It might be a volatile start to the week as the risk-on sentiment from Friday might reverse as trade tensions escalate after the US persisted with tariffs on Japan, Canada, Mexico and the EU and led to retaliatory tariffs. At the same time, Secretary Ross is in Beijing to urge China to buy more American goods to reduce the trade deficit the US has with China and secure greater intellectual property protection. The tensions seen at the Whistler G7 FinMin conference may be a tell-tail for the G7 Leaders Summit which will take place this week.
In other news, Italy has avoided the need to call another election that would have created great uncertainty. However, many analysts still question how populist parties on the right and left will maintain a government that will abide by the strict EU budget rules. For the time being, all is well and the markets will likely focus on the brewing international trade war.
Regarding data, Australia is the protagonist this week. The RBA will likely be a non-event, but Australia also has Retail Sales, GDP and Trade Balance. Canada will only have the Employment Report. China will release Caixin Services PMI and trade data.
Going into the week I remain biased long on Nasdaq, short on Crude, and although there’s much confusion in FX at the moment, it seems that GBP is gaining some favour vs. USD, JPY & CAD.
Be sure to check our TradingView page for updates as the week evolves.
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