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Weekly Game Plan 25 Feb 19

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Late Friday, Trump generated a risk-rally saying he’s inclined to extend China trade deadline and meet Xi soon, possibly in March in Florida to decide on the most important terms of a trade deal. Watch the Kiwi as we open up the week: Retail Sales are due and with lower credit card spending, there may be space for a weak print.

Themes for the week:

  • Optimism that the US/China tensions are de-escalating is pushing risk assets higher.  The Dow has almost made a full recovery from 2018 lows to 2018 highs.
  • US GDP & Powell: the markets will be watching US GDP closely to see whether the government shutdown (amongst other things) affected growth. Also, FED’s Powell is also likely to give his take on the economic outlook and  monetary policy plans when he testifies in the House of Representatives and Senate on Feb 26. and 27.
  • Recent ECB minutes have almost guaranteed further support to the financial system. Will “flash” CPI numbers due Thursday and Friday reinforce the picture of a sluggish economy and below-target inflation?
  • More on Brexit: a “meaningful vote” could come as early as Feb 27 if PM May and the UK Parliament can agree to something (for example the Malthouse compromise). But don’t hold your breath.

  • China Mfg PMI and Caixin PMI will be released in the week ahead along with China non-Mfg PMI, and participants will be paying attention and evaluating the degree of the economic slowdown.

Data in the Week Ahead:

  • NZ Retail Sales (Sunday evening)
  • UK Inflation Report (Tue)
  • PM May Speech (Tue) & Vote on Brexit (Wed)
  • Powell Testimony (Tue-Wed)
  • Cad CPI (Wed)
  • China PMI (Thur)
  • Powell Speech (Thur)
  • US GDP (Thur)
  • China Caixin PMI (Fri)
  • CAD GDP (Fri)

On the Radar:

As of Friday, the Dow remains the strongest index with the most impressive recovery. Having closed above 26000, it remains on my (long) watchlist. I haven’t watched metals as much as necessary lately and missed the rise in Copper up till now, but it does remain on the (long) watchlist. In FX, the risk-on sentiment looks easier to play via GbpJpy (long). I also like Cad strength vs USD and Eur.

About the Author

Justin is a Forex trader and Coach. He is co-owner of www.fxrenew.com, a provider of Forex signals 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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