There was a sense of deja vu this week as another successful vaccine candidate, this time from Moderna, pushed markets up firmly on Monday to new highs, but from then, markets retreated and consolidated again, as the world seems to progress but cannot shake COVID. All indices moved less than 1% and (except FTSE) reported inside weeks. We also saw inside weeks in DXY, Gold, Bonds and Oil, probably the first time for years that this has happened across all asset classes. The dollar merely reversed last week’s move and DXY has traded in a 3% range, and largely in a 2% range since July. Similarly Gold stayed in the 6% range it has occupied since August.
Mon Nov 16
There was a sense of deja vu today, as MRNA announced that their vaccine was “95% effective”. There was the immediate pre-market in DJI futures but not in NDX futures. Unlike last week, though, the effect persisted all day and SPX closed up 1.2% at a new ATH, as DJIA for the first time since February. The small-cap RUT also hit an ATH, and Oil and yields (inverse to bond prices) were up in line. Other world indices followed suit. Although briefly spiking up on the vaccine news, the dollar retreated to end the day down, following the pullback which started last week, and still within the 2% the greenback has followed since July.
Tuesday November 17
The Retail Sales miss at 1330, and general coronavirus concerns resulted in a slight decline today in markets. SPX fell a little more than NDX. Oil was flat on the day. The dollar continued to pull back, and JPY outperformed in line with the equity move, as did bonds, which advanced. Gold’s reaction, a decline of 0.37% did not follow either equity or dollar trend, but appeared, as we will see later in the week, to be treating the market as still (vaccine) risk-on. We have written before about how Gold sometimes detaches itself from intermarket forces.
Wednesday November 18
Markets tried to rally today, but collapsed in the US afternoon session, with SPX giving up 2.1% from the point Europe closed (up). This may have been a reaction to NYC announcing a new schools closure due to COVID-19. Sentimentally, anything in the Big Apple is going to have more of a reaction. The main index was 1.2% down on the day (NDX down 0.8%). The dollar was down yet again, but reversed from 92.20 support (at which point there was slight EUR resistance at 1.1890). Yen was the largest gainer, in line with stocks. Oil was up on the EIA beat at 1530, and although it pulled back, the black stuff still managed a green candle for the day. Bonds were flat, and Gold once again ignored the dollar and markets, and fell.
Thursday, November 19
After Wednesday’s sharp drop, there was a bounce back today, and markets were slightly up, (NDX outperformed) although only in the final US hour, meaning Europe closed red. Oil and yields were up in line. We are seeing a pattern where good news pushes the market up, but this quickly fades. Note however, that unlike the dollar, and even NDX, SPX and DJIA are starting to break out to new levels. The dollar was down again today, as was Gold and yields, arguably in line with equities
Friday, November 20
A familiar pattern again today, markets tried to rise, but collapsed into the close with little difference between SPX and NDX, as TreasSec Mnuchin decided not to extend several emergency lending facilities set up by the Fed. The dollar bounced again off 92.20, and ended the day slightly up. Gold and Bonds were up in line with the equity move. Oil had its fifth day of gains, making 4.05% up on the week.
WEEKLY PRICE MOVEMENT
A very flat week with no index moving more than 1%, the largest move being SPX. Forex was also quiet with NZDUSD being the strongest mover. EURUSD posted an inside week. FANGs were exciting again with BTCUSD putting on 14.2% in sight of its amazing 2017 high. The crypto-asset BTCUSD has risen 76% in two months. FANGs reflected equities generally and were largely flat.
My GBPUSD short failed again, this time costing me 0.65% taking my running total to 8.44% (21 of 39 wins). I have given up trying to short it, and this week I am selling EURGBP.
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)
- Thanksgiving short week
- Black Friday
- Possible sentiment change
- US Durable Goods and GDP
Monday November 23
CB speeches today from BoE Haldane at 0930, and Fed Daly and BoC Gravelle later in the day. Markets are closed in Japan for Worker’s Day.
22:00 Aus Commonwealth Bank PMIs (Sunday)
08:30 Germany Markit PMIs (Mfr e55.1 p58.2)
09:00 Eurozone Markit PMIs (Comp e49.3 p50.0)
09:30 UK Markit PMIs
13:30 Chicago Fed National Activity Index (Oct)
14:45 US Markit PMIs
Tuesday November 24
A quiet day for data,. BoE Haskel speaks at 1100, with Fed Williams at 1700.
00:30 Aus Imports/Exports/TB
02:30 RBA Debelle speech
07:00 Germany Q3 GDP
09:00 Germany IFO Sentiment Reports
12:05 BoJ Governor Kuroda speech
14:00 US Housing/Home Price Indices
15:00 US Consumer Confidence(Nov)
Wednesday November 25
A raft of US number at 1330 is the busiest data point of the week. FOMC Minutes will of course also be closely watched, but today marks the effective end of the week.
09:00 EU Financial Stability Review
13:30 US Durable/ND Capital Goods (NDC e0.5% p1.0%)
13:30 US PCE/Personal Income
13:30 US Jobless Claims
13:30 US Q3 Prelim GDP (e33.2% p33.1%)
15:00 Michigan CSI
15:00 New Home Sales (MoM)(Oct)
15:00 UK Autumn Forecast Statement (time approx.)
19:00 FOMC Minutes
Thursday November 26
Today is Thanksgiving and US markets are closed. There are rate decisions in Sweden (SEK is part of the DXY basket) and South Korea, but all market activity is expected to be muted.
07:00 Germany Gfk Consumer Confidence Survey
12:30 ECB MPC Minutes
23:30 Tokyo CPI
Friday November 27
Today is retail sales day Black Friday. Also US markets are closed for a half-day as the holiday season starts. There is a rate decision in Colombia.
10:00 Eurozone Consumer Confidence
10:00 Eurozone Business Climate(Nov)