Themes for the week and potential opportunities
- FED dot-plot still creating exchange rate volatility. Fedspeak will be in focus this week with Minutes of US Fed’s March policy meeting (Wed) and a round table with Fed Chair Yellen and previous Fed Chairs (Thu).
- March service sector data (US ISM, EU Services & UK PMI on Tue, CHN Caixin on Wed) generally expected to show stronger activity whereas the UK Construction PMI (Mon) & manufacturing PMI (Fri) probably worsened.
- GBP continues to weaken as polls indicate that the Brexit referendum (June 23) will be close. If UK voters opt to leave the EU, it will be seen as a significant negative for the UK (most of their goods and services exports are sold to the EU).
- RBA meets this week and will most likely remain still given we’re not too distant from the 0.7-0.75 comfort zone. All in all, bullish AUD position can be considered given that recent economic conditions seem relatively stable compared to the rest of the world.
I continue to remain bearish USD vs. Eur, Aud, Nzd & Jpy although positive vibes from global risk appetite make Jpy longs more insidious. I’m also bearish GBP vs. Aud, Nzd, Eur.
Skimming across other markets, Copper & Crude are starting to attract bearish attention while US indices remain well bid.