Sunday, 5 January 2020

Week to Jan 3rd

New Year Week, China Good News, Iran Assassination

Mon Dec 30
After a strong rally for weeks, markets took a breather today, possibly banking year-end profits, as there was no specific news to cause the 0.70% pullback. The move was reflected in Gold and Bonds and JPY, all of which were up. The move was not as strong in other currencies, but all gained against the dollar. Oil was down in line with equity mood. With many markets closed thin trading may have exacerbated the moves.

Tuesday December 31
It was a quiet ending to the day, month, year and decade, with stocks quiet at first, and then making a strong rally into the close to erase yesterday’s losses and then some. Only FTSE failed to go green, following a strong 1.14% rally in GBP. The dollar continued to pull back and Gold and all major currencies advanced. Bonds were down in line with the equity move, but Oil fell again. This short day was all about positioning for end-of-year reporting, rather than any actual news moves.

Wednesday January 01
Markets were closed everywhere, although forex trades, which are not done on exchanges, continued , although as you would expect, volume and therefore volatility was very thin. A move up of 0.22% in CAD was the most any major made.

Thursday January 02
The China Phase 1 deal was augmented today by positive comments from China about it, and further negotiations made during the trading session. Coupled with some New Year positioning, carrying on the ramp on Tuesday afternoon meant all indices were up. Notably however, Gold, JPY and Bonds were also up, an indicator of possible things to come. The move in JPY was only 0.03% on another nearly flat forex day, where only CAD moved more than 0.1%. Oil was also down in a sign that the rally was fragile and done on low volume. It should be noted that four out of five manufacturing PMI reports today missed, only Germany beat estimates.

Friday January 03
The overnight US targeted strike on a top Iranian commander sent Asian and then European and US markets into a tailspin. As you might expect with anything Middle Eastern, oil soared in price, as did Gold, JPY and bonds. Otherwise the dollar was down across the board. A strong risk-off day, as you would expect.

The biggest index move on this quiet week was DAX, down 0.88%, and the strongest currency move was NZDJPY, down 1.77%. ETH made up some of the ground from last week, whereas BTC once again was flat. FANGs slightly outperformed NDX, in particular AAPL, which briefly touched $300 for the first time.

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
  • Services PMIs
  • Various CB speakers
  • First full week of new decade

Monday January 6
Back to work for many traders, and volumes should increase with plenty of data this week. Last week was Manufacturing PMIs which were generally poor, and this week it is Services. Unusually, ECB Lane and BoC Wilkins speak over the weekend, but markets will generally be guided by the next step in the latest US-Iran bellicosity.
01:45 CNY China Caixin Services PMI (Dec)
07:00 EUR Germany Retail Sales (MoM) (Nov)
08:55 EUR Germany Markit PMI Composite (Dec)
09:00 EUR Eurozone Markit PMI Composite (Dec)
09:30 GBP UK Markit Services PMI (Dec)
14:45 USD US Markit Services PMI (Dec)
14:45 USD US Markit PMI Composite (Dec)

Tuesday January 7
The ISM Services PMI is important today, following the miss in the Manufacturing print last week. Otherwise Eurozone inflation is the key release. 

10:00 EUR Eurozone Prelim CPI (Core YoY e1.3% p1.3%)
13:30 USD US Trade Balance (Nov)
13:30 CAD Canada International Merchandise Trade (Nov)
15:00 USD US ISM Non-Manufacturing PMI (Dec) (e54.5 p53.9)
15:00 CAD Canada Ivey Purchasing Managers Index
15:30 NZD NZ GDT Milk Index (time approx)

Wednesday January 8
A quiet day on the news front as markets get back to normal. The ADP ‘preview’ of Friday’s jobs report has a similar estimate. There are rate decisions on PLN and RON.

07:00 EUR Germany Factory Orders s.a. (MoM) (Nov)
10:00 EUR Eurozone Business Climate (Dec)
10:30 EUR Germany 10Y Bond Auction (time approx)
13:15 USD US ADP Employment Change (Dec) (e150k p67k)

Thursday January 9
Chinese inflation will definitely set the tone on this busy day, and we have our first Fed speakers of 2020. There is a rate decision on ILS

00:30 AUD Aus Imports/Exports/TB
01:30 CNY China CPI (p4.5%)
07:00 EUR Germany Trade Balance s.a. (Nov)
07:00 EUR Germany Industrial Production s.a. (MoM) (Nov)
10:00 EUR Eurozone Unemployment Rate (Nov)
13:00 USD Fed Clarida speech
13:15 CAD Canada Housing Starts s.a (YoY) (Dec)
13:30 USD US Jobless Claims
16:30 USD Fed Williams speech
19:00 CAD BoC Governor Poloz speech
19:10 EUR German Buba President Weidmann speech

Friday January 10
The first jobs print of 2020, and the estimate is climbing back to the 180-200k mean. Canada reports simultaneously so the scope for a big USDCAD move is there, especially if it first moved strongly on Thursday’s BoC speech.

00:30 AUD Retail Sales s.a. (MoM) (Nov)
13:30 USD US NFP/AHE/UnEmp (NFP e160k p266k)
13:30 CAD Canada NFP/AHE/UnEmp (NFP e20k p-71.2k)

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