Weekly Game Plan – 28.8.16

Themes for the Week and potential opportunities

Reminder: Monday the 29th is a UK bank holiday – expect little to no movement in FX. Also, some contacts are reporting that many players were back for Yellen and will be in the office this week planning positions for Sept. Based on recent Jackson Hole comments, it seems that unless this week’s NFP is dismal, there’s scope for a 0.25% hike in September.

Kuroda is instead taking the BoJ on the opposite path, and may aid UsdJpy rise http://www.bloomberg.com/news/articles/2016-08-27/kuroda-says-boj-won-t-hesitate-to-act-decisively-again-if-needed

USD: busy week ahead, including NFP (Fri), consumer spending (Mon), construction (Thu) and international trade (Fri), along with ISM manuf (Thu). The week also brings several public appearances by FOMC members: Rosengren (Wed), Lacker (Fri). Any comments about monetary policy will be followed closely up to the FOMC meeting in mid-September.

GBP: The coming week will see the Lloyds Business Barometer and GfK consumer confidence (both Wed), the manufacturing PMI (Thu) and construction PMI (Fri). Market participants will be observing just how much Brexit influenced the economy – and so far data has held up well.

EUR: ‘Flash’ CPI data for August (Wed) will provide an update on the extent to which inflation in the Eurozone. Before that (Tue) we have German CPI.

Comm-Dolls: AUD has a busy calendar: QII private capex numbers (Thur), monthly building approvals (Tue), retail sales (Thur) and RBA private sector credit (Wed) will afford market watchers snapshots of the economic growth pulse early in QIII. For NZD we have ANZ Business Outlook & Credit Growth (Wed) as well as Terms of Trade (Thur).

CHN: Finally both official and unofficial August PMI data in China (Thu) will be watched closely for signs that economic growth is stabilising. As almost all of the data in July surprised on the downside, markets will be looking for more reassurance from the latest set of indicators.

I don’t expect the market to be back into full gear until next week, and it’s effectively slim pickings still. So Aud weakness looks like one of the more evident things out there, along with USD strength. Watchlist has AudUsd/GbpAud and UsdJpy as initial candidates.

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