1. Themes for the Week & Best Opportunities
– Fed Chair Yellen is expected to sound cautious about a near-term rate hike possibilities (Wed/Thu), while the main US data release is retail sales (Fri), expected to remain soft. We also get to hear from the Fed’s Dudley (voter, dovish) and Fed’s Williams (neutral, non-voter).
If Yellen does indeed sound dovish, like Dudley last week, then we can expect further USD weakness. UsdJpy shorts / EurUsd longs might be a good choice to play Usd weakness.
– Euro area Q4 GDP ‘flash’ estimate expected to rise moderately. We also have German data out this week, which should also be buoyant. All this might actually help the Euro gain against the USD.
– UK Prime Minister David Cameron to meet German Chancellor Angela Merkel (Fri). Brexit fears are rising, and Cameron needs to build allies in continental Europe. GbpJpy might be a good choice to play any Gbp weakness.
We finished last week with risk-aversion so it also makes sense to look for shorts on Dax and longs on Gold, so long as the theme lasts.