Sunday, 15 September 2019

Week to Sep 13th


ECB rate cut and QE2, Sterling rallies on Brexit deal hopes, Trump postpones tariffs

Mon Sep 09
In the absence of news, there was little action globally today, with indices more or less flat, although other markets showed a risk-on profile, with Gold, JPY and bonds firmly down, and Oil up. The exception was in the UK, where GBP rallied and of course FTSE fell, following last Friday’s success for the anti-no-deal Brexit doves, and the (accurately) predicted failure of British PM Johnson to get agreement for an election before the Brexit deadline of Oct 31. Yields were up following the Powell ’recession unlikely speech’ on Friday, a trend which continued all week.


Tuesday September 10
Another flat day in the US covering mixed action as tech fell and energy rose sharply, the latter despite a slight Oil decline. Also DJIA outperformed due to strong moves from BA and CAT. However non-US indices all rose, and Gold and JPY were slightly down in line. Other currencies were fairly flat, for once, and the real story in the US was bonds, with yields rising 11.8bp.


Wednesday September 11
A rally finally kicked in today with all markets up as investors anticipated easing in both the ECB tomorrow and the Fed next week. SPX crossed the 3,000 line, helped by a positive reception to AAPLs new cheaper iPhone and Apple TV+. Oil was up in line, helped by the EIA beat at 1530. In forex, the dollar  basket was up 0.3% with all currencies (except AUD, not part of the basket) down. Yields rose more slowly today.


Thursday September 12
Today’s bold ECB moves, cutting the deposit rate and reintroducing QE caused a huge move in EUR. It initially dipped 0.88%, but as the easing moves were less than anticipated from there added 1.47%. Notably Gold, bonds and JPY spiked up and faded more in line (to the minute) with the EUR movement, as did DAX the other way (spiked down and recovered). The US inflation beat concurrent with the ECB presser was lost in the noise. As we predicted last week, President Trump tried to tweet the dollar down by contrasting today’s ECB action with the Fed next week. Overall on the day, DXY was down 0.29%.

This was enough to fade DXY by 0.29% overall, despite JPY being slightly down, the only currency to go in that direction. Indices had received a boost the night before as President Trump postponed some Chinese tariffs as a ‘gesture of goodwill’ and were comfortably up.


Friday September 13
US indices closed flat today after an early rally, whereas DAX continued up, reflecting the ECB easing, as did NKY. FTSE was down following a very strong (1.5%) rally in GBP following a reported breakthrough in the Brexit deal talks, in that the coalition Northern Irish DUP may shift their position on the Irish backstop. A further rise in EUR meant a down day for the dollar. Gold was down and Oil flat, and yields continued upwards as they have done all week.



WEEKLY PRICE MOVEMENT
NKY came out top this week in a positive week for indices, helped of course by the 1.09% fall in the yen, which also resulted in GBPJPY being the biggest forex mover, up nearly 3%. Crypto was quiet, with ETH catching up with BTC’s gain last week. FANGs were quieter than usual, but still managed to outperform the NDX index.




Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on DXY. The equity and index prices are now based on the cash close each day.


NEXT WEEK (all times are GMT)
(Calendar High volatility items are in bold)

  • Fed rate cut expected
  • Six more rate decisions on Thursday
  • Quad-witching OpEx
  • British and Canadian inflation

Monday September 16
The weekend attack on Saudi oilfields, possibly cutting their production in half may well affect Oil, and its proxies CAD and FTSE today. Markets are closed in Japan and Mexico.

02:00 CNY Retail Sales/Industrial Production
02:00 CNY NBS Press Conference


Tuesday September 17
The important German and Eurozone sentiment indicators were surveyed before Thursday’s ECB action. ECB Coeuré speaks at 1710.

