God it is good to be able to use a keyboard again. Blogging from an Iphone is more tedious than it sounds. Anyway without further delay, I would like to share with you some of my views for the upcoming week:
China, from pain to pleasure?
One of the things that kicked off the massive sell offs in January was the Caixim Manufacturing PMI surprising markets with its softness. This month, things may be a little different. The timing of Lunar New Year holidays have the consequence of possible stronger factory output. Should this the case, it will add to the confidence emanating from firming oil prices and reinforce the impression that the turmoil of January is not representative of the year ahead. This could in turn have investors giving second thoughts to US tightening prospects, to the benefit of the USD.
March off the cards for the FED? Don’t jump to conclusions Yet!
Many have counted March out citing similar reasons that many used to say December would not happen. While I agree, that March may be less likely now, I will not rule out an increase. Some others may change forecasts very often, but I prefer consistency. Until we see the results of the NFP on Friday and hear
Fed Yellen’s testimony to congress later this month. It is too early to rule anything out. At least in my opinion.
AUD to weaken?
There will be AUD weakness when the RBA meets. In spite of opinions that the RBA will hold rates at present levels (90% chance they will), I expect softness from their statements. I believe that they will not want the AUD to value more than its current level as it kills their exports. Expect dovish of statements, even if the bank decides to hold. If chinese data is firm, it will bost the AUD due to the trade relationship between the two, creating the perfect situation to get sells in at higher levels.
Relief for pound imminent? Not likely but it will come soon.
The BOE inflation report is out this week. The BOE is expected to show that inflation has grown slowly and are likely to revise down their growth expectations for 2016. However, their growth expectations will still be well above 2% and I feel their inflation figure, while still far from their target (of 2%)will not be as soft as many expect. I have explained why in previous posts over the last few days, so do not wish to repeat myself again.
Sentiment on the UK is still also weak due to BREXIT concerns (not fully priced in as I believe it should also be affecting the Euro far more. After all, is the EU without the UK still so formidable?) and due to lack of trust in the BOE.
With that said, I am not too worried about our GBP bull positions at the moment, since:
1.) they cost nothing to keep open.
2.) Due to a dozen other green trades in Janaury, we have the firepower for more trades if needed.
3.) I expect the JPY and CHF to weaken further in the medium and longer term. So falls in the cable should not affect us as much, and our positions may still gain.
Euro to run out of steam? I think so.
Following the devaluation of the jpy, the EUR is currently stronger than the ECB would like and that is hurting exports. While the ECB do not meet until March , when I am sure they will take further action, expect Draghi to do his upmost in public speeches to weaken the currency.
Trade plans for the week?
Will take a wait and see approach till after Chinese manufacturing PMI data comes out tomorrow. (Both the official and the Caixan). This is very important as it is at the start of the week and will set the tone ahead of the BOE and RBA central bank meetings and the US employment data.
If all goes as planned above, then I will be looking to capitalise on EUR weakness, JPY weakness and AUD weakness over the week at appropriate times. I believe that these will be the themes and will be looking to exploit these with both options and trades.
Will also consider making some plus500 cfd’s buys on Japanese equities as I feel the market still has not appreciated how much they have the chance to rebound due to growth fueled by increased exports due to a cheaper yen and cheap capital expenditure provided by cheap loans. Again, Chinese data is the key here. Provided that it is not poor, Japanese equities will perform well in February on these two fundamental factors.
Personal Targets to achieve by Q1 2016 (April 2016):
I know that if I publicly declare these, then I will do my best to stick to them, so here it goes. Please note some of my goals have been delayed for obvious reasons, but I never abandon a project. Its not really in my nature to quit.
1.) Close Etoro account at a gain and move on.
2.) Start my social account up on anyoption (it already exists and is funded).
3.) Have a section of the site dedicated to plus500 equity trade ideas. (You can read more about this from my posts on the forum in December 2015).
4.) Expand this community.
An ultimate fantasy to achieve by the end of 2016:
To be able to do this full time. Will never know if I do not try.
Hope you all had a great weekend, and I really hope next week works as planned for us,