Trading with point and figure

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The Week Ahead - Preview: 18 to 22 June 2018

- If the rather meagre economic data schedule was the sole determinant of price action in financial markets in the week ahead, then a quiet week would seem likely. However there are a raft of central bank meetings and conferences, Fed bank stress tests, numerous meetings in the Eurozone, the continuing saga of the Brexit Withdrawal Bill, the key OPEC meeting to decide on easing production curbs, and of course the various trade tensions, which between them should offer the one or the other 'tape bomb'. Eurozone govt bond supply is plentiful, though redemptions are even larger, and there are inflation-linked bond auctions in the UK and USA.

- Statistically the US has nearly all of its housing data, while Japan has Trade and national CPI. Consumer and Business surveys are plentiful, and include the flash Manufacturing PMIs from Japan, Eurozone and the USA. Canada looks to CPI and Retail Sales, while the UK has PSNB and the CBI's Industrial Trends survey, and a rather wobbly ZAR will be sensitive to the key CPI and Current Account reports.

- The Bank of England's MPC is expected to keep rates on hold at 0.50% when it meets this week, but following the strong Retail Sales report, (though very poor Industrial Production and Construction output, and sluggish wages), there are expectations that it will signal that the door is very much open for August rate hike, with the usual Brexit negotiation contingencies. As this is not an Inflation Report meeting, there will be no press conference, though Mr Carney will have the opportunity to eludicate on the BoE's statement, wjhen he makes his annual Mansion House address on the evening after the MPC meeting. Swiitzerland's SNB is also seen holding rates at this week's meeting, and signal that a shift in its policy rate is still a distant prospect, while again underlining that it sees the CHF as still being overvalued, and expressing some dismay at the recent bout of 'flight to quality' strength. Norway's central bank should also hold its polict rate at 0.50%, though it will be interesting to see if the weaker than expected CPI (though otherwise solid activity data) prompts any change of heart in terms of its rate trajectory, given that it has signalled that a rate hike is likely by the end of Q3. In the EM space, the primary points of focus will be Brazil and Mexico, above all given recent currency weakness. Brazil's BCB halted its long run of rate cuts at 6.50% at its last meeting, though it signalled that it reained an easing bias, but with IPCA-15 seen vaulting higher this week to 3.3% y/y from 2.7%, and the BRL suffering bouts of intense pressure (in no small part due to a very murky policital outlook), it may well shift its rhetoric to a rather less accomodative footing. Mexico's Banxico is once again charged with propping up the ailing MXN, which is likely to stall the relatively drop in CPI this year, and is seen resuming its rate hikes with a 25 bps hike to 7.75%. Fed and ECB speakers are more than plentiful, with the NY Fed holding a conference, at which outgoing and incoming presidents Dudley and Williams will speak, while 'the great and the good' of the central banking world convene at the ECB's annual Sintra Forum on Central Banking, which includes a panel discussion with Draghi, Powell, Kuroda and RBA chief Lowe. Given the increasingly hefty divergence between, Fed and ECB/BoJ policy trajectories, markets will be pondering how this will play out above all for EM countries, for which some thoughts here via Core Finance TV:

- On the political front, there will be much to ponder in Europe, above and beyond the abject spectacle that continues in the UK's Houses of Parliament in respect of the Brexit Withdrawal Bill, which this week returns to the House of Lords. Things are clearly no better in Berlin where the tensions between the so-called sister parties of CDU and CSU over immigration policy remains very high, which hardly bodes well for the meetings Between Merkel and new Italian PM Conte, followed by Macron, which are supposed to reach some common ground in terms of Eurozone and EU reform proposals. This week is also the deadline set by the Euro group of Finance Ministers to come up with an agreement on debt relief for Greece (Thursday), while Friday has an EcoFin meeting. Markets will also be on higher alert given the latest volley of US tariffs and Chinese counter tariffs, the latter all surprising in terms of the China tariffs on energy products. As previously noted, this is now escalating into an all out fight for economic hegemony of the world, even if there does still appear to be a willingness to continue with negotiations. The energy tariffs are all the more interesting given that OPEC+ meets this week to come to some form of agreement on easing some of the production curbs, amid signals that the non-GCC members of OPEC (above all Iraq and Iran) are none too happy with the idea that they should bow to whatever is agreed between Saudi Arabia and Russia, and as such 'quotas' will likely be the hot topic at the meeting. It appears that some form of two 500K bpd step increases will be the compromise solution, well short of the 1.5 Mln increase that Russia would clearly prefer to see. (For those that have not already listened to this, I discussed prospects for this meeting and the oil market earlier this week with Radio Sptunik, which can be found here: https://soundcloud.com/radiosputnik...ran-will-have-a-lot-of-internal-demand-expert )

..........................................................................


Marc Ostwald
Strategist
ADM Investor Services International
 
Dow

got a tad more bearish on Friday morning/broke purple horizontal

Bears need to keep i below the GREEN trendline...bulls are goin to fight hard
our 24875-24900 marked area saved the day for the bulls on Friday...must be Algos in that area


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SPX for the weekly competition
Does it break the range..??
our 2759=2763 picked up the support area on Friday

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