01:30 AUD RBA Meeting Minutes
09:00 EUR Eurozone ZEW Economic Sentiment
09:00 EUR Germany ZEW Survey Economic Sentiment (e-38.0 p-44.1)
13:15 USD US Industrial Production (MoM)
14:00 NZD NZ GDT Milk Index
23:50 JPY Japan Imports/Exports/TB


Wednesday September 18
Today is the big day, the US rate decision. Note that the recent bond fade has pushed back the ‘priced in’ level on a 25bp cut from 90% last week to only 80%, meaning a potential stock rally to new all-time highs if the cut is delivered, unless of course Powell accompanies it with hawkish rhetoric. Also today GOOGL, FB and TWTR testify before the senate about content control. There is also a rate decision on BRL.


08:30 GBP UK CPI (YoY e1.9% p2.1%)
09:00 EUR Eurozone CPI
12:30 USD US Housing Starts/Building Permits
12:30 CAD Canada CPI (BoC Core p 2.0%)
18:00 USD Fed Rate Decision (e2.0% p2.25%)
18:30 USD Fed Chair Powell Presser
22:45 NZD NZ19Q2 Final GDP (QoQ e0.4% p0.6%)


Thursday September 19
After the Fed have made their decision, there are six more rate decisions today, as there are also decisions on NOK, IDR and ZAR. The most important is GBP, not so much for the hold, but the committee vote (the UK version of ‘dot-plot’) and its effect on the now volatile sterling. Markets are closed in Chile today.

01:30 AUD Aus NFP/UnEmp (e10k/5.3% p41.1k/5.2%)
02:00 JPY BoJ Rate Decision/Statement (e-0.1% hold)
06:00 JPY BoJ Presser
07:30 CHF SNB Rate Decision/Statement (e-0.75% hold)
08:30 GBP UK Retail Sales
11:00 GBP BoE Rate Decision/Statement (e0.75% hold)
12:30 USD US Jobless Claims
12:30 USD Philly Fed Manufacturing Survey
14:00 USD Existing Home Sales (MoM)
23:30 JPY Japan National CPI


Friday September 20
Markets will still probably be reacting to the interest rate moves but today is monthly and quarterly Opex, sometimes called quad-witching (the daily, weekly, monthly and quarterly options all expire). It’s quite important, as index future options are mainly traded quarterly. For example SPX December 19 open interest is over double that of October and November monthlies. Note also an opportunity on CAD, their rate decision was last week, but if Wednesday’s inflation moves CAD hard, Friday’s retail sales (if one is a beat and the other a miss) may well exactly reverse it.

06:00 EUR Germany PPI
08:30 GBP UK PSBR
12:30 CAD Canada Retail Sales (MoM e0.8% p0.0%)


This report is published every week as an email by MatrixTrade.com - you can sign up to receive it here. This blog is supported solely by advertising, so if any of the ads interest you, please click on them. If you want notification when the blog is updated, please follow me on TwitterFacebookStocktwitsTradingView or Linkedin (all open in separate windows). Details of how I compile the report are here.





Sunday, 8 September 2019

Week to Sep 6th


NFP miss after ADP beatDollar reversal, Brexit doves win a round

Mon Sep 02
Today was Labor Day, a US holiday, so as you might expect the action was elsewhere. Asian indices fell as the new US tariffs on China came into place, and DAX and US Futures followed suit. The British parliament opened after summer, and immediate Brexit antagonism caused a sharp drop in GBP which allowed FTSE to rise. Other currencies were slightly down and DXY finished 0.24% up on the day. Gold, Oil and Bond futures were flat


Tuesday September 03
Equity markets carried on drifting downwards, after a series of trade release misses, most significantly the ISM Manufacturing PMI at 1400 which move below 50, ie into contraction for the first time in three years. The print of 49.1 from the estimate of 51 is equivalents to a -0.9% after a +1.0% estimate in other statistics. Oil was down, and Gold, JPY and Bonds were up in line. After briefly hitting a two-year high of 99.37, DXY was down 0.08%, with GBP up on hopes of frustrating a no-deal Brexit, and AUD following gold. However with EUR and CAD flat the move was minimal.


