Next week's trader's playbook - 16.09 - 20.09.2019

Stock markets recorded a strong week after tensions between China and the US subsided, economic data for the US are still showing solid growth and central banks are starting another round of stimulus. Bond yields began to rise again, hitting alternative instruments such as gold and silver. The happy dollar is suffering damage as another US interest rate cuts, and oil has suffered a strong sell-off after most oil stocks and the likelihood of sanctions being dropped against Iran. On the Brexit front, we are also relieved after positive indications from the EU of progress on the Irish problem.

Optimism is definitely returning among investors, and we expect the sentiment to persist in the next week as long as good sentiment remains. We expect markets to keep pace this week, but next week we have the FOMC and the Fed's interest rate decision. The market desire is for a cut of 50 points, but realistic expectations are for only 25 bps decrease. Given the retail sales figures today that would be expected, the bond market is beginning to appreciate not just 3 but only 2 interest rate reductions by the end of the year.

But by the time we get to the Fed, markets will first have to assimilate and play some fundamental events. Monday will be Japan's day, but China's data will be the main one for industrial production. On Tuesday, the Asian session will focus on RBA Meeting minutes, the European ZEM Economic sentiment in Europe, and industrial production in the US session. On Wednesday, CPI for the UK will keep European views fixed on FTSE and pounds, and the euro will be tested by CPI data. At 21:00 tonight, we expect FOMC and the interest rate decision, with markets fully focused on this event. Thursday, the Asian session will be concerned with GDP data and the state of the New Zealand labor market, and then Japan will decide on interest rates and we expect the BoJ Monetary Policy Statement. Retail Sales for the UK and the interest rate decision, together with BoE MPC Meeting Minutes, will be a priority for the European session. State commerce will come under the influence of initial requests for aid and the Philadelphia Production Index and the sale of existing homes. Friday, the Asian session alone CPI for Japan will be some driving factor for the Japanese yen, and retail sales will be the focus for Canada.

Over the weekend, plan well for the next trading week. There are many events ahead and much action will be seen from the central banks. But the main driving event for the next seven days will be the FOMC on Wednesday - 9pm.

Read more:

• Risk off after the escalation in the Middle East, markets are recovering in a period of calm
• The macroeconomic events for today’s trading calendar
• The US government has confirmed the attacks, Trump is calling an emergency staff meeting
• Has the war between Iran and the US started?
• US markets remain under pressure, traders await Iran’s response