Sunday, 31 March 2019

Week to Mar 29th

Further Brexit defeats, NZD collapse, Mueller exonerates Trump (for now)

Mon Mar 25
After last Friday’s collapse following the 10-year/3-month bond inversion, markets were subdued today, with SPX flat, although non-US markets showed some recovery. USD was similarly flat, with slight moves down in GBP being matched by slight increases elsewhere.  Oil, Gold and bonds (inverse to yields) were up on the day, with the 10-year yield down 4.4bp. Apple’s product event underwhelmed the market, and the stock dropped 1.5%.

Tuesday March 26
All equity indices were up today as market digested the Mueller report exonerating, which was announced at weekend, but probably took a day to digest. Sometimes they do this on a ‘no news’ day. The dollar was also up as the drop in yields halted. DXY added 0.28% but the picture was mixed. The usual risk-on profile was seen. Gold and JPY were down, but AUD and CAD were up. EUR fell after the Germany Gfk confidence miss at 0700, whereas GBP was slightly up as some Brexiteers softened on the Theresa May deal, not enough however for the vote, which was cancelled. Oil had another good day.

Wednesday March 27
The day started with the RBNZ joining the dovish CB chorus. The kiwi fell sharply, finishing nearly 2% down on the day. Also Trump potential Fed nominee Stephen Moore called for a policy reversal and rate cut. Yields naturally fell again, but surprisingly USD held its own with DXY adding 0.17%, in a mixed day where JPY advanced as rates fell, as did GBP, but others declined. Gold and Oil were down in line with the stronger dollar. The dovishness caused an early rally in SPX futures, but this sold off hard at the open despite the trade balance beat, and did not fully recovery. DAX and FTSE were choppy but ended roughly flat helped by weaker currencies. NKY fell all day. An odd day, where markets behaved counter-intuitively.

Thursday March 28
Markets recovered on Thursday as the US QoQ GDP and PCE beats at 1230 (although the YoY figure missed). Housing and Jobless Claims data was mixed. All indices were up on the day. DXY was up again, only 0.17% but all currencies were down, GBP sharply (over 1%) as British MPs voted down a series of alternatives to the Prime Minister’s deal. Gold was notably down 1.5%. Oil dipped during the session on growth expectations, but ended the day flat.

Friday March 29
A final rally on Friday, fuelled by China trade talks optimism, and another upturn in the Michigan Sentiment Index gave the indices their best quarterly increase since 2010, and the best SPX Q1 since 1998. A flat DXY belied substantial currency movement, in particular an immediate 0.68% move up in CAD after the GDP MoM beat at 1230 (0.3% vs 0.0% best), and a wildly choppy GBP after the third Brexit deal vote was lost, down 1.16% on the day. Yields carried on upwards, and Oil rallied in line with equities.

After last week’s work performance, DAX was the best index this week. Four weeks in a row now for GBPJPY as the biggest mover, like last week a sell. Cryptos had another quiet week.

We have problems with Google Finance data this week, so no table

NEXT WEEK (all times are GMT)
(Calendar High volatility items are in bold)
  • RBA Rate Decision
  • More China trade talks
  • Lots of Manufacturing data
  • Non-farm Payrolls

Monday April 01
This week Chinese Premier Liu travels to the US to continue trade talks. One of the busiest Mondays in months has a day packed with Manufacturing PMIs. China’s is very important, as it’s on the cusp on expansion/contraction, and may cause even more of an effect than the US ISM figure later in the day. Note that the UK and Europe are now on DST, but we stick with GMT in our listings. Also of course we start a new month and quarter.

01:00 CNY China Mfr & Non-Mfr PMIs (Sunday)
23:50 JPY Japan Tankan Large Mfr Index/Outlook (Sunday)
00:00 AUD HIA New Home Sales (MoM)
01:45 CNY Caixin Manufacturing PMI Mar (est 49.9 prev 49.9)
07:55 EUR Germany Markit Manufacturing PMI
08:30 GBP UK Markit Manufacturing PMI
09:00 EUR Eurozone CPI (Core est 1%)
12:30 USD US Retail Sales (Feb Control Group best 0.4% prev 1.1%)
13:30 CAD Canada Markit Manufacturing PMI
13:45 USD US Markit Manufacturing PMI
14:00 USD US ISM Manufacturing PMI (est 54.4 prev 54.2)
21:00 NZD NZIER Business Confidence (QoQ)

Tuesday April 02
The big story is the RBA statement, where traders will be looking for a repeat the RBNZ dovish line last week. Fed Bostic (dovish, non-voter) speaks today. Argentina's markets are closed today. There is a rate decision on RON (2.5% hold expected)

00:30 AUD Aus Building Permits (MoM)
03:30 AUD RBA Rate Decision/Statement (est 1.5% hold)
06:30 CHF Switzerland CPI
09:00 EUR Eurozone Unemployment Rate
09:30 GBP UK Markit Construction PMI
12:30 USD US Non-defense Capital Goods (est 0.3% prev 0.8%)
14:00 NZD NZ GDT Milk Index
20:30 WTI API Oil Stock

Wednesday April 03
Unusually quiet for a Wednesday on the data front. Watch for the ADP print, an indicator for Friday’s NFP. Fed Mester (hawk, 2019 voter) speaks today. There is a rate decision on PLN (1.5% hold expected)

00:30 AUD Aus Retail Sales s.a. (MoM)
00:30 AUD Aus Imports/Exports/TB
01:45 CNY China Caixin Services PMI
08:00 EUR Eurozone Markit PMI Composite
08:30 GBP Markit Services PMI
09:00 EUR Eurozone Retail Sales (YoY)
12:15 USD US ADP Employment Change
13:45 USD US Markit Services/Composite PMI
14:00 USD US ISM Non-Manufacturing PMI (est 58.7 prev 59.7)
14:30 WTI EIA Oil Stock

Thursday April 04
Another slow data day. Fed Bostic is on again today. There is a rate decision on INR (6.25% hold expected)

06:00 EUR Germany Factory Orders s.a. (MoM)
12:30 USD Jobless Claims
14:00 CAD Canada Ivey PMI
21:30 AUD Aus AiG Performance of Construction Index
23:30 JPY Japan Overall Household Spending (YoY)

Friday April 05
US and Canadian NFPs as always almost guarantee USDCAD volatility. After last month’s shocker, traders will be looking to see if there is any further shutdown effect on the March report. It's the end of the UK income tax year today. Hong Kong and China are closed for Ching Ming.

05:00 JPY Japan Leading Economic Index
06:00 EUR Eurozone Industrial Production s.a. (MoM)
12:30 USD US NFP/AHE/Unemp/Participation (est 175k prev 20k)
12:30 CAD Canada NFP/AHE/Unemp/Participation (prev 55.9k)
17:00 WTI Baker Hughes Rig Count

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