Wednesday September 04
The China Caixin Services PMI beat at 0145 set the mood, followed by PMI and Retail Sales beats in Europe. Equities snapped their losing streak, and SPX added 1.1% on the day. The dollar fell steadily all day, giving up 0.57% as Gold and all currencies except risk barometer JPY advanced. CAD was particularly strong after hawkish remarks from the BoC following the rate hold at 1400. Oil was up in line with equities, and 10-year bond yields were flat, but the 10/2 yield curve climbed back into positive territory. The four Fed speakers added little to what we already knew.


Thursday September 05
Today’s announcement of new high-level US-China trade talks, which of course have stalled recently, in addition to successful moves in the UK parliament to block a no-deal Brexit, and a beat on the ISM Non-Manufacturing PMI at 1400, was enough to continue the equities and Oil rally. SPX added 1.3%, its best day in three weeks. A relatively flat DXY (up 0.02%) disguised a rally in most currencies, but the inevitable pullback in JPY (and Gold). CAD gave back a little of Wednesday’s rally. Yields were sharply up on bond-stock rotation.


Friday September 06
Friday’s NFP was a miss (130k vs 158k) and as the rate decision is next week, the ‘bad is good’ effect applied. A low figure makes a rate cut more likely. However, as a 25bp rate cut is already 91.2% priced in, per the CME Fedwatch tool, there was no sudden move in equities, which did nevertheless all gain on the day, as did Oil. DXY was down 0.37% on the same principle, mainly due to a further CAD rally and pullback in JPY. Unusually, 0.3% of this move was in the last three minutes of trading. GBP and EUR gave back some of the week’s rally and yields were down in line with rotation and rate cut hopes.

Surprisingly, there was little reaction to Fed Chair Powell’s speech at 1630, in which he said he does not expect recession and the economy is in a “good place”. He reiterated that the Fed will not be swayed by politics (eg Trump pressure to cut rates).


WEEKLY PRICE MOVEMENT
The top performing index this week was, unusually, DJIA, and our top performing tracked share was AMZN. In currencies, the rarely traded AUDCAD pair, if shorted would have made the best return. Crypto, still quieter than it used to be, returned north.



Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on DXY. The equity and index prices are now based on the cash close each day.


NEXT WEEK (all times are GMT)
(Calendar High volatility items are in bold)

  • ECB dovishness expected
  • Chinese and German inflation
  • British Parliament prorogued
  • Three quiet scheduled news days

Monday September 09
Having passed a law on Friday to force PM Johnson to ask for a Brexit extension, the British Parliament may force further moves to prevent a no deal exit. GBP did not react positively to Friday’s move, volatility may occur today.

07:00 CNY China Imports/Exports/TB (Sunday)
23:50 JPY Japan GDP (Sunday) (QoQ e0.3% p0.4%)
06:00 EUR Germany Trade Balance s.a.
08:00 GBP BoE Vlieghe speech
08:30 GBP UK GDP (MoM)
22:45 NZD NZ Electronic Card Retail Sales (MoM)


Tuesday September 10
The UK parliament is suspended or prorogued this week, although the Brexit saga may continue in the courts. A second day of no significant American news. Markets in India are closed.

01:30 CNY China CPI (YoY e2.6% p2.8%)
07:00 CNY China FDI
08:30 GBP AHE/UnEmp (AHE e3.8% p3.9%, Unemp e3.9% p3.9%)


Wednesday September 11
An ominous date in history, but yet another quiet day on the news front. There is a rate decision on PLN.

12:30 USD US PPI
23:50 JPY Japan Machinery Orders


Thursday September 12
Today's ECB decision and press conference, the penultimate one for outgoing President Draghi is the most important event of the week, especially as the conference is concurrent with the US inflation print. A reduction to the deposit rate (not the base rate) may be on the cards. Watch out to see if President Trump tries to tweet the dollar down. There is a rate decision on TRY where a 3% cut is expected.

