G7 In London: Attention On European Austerity, Japanese Economy

The economic ministers will meet in London at the end of the week, but also and above all, the central bankers of the G7; it is likely that once again the European austerity and the Japanese monetary generosity will be the center of attention. The week of the American macroeconomic data, in fact, will not offer a lot, with no information worthy of being considered as a market movers.

UK AND CABLE

After the decision of last week by the ECB, the market seems to be a little more optimistic towards the macro data of the week. At the beginning, May 6th, the PMI services and retail sales, then May 7th, German factory orders; May 8th, the German industrial production and May 10th, the trade balance of the Euro zone. Very important for UK: the appointment of May 9th, when the Bank of England will communicate its statement on interest rates. GBP/USD is approaching a very important resistance area that could offer the chance to open a short position on the Cable. As we can see from the graph, we are now at the 50% of retracement of the bear market (1.5610), with the 200-days moving average and the 61.8% of 1.579 that should prevent any kind of bullish action by GBP/USD.


AUSSIE UNDER PRESSURE
A delicate week for AudUsd, as on May 7th the Australian Central Bank will decide on interest rates currently at 3%. The previous day we will be able to know the retail sales and on May 9th, the unemployment data, but the impression is that Australia is risking too much, aided by the decline in the price of raw materials. At this point, it is better to trust the trading range on AudUsd. From July 2012, the prices are still compressed between 1.0150 and 1.0610, and since the oscillators are quite discharged, we enter long.


EMERGING COUNTRIES

China: HSBC services (May 6th ) - trade balance (May 8th ) - Inflation (May 9th )
India: Industrial Production (May 10th )
Mexico: Industrial Production (May 10th )

TRADE OF THE WEEK

If you are thinking that the volatility (VIX) is too low and that the U.S. stock markets are on the eve of a fall, the winning trade is going long of UsdMxn. As we can see from the graph, the correlation with the VIX is very high and if a blaze of the VIX should occur in the summer months, then keeping the Mexican Pesos in the portfolio is not the best thing to do.