Weekly Game Plan 3 Jun 19 By Justin Paolini

President Trump seems to act like a normal retail trader – emotionally, not logically. On Friday, Trump planned to place a 5% tariff on Mexican imports effective June 10 had this had a huge impact on markets. Comments made by Mexico’s President Obrador on Saturday might help to calm markets as he will take extra steps to curb migration. With bond markets pricing in a global slowdown and central bank easing, there will be keen focus on central banks in the week ahead. The RBA and ECB meet this week, while the Fed will be in focus with a speech by Fed Chair Powell

Themes for the Week:

  • Obviously the tit-for-tat  trade jitters will be top of mind. Markets were expecting Trump to come to an agreement sooner or later, but instead the trade debate just seems to be getting worse. Next week there will be a G20 finance ministers’ conference but who knows what will go down…
  • Dovish RBA: the RBA is widely expected to cut rates by 0.25%. So that’s priced in, and what will be more influential is the RBA’s statement.
  • Dovish ECB: the ECB will describe the details for another set of TLTRO lending operations at its meeting this week. The ECB will also release their economic forecasts which should help shape ECB expectations over the next few months. With worse data, and issues in Italy, the markets are pricing in dovishness all around. Watch out for surprizes.
  • Italy vs. Brussels: Italy’s Salvini is threatening to tear up EU fiscal rules. He argues the result gives his party a mandate to push through tax cuts and fight EU budget rules. The Rome-Brussels standoff will escalate after June 5 if the Commission decides to start disciplinary steps against Italy for failing to rein in debt.

Data in the Week Ahead:

  • AU Retail Sales
  • RBA Decision
  • AU GDP
  • US ISMs
  • ECB Rates Decision
  • CAD Employment
  • US NFP

On the Radar:

So long as the markets remain risk-off, JPY and CHF will be in demand vs. GBP, Cad and USD. Also, equities should also remain under pressure with strong negative action across the board. Expect AU and EUR to remain rangebound until after the respective central bank meetings.

About the Author

Justin is a Forex trader and Coach. He is co-owner of www.fxrenew.com, a provider of Forex signals and Education from ex-bank and hedge fund traders (get a free trial), or get FREE access to the Advanced Forex Course for Smart Traders. If you like his writing you can subscribe to the newsletter for free.

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