Calendar Week 16 – 2022

 

Whilst the impact of two shortened weeks and a lot of traders and dealers out of the market for holidays, this week has some interesting points to focus on. We will be getting key data from across the globe that will show a full months’ worth of figures impacted by the Russian/Ukrainian conflict.

 

From Europe we will get the inflation and industrial production numbers, along with PMI surveys. UK will also release retail sales numbers. Early in the week China will show us the impact of lockdowns with their industrial production, retail sales, GDP and employment numbers. China benchmark interest rate is also expected to be cut this week, heading the opposite direction to every other central bank who is fighting inflation by raising rates.

 

Talking Heads

 

Later in the week the IMF and World Bank has a panel discussion on “Debate on the Global Economy” that global central banks will be attending. Amongst the speakers will be the US Fed and ECB heads. It will be the last we hear of from Powell before the FOMC early May at which the Fed is expected to raise by 50 basis points. Traders will be attentive to this discussion for clues on forward guidance, or trajectory of global interest rates.

 

Currency Guidance

 

Across the currency majors the Yen continues to weaken beyond my expectations and reminds me of that old adage from Keynes, that “markets can remain illogical for longer than you can remain solvent”. One thing is for sure though, I will not be selling it at these levels. Soon as you do it will reverse on you. That is Murphy’s law. The Aussie and Loonie have both completed their cycle back to the 50 EMA and we will be looking for trade setups here to take them into the next cycle. The Euro however appears to be at the mid cycle point having produced a Lower Low. It could have further weakness in it, but we are waiting for it to complete the second half of the cycle and leg back up to the EMA to circa 1.10. The Cable is in a similar position to the Euro and ideally we would like the cycle to rotate back to circa 1.32 before getting short again.