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The Week Ahead in the Global Markets

The Trading Room

From the desk of Joe Rios

The Euro fell broadly after Greece said it would temporarily close banks on Monday in an attempt to prevent its banking system from collapsing after international creditors refuse to extend the country’s bailout. Greece’s banks, afloat by emergency funding from the European central bank are on the frontline as Greece moves toward defaulting on a €1.6 billion payment due to the international monetary fund on Tuesday. Expect volatility in the week ahead, not only from the dramatic escalation of the Greek debt crisis but also from a busy economic data calendar squeezed in a short holiday week.

 

Last week the grains market provided bullish opportunities with wheat leading 14.97% higher, corn 9.2% and soybeans 4.27 %. In the metals market copper rallied 3.15% while gold dropped -2.35% and silver -2.26%.  Global stocks were weaker, led by the Shanghai composite index dropping -7.4% on Friday, taking its decline from its June 12 high to -19%. China’s central bank reacted by cutting its benchmark lending rate to a record low and lowered reserve requirement ratios for some lenders after local government bonds sales drained liquidity.

 

In the week ahead I expect the currency market to lead the way to a rise in volatility across the broad markets. Before placing currency trades check with your broker for the potential of higher margins, especially on the euro currency pairs in the Forex market. Should we see extreme volatility, then some brokers may limit euro trading to the closing of existing positions and not allow you to open new positions. Pay special attention to the spread between the bid and offer, as Forex dealers may widen the spread in an attempt to lower their risk. A number of major online brokerage firms lost millions in the 10 minute surge in the Swiss franc on January 15. I will also focus on correlations analysis as a guide to rotation flows. I expect a flight to safe haven assets across the global markets, therefore risk assets should flow to US Treasuries and gold. The Japanese yen should also rise from the unwinding of carry trades. Throughout the week keep your attention on the rotation flows as positions may eventually begin to unwind, providing new trading opportunities.

Joe Rios 

Founder & Chief Strategist

 


 

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Monday

8:30 AM               CAD       RMPI

10:00 AM             USD       Pending home sales

9:00 PM                NZD       ANZ business confidence

 

Tuesday

2:00 AM               EUR        German retail sales

3:55 AM               EUR        German unemployment change

4:30 AM               GBP       Current-account

4:40 AM               AUD       RBA Gov. Stevens speaks

5:00 AM               EUR        CPI flash estimate

all day                   EUR        Euro group meetings

8:30 AM               CAD       GDP

9:45 AM               USD       Chicago PMI

10:00 AM             USD       CB consumer confidence

9:00 PM                CNY        Manufacturing PMI

9:30 PM                AUD       Building approvals

9:45 PM                CNY        HSBC final manufacturing PMI

 

Wednesday

4:30 AM               GBP       Manufacturing PMI

8:15 AM               USD       ADP nonfarm employment change

10:00 AM             USD       ISM manufacturing PMI

10:30 AM             CL           Crude oil inventories

9:30 PM                AUD       Trade balance

 

Thursday

4:30 AM               GBP       Construction PMI

8:30 AM               USD       Nonfarm employment change

10:30 AM             NG         Natural gas storage

9:30 PM                AUD       Retail sales

 

Friday

US Bank Holiday


 

THERE IS A SUBSTANTIAL RISK OF LOSS IN TRADING COMMODITY FUTURES, OPTIONS, AND FOREIGN EXCHANGE PRODUCTS. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS

 
 
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