Sunday Prep

Sunday Prep

Major Themes

 

  • North Korea Summit, meeting between Kim & Trump.
  • Trade war, tariff bonanza between US and G7.
  •  Brexit UK
  • Italian political Risk
  • Taper Tantrum Euro Area QE cuts.

 

It has been along time since I have posted, but I am back with a new strategy and a new outlook. I had to take some time away from trading to sort my life out and recover from a few heavy losses last year.  So to kick off the Sunday night prep I have singled out the major themes/headline news at the moment.

So we have the meeting between Kim and Trump this week and also the fallout and further clarification of the G7 meeting, which didn’t seem to amount to much and had all the G7 leaders pretty confused as to the US stance after Trump left for Singapore.

The G7 meetings were supposed to shed more light on the tariff situation, but things seem to be deteriorating quite quickly with tariffs being levied against Mexico, Canada and Germany.

The USD seems to be in an interesting spot, having been sold off most most of 2017 and early 2018 we see some recent strengthening in the Dollar index. This fits my view from last year that the US is currently in a tightening cycle and holding dollars will yield more in Carry moving forward. The only reason why we haven’t seen real follow through into the USD is the trade war spat that is keeping dollar prices capped.

This weeks data includes US interest rate decision, ECB monetary policy update, BOJ QE economic policy meeting and UK Brexit bill heading to Parliament.

Source (trading economics)

Week Ahead

Next week the Federal Reserve, ECB and Bank of Japan will be deciding on monetary policy. Key economic data include: US inflation rate, retail trade, industrial output and Michigan consumer sentiment; UK inflation, wage data, unemployment, industrial production, retail sales and trade balance; Eurozone industrial output; Japan machinery orders; China industrial production, retail sales and fixed asset investment; Australia consumer and business morale; India industrial production and inflation; Turkey Q1 GDP growth.

It will be a busy week in the US, as investors turn their attention to next week’s FOMC meeting at which the Federal Reserve is expected to raise its target short-term interest rate for the second time this year. Regarding the economic calendar, the most important releases are: inflation rate; retail trade; industrial output; the preliminary estimate of Michigan consumer sentiment; producer and foreign trade prices; business inventories; NFIB Business Optimism Index; NY Empire State Manufacturing Index; overall net capital flows; and the government’s budget statement.
Besides, market-participants also will be eyeing a meeting between US President Donald Trump and North Korean leader Kim Jong Un, which will held in Singapore on June 12th.
The UK will publish inflation and producer prices, wage data and unemployment, retail trade, industrial production, trade balance and construction output.
Elsewhere in Europe, the ECB will provide an update on monetary policy and is likely to announce an intention to end a massive bond purchase scheme later this year. Markets will also focus on: Eurozone industrial production, trade balance, employment change and final inflation; Germany ZEW Economic Sentiment index; Italy industrial output; Sweden inflation rate; and Turkey Q1 GDP growth.
The Bank of Japan will hold its monetary policy meeting, but no changes are expected. Analysts are also eyeing the publication of Japan’s machinery orders. Meanwhile, China is set to publish figures for industrial production, retail sales, fixed asset investment and house prices; and Australia is releasing NAB Business Confidence, Westpac Consumer Confidence and employment figures.
Other important releases include: India industrial production, inflation, wholesale prices, trade balance and current account; Indonesia foreign trade; Canada house prices; Brazil retail trade; and Russia interest rate decision.

 

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