Themes for the week and potential opportunities
Seems to be a quiet week with the exception of the Bank of England so I’ll be on the lookout for potential emerging dynamics. Chinese data will be taken into account early in the week, and Trade Data so far has disappointed.
US: NFP missed expectations but AHE held up and the USD kept it’s strength into the weekend. This is interesting and shows some kind of underlying strength. We have a quiet week ahead for the USD until Retail Sales on Friday (expected to rebound higher). Fed Presidents Evans and Kashkari (Mon) and Mester, Rosengren and George (Thu) will most likely support the idea of a June hike.
GBP: The BoE (Thurs) is the highlight on the calendar this week but the chances of any change are pretty much zero. Even though these very same conditions (weakening data, easing by other CB’s) would have turned the tide yeras ago, the Bank will likely argue that referendum uncertainties are in play in the numbers and anything other than 9-0 for the status quo would be a major surprise. We also have Ind. Prod. (Wed) expected +0.2% m/m for the headline and y/y to -1.0% from -0.5%. Manufacturing is expected +0.3% m/m (after -1.1%) with y/y at -1.9% from -1.8%. April’s RICS house price balance is on Thursday, March construction output on Friday.
EUR: quiet calendar in EU this week, with a revision to first quarter GDP growth, revisions to April CPI estimates, and March industrial production growth as highlights.
Comm-Dolls: There is not much news on Australia, New Zealand or Canada this week but the Chinese trade data over the weekend will be an early focus especially for Australia, while China’s inflation data is also scheduled on Tuesday. The BoC’s Wilkins is due to speak on Wednesday, the RBA’s Edey on Thursday.
Going into the week Aud still looks like the weakest of the pack and Jpy is the strongest. So I’ll be looking for AudJpy shorts, AudUsd shorts, EurAud Longs. UsdCad Longs, CadJpy shorts. Gbp might pop up later in the week.