Themes for the week and potential opportunities
– David Cameron tries to reach an agreement: the referendum date has been set for June but the deal negotiated is not satisfactory and at least 6 of his own cabinet ministers will vote for a Brexit. Boris Johnson did the rest of the damage to Gbp yesterday and so further downside is warranted.
– Risk of downward revision to UK GDP (Thur) since both the industrial and construction sectors, which together make up about one-fifth of the UK economy, look to have contracted in Q4. Of further notice, BoE’s Carney will be speaking to the TSC (Tue).
– It is also an important week for the EU, as the ECB prepares for further stimulus in March. President Draghi has reiterated that the ECB “will not hesitate to act” and this week, EU business confidence (today) and inflation prospects (Fri) may weaken again.
– For the US, durable goods orders (Thu) and personal consumption figures (Fri) are the key releases, but we will also get some Fedspeak from Fischer (Tue), Bullard (Thu), Powell and Brainard (Fri).
– G20 finance ministers and central bankers meet in Shanghai
I continue to favour short GbpCad, GbpJpy positions and also GbpAud this week, diversifying but playing the same GBP-short theme.
Further behind, but still on the watchlist, are UsdCad (short) and EurJpy (short).
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