, top me, to play the Dow or Dax from the long side rather than dabble in FX. AudUsd above 7050 might be an equally interesting risk-on play, but it’s not yet clear whether the China fears are overdone or not.
I also think UsdCad has at least another 100 pips to go on the downside since Poloz seems less concerned about the situation than the market expected.
Generally speaking, we’re still seeing a bounce in a clear downtrend. Many will try to sell into the bounce, so things could be tricky for the time being.
I will be watching the Central Banks this week, but will wait for the announcements rather than pre-commit to a view.
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