Themes for the Week and Potential Opportunities
The markets are now in holiday-mode so volatility is expected to fall and opportunities will become less abundant.
USD: The only really significant release in the coming week will be July retail sales (Fri) and coupled with the holidays, I don’t expect much action at all.
GBP: we have some data out, but the most important release is the NIESR GDP estimate for July (Tue) which usually is a good indicator for actual GDP growth and the expectations are for a lower print. Ind. prod. (Tue) and construction output (Fri) are expected robust, but they are pre-Brexit indicators.
CHN: The coming week will see a Chinese data-dump: international trade (Mon), inflation (Tue) and industrial production, retail sales and fixed investment (Fri). The consensus expectation is that the economy may be finding a bottom. This may provide opportunities on the indices and Jpy crosses.
EUR: Very thin calendar. Nothing influential.
Comm-Dolls: RBNZ meeting will be the highlight of the week. There is risk of a hawkish cut (similar to the RBA in the past week) as the market has not decided on a 0.5% cut or simply a 0.25% cut. But a hawkish cut is to be expected given the underlying economic strength, persistent concerns on housing and recent buoyancy in milk prices. In Australia, confidence and lending data are among the highlights but Governor Stevens will also be making an address to the Anika Foundation.
Going into the week, indices remain bullish and Crude is supportive. I also continue to favour Gbp shorts vs. Nzd and Aud and will continue to monitor Nzd into – and out of – the RBNZ announcement as it should be the highlight of the week.