06:00 EUR Germany CPI (YoY e1.0% p1.0%)
09:00 EUR Eurozone Industrial Production (MoM)
11:45 EUR ECB Rate Decision/Statement (e0.% hold)
12:30 EUR ECB President Draghi Presser
12:30 USD Jobless Claims
12:30 USD US CPI (YoY e2.3% p2.2%)
18:00 USD US Monthly Budget Statement


Friday September 13
The Michigan Consumer Sentiment Index hit a three-year low last month, and recovery is assumed. Markets in China, Taiwan and Korea are closed.

00:00 EUR Eurogroup Meeting (all day)
12:30 USD US Retail Sales (Control Group Aug e0.3% p1.0%)
14:00 USD Michigan CSI (e90.5 p89.8)


This report is published every week as an email by MatrixTrade.com - you can sign up to receive it here. This blog is supported solely by advertising, so if any of the ads interest you, please click on them. If you want notification when the blog is updated, please follow me on TwitterFacebookStocktwitsTradingView or Linkedin (all open in separate windows). Details of how I compile the report are here.




Sunday, 1 September 2019

Week to Aug 30th



Trade war indecision, Euro hits 1.10, GBP down on prorogation


Mon Aug 26
President Trump’s “second thoughts” about the trade war were enough to move markets and the dollar up on Monday. All currencies fell except surprisingly AUD which bounced off a psychological 0.67 triple bottom (the level hit on previous flash crashes). Gold and Bonds initially spiked up but ended flat on the day, and Oil rose in line with indices.


Tuesday August 27
Conflicting trade war signals left indices directionless today. The US was slightly down whereas elsewhere gained, partly due to their currencies. The yield curve (10 year minus 2 year) hit a new low of 5.16bp, the most since 2007. Risk assets Gold JPY and bonds (inverse to yields) were up, and commodity currencies AUD and CAD down, so overall the mood was risk-off. Oil shot up sharply at the end after a large drawdown reported by API, and GBP was up on Brexit deal hopes.


Wednesday August 28
Despite the 30-year bond yield dropping to a record low of 1.905% today (with an appropriate fall in 10-year yields, and further inversion), equity markets were still slightly up except for DAX, following the German 10-year bond auction which also made new lows. The picture was clearer with USD, with all currencies down, particularly GBP which plummeted 130 pips on British PM Johnson’s decision to prorogue (suspend) parliament to prevent no-deal blocking by MPs. Oil carried on rising as the EIA beat at 1430 reflected the API figure from Tuesday.


Thursday August 29
Conciliatory remarks from China today were enough to send equities upwards again, helped by the US GDP figures at 1230 (2.0% in line with estimates, but not a miss). Oil was up in line, as was USD with all currencies and Gold down. Yields were up on bond-stock rotation. A risk-on day.


Friday August 30
Indices made small advances today, but the real story was in currencies. The misses on German Retail Sales at 0600 and more importantly Eurozone inflation at 0900 sent EUR into a tailspin, briefly dipping below the psychological 1.10 level, last seen in 2017. Together with a sharp dip in GBP, the dollar had its best day of the week. Oil gave up some of its earlier gains. Yields were flat, hovering around 1.50%.



WEEKLY PRICE MOVEMENT
Equities were up with NDX making the largest advance. USD was the strongest currency, and very rarely seen, shorting EURUSD was the best trade. Crypto pulled back again, with Bitcoin returning to under $10,000, and FB was the top FANG performer.



Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on DXY. The equity and index prices are now based on the cash close each day.


NEXT WEEK (all times are GMT)
(Calendar High volatility items are in bold)
  • Non-farm payrolls
  • AUD and CAD rate decisions
  • Brexit court hearings
  • Four-day week

Monday September 02
Today is Labor Day, so US markets are closed, as are Canadian, Malaysian, Bermudan, Indian and Vietnamese markets On Sunday, the next phase of tariffs came in, with 15% on $131Bn of Chinese imports, and about 7% retaliatory tariff on $45Bn of US exports. German regional elections were held on Sunday.

