Weekly Game Plan 30 Jul 18

With no developments over the weekend, it should be a slow start to a very busy week. Some analysts are expecting the tight ranges we’ve seen in FX to be challenged by BOJ, FED, BOE and Non-Farm Payrolls.

Themes for the Week:

Bank of Japan: even with QQE and other tweaks to an ultra-easy monetary policy, Japanese growth remains stagnant and with trade wars lingering, zero interest rates hurting bank margins and a strong JPY, the BOJ might be considering action.  There is a real risk that the tweaking of the YCC could cause a “taper tantrum”.

FED: Possibly the least influential event this week  as the market is pricing in a rate hike at the September meeting and the meeting this week shouldn’t alter Fed expectations or move markets.

BOE: the market is expecting a “dovish hike” given the sluggish UK data and the high uncertainty surrounding the UK BREXIT proceedings. So watch the accompanying statement closely.

Crowded FAANG trade: Facebook took quite a beating on earnings last week after this week after fellow-FAANG Netflix and Twitter. The final FAANG, Apple, reports this week and any disappointments in its numbers could cause more pain for U.S. and world stocks.

EU Banks will also be on the radar:  BNP Paribas, Intesa Sanpaolo, Lloyds, ING, Barclays, SocGen, RBS, Credit Agricole and Unicredit all have earnings due. With dull euro zone growth, zero interest rate policy impacting margins, a long-running struggle to keep up with U.S. rivals as well as bad loans and trouble in Turkey, there will be plenty to keep traders on their toes.

Market Movers Due:

  • The main event is NFP-Friday. The market is expecting +190K , unemployment rate to fall to 3.9% from 4.0% and the Average Hourly Earnings to come in at +0.3%. Just remember that the main focal point will be earnings.
  • In Canada we get GDP.
  • In AU we get trade balance, retail sales.
  • In NZ we get employment data.

What’s on the Radar:

Going into the week, the only clear trade setting up seems to be Nasdaq Short towards 7200 initially, 7000 main target on the back of last week’s FAANG sell-off.

Chart: https://www.tradingview.com/chart/NQ1!/23a9TPec-Nasdaq-Short-Bias-in-Play/

Everything else is a wait & see, until the buck decides where it wants to go:

https://www.tradingview.com/chart/DXY/N8UzLIUS-DXY-Stuck-in-a-Range-Going-into-a-Busy-Week/

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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