Starting two weeks ago, we’ve seen the market switch from risk off to risk on. All the news came out to put accelerate greed – US-China trade talks coming October; delay of tariffs and possible aversion of a no-deal Brexit. Moreover, a comment from BOJ Kataoka about adding more stimulus trigger a huge sell offs on JPY. Coupled with ECB’s stimulus package sent equities market to hit the highs.
September is half over. Are we going to see the greed’s rally continue to the rest of the month or is it high time for the market cool off?
UK data will come out this Wednesday and Thursday. Expect volatility. However, most of the move of the sterling will most likely be coming from Brexit talks. UK PM Johnson will be meeting EU’s Juncker on Monday. Any progress to a Brexit deal will push sterling higher.
RBA will be releasing minutes on Tuesday. This will most likely be the same rhetoric as usual. The highlight on AUD this week is AU’s unemployment and employment rate on Thursday. Forecast seems to have a downward bias. If the market does make a turn downward, I’d expect a huge move as a correction to the huge rally AUD has made past 10 trading days.
Forecast on CA’s data will be bearish but market may actually shrug this off because of the recent attacks on Saudi oil.
BOJ will have a press conference on Thursday. Will they follow the steps of the ECB in introducing a new stimulus package? If so, this will definitely increase the risk appetite of the market and JPY could continue to sell until fear comes in.
Lastly, the FED will be announcing their Fed Funds Rate on Thursday 2AM. Market is expecting a rate cut. My personal bias for USD is a long after rate cut announcement. In my view, USD will still be strong despite the rate cut because US economy is performing well. Moreover, when fear strikes – such as US-China trade talk failure – USD will continue to act as safe haven over risky currencies like AUD, NZD, CAD, EUR.