01:45 CNY China Caixin Manuf PMI (e49.8 p49.9)
07:55 EUR Germany Markit Manuf PMI
08:30 GBP UK Markit Manuf PMI
23:01 GBP UK BRC Like-For-Like Retail Sales (YoY)


Tuesday September 03
The main news is the Australian rate statement which is expected to be mildly dovish. There is a court hearing scheduled in Scotland on the legality of UK PM Johnson prorogation (suspension) of Parliament. There is also a rate decision on CLP.

04:30 AUD RBA Rate Decision /Statement (e1.0% hold)
07:00 EUR ECB Nominated President Lagarde speech
07:00 GBP UK court hearing on forcing no-deal Brexit
08:30 GBP UK Markit Construction PMI
13:30 CAD Canada Markit Manufacturing PMI
13:45 USD US Markit Manufacturing PMI
14:00 USD US ISM Manufacturing PMI (e51.0 p51.2)
14:00 NZD NZ GDT Milk Index (time approx)
21:00 USD Fed Rosengren speech


Wednesday September 04
The BoC is expected to make a fairly neutral statement today and hold rates. A raft of Fed speeches today, although it is unlikely these will have a cumulative effect.

01:30 AUD Australia 19Q2 Final GDP (QoQ e0.5% p0.4%)
01:30 JPY BoJ Kataoka speech
01:45 CNY China Caixin Services PMI
07:55 EUR Germany Markit Composite PMI
08:00 EUR Eurozone Markit Composite PMI
08:30 GBP UK Markit Services PMI
09:00 EUR Eurozone Retail Sales (YoY)
11:00 EUR ECB Lane speech
12:30 USD US TB
12:30 CAD Canada TB
13:25 USD Fed Williams speech
13:45 USD US Markit Composite PMI
14:00 CAD BoC Rate Decision/Statement (e1.75% hold)
15:15 CAD BoC Presser
16:30 USD Fed Bowman speech
16:30 USD Fed Bullard speech
17:00 USD Fed Kashkari speech
19:15 USD Fed Evans speech


Thursday September 05
There is a rate decision on SEK, hold expected. SEK is 4.2% of DXY. The NFP ‘sneak preview’ ADP estimate is 150k (p156k) a little lower than the NFP estimate for Friday.

01:30 AUD Aus Imports/Exports/TB
07:00 GBP UK court  hearing on forcing no-deal Brexit
12:15 USD US ADP Employment Change
12:30 USD US Jobless Claims
13:45 USD US Markit Services PMI
14:00 USD US ISM Non-Manufacturing PMI (e54.1 p53.7)
14:30 GBP BoE Tenreyro speech
15:45 CAD BoC Schembri speech


Friday September 06
NFP day for both sides of the 49th parallel today, so expect USDCAD volatility and reversion too mean, maybe as soon as the Canadian PMI 90 minutes later. A US-Mexico trade meeting is scheduled for today. There is a rate decision on RUB. A 0.25% cut is expected. Markets are closed in Bulgaria for Union Day.

06:00 EUR Germany Industrial Production
09:00 EUR Eurozone 19Q2 Final GDP (QoQ e0.2% p0.2%)
12:30 USD US NFP/AHE/Unemp (NFP e159k p164k AHE e3.1% p3.2%)
12:30 CAD Canada NFP/AHE/Unemp (NFP e12.5k p-24.2k)
14:00 CAD Canada Ivey PMI
16:30 USD Fed Chair Powell speech


This report is published every week as an email by MatrixTrade.com - you can sign up to receive it here. This blog is supported solely by advertising, so if any of the ads interest you, please click on them. If you want notification when the blog is updated, please follow me on TwitterFacebookStocktwitsTradingView or Linkedin (all open in separate windows). Details of how I compile the report are here.