In a gloomy week for markets, which first saw President Trump in debate fail to say he would respect the election result, and then late in the week announce that he has succumbed to COVID-19 himself, we saw a Monday rally fail to break out. DAX and AUD last weeks weakest performers outperformed on Monday, suggest this was only part of a the wider consolidation we have seen for weeks, perhaps driven by month and quarter end window-dressing.
The week also an extremely shallow dollar decline, with DXY and EURUSD both posting inside weeks. In commodities, Gold rose in an inside week, in line with the weaker dollar, but we saw sharp declines in Oil and Copper.
Mon Sep 28
Indices surged today, with European stocks posting their best day since June, and DAX adding 3.2%. Financials led, the sure sign of a risk-on day, and Oil was up in line
The dollar fell sharply, which appreciated Gold. Bonds were down in line with the equity move.
Tue Sep 29
Turnaround Tuesday with indices, Oil, Gold and Bonds all reversing Monday’s direction, without any particular new push. In currencies, some clearly reversed (such as GBP) whereas a further fall in EUR meant a flat dollar overall.
Wednesday September 30
Lots of action in the final day of the month and quarter, after an acrimonious Presidential debate, SPX initially plunged, but rallied in the afternoon session, which may well have been end of month and quarter portfolio rebalancing. SPX fell 3.9% on the month, NDX 5%. The dollar runs to a slower trend, and was down again today. Gold and bonds were down and Oil was up, all in line with the equity rally.
Thursday October 1
A flatter, but still upward trend in stocks faded late in the day, although all US indices were still up. The dollar was more or less flat as were bonds, and Gold was only slightly up, although Oil continued down.
Friday October 2
More bad news today on news that President Trump had contracted COVID and was moved to hospital as a precaution. Together with a miss on NFP (even below the ADP figure), stocks fell again, with NDX hit particularly hard down 2.83% to close a mere 0.94% on the week. Oil similarly fell hard, down over 4%. A mixed day in currencies resulted in a slight uptick in DXY (with Gold down in line) and another flat day in bonds.
WEEKLY PRICE MOVEMENT
Another consolidation week in indices, with less volatility saw last weeks loser DAX come out on top, but up only 1.76%. Similarly, the top forex mover up AUDUSD was last weeks biggest loser. Another flat week for crypto, and FANGS were mixed but generally subdued.
Buying EURCAD for a second week worked with a gain of 0.15% (more than covering last week’s 0.08% loss) and at one point I was 1.12% ahead. I still believe in this cup-and-handle, so I will buy EURCAD for a third week running. The running profit total is 8.23% with 18 wins out of 33.
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)
- Election four weeks away
- President’s health concern
- Australian Rate Decision
- FOMC Minutes
Monday October 5
The main focus this week will be on the President’s condition in hospital, the election campaign and COVID. Markets are closed all week in China for the National Day holiday.
07:55 Germany Markit PMI Composite
08:00 Eurozone Markit PMI Composite
08:30 BoE Haldane speech
09:00 Eurozone Retail Sales (YoY e0.6% p0.4%)
13:45 USD Markit Services/Composite PMI
14:00 ISM Services PMI (e56 p56.9)
Tuesday October 6
Today Jay Powell gives a webcast speech on the Economic Outlook at the National Association for Business Economics Annual Meeting
00:30 Aus Imports/Exports/TB
03:30 RBA Rate Decision/Statement (e0.25% hold)
06:00 Germany Factory Orders
12:30 US Trade Balance
14:40 Fed Chair Powell speech
Wednesday October 7
Today’s speech by ECB President Lagarde at the Paris Europlace Online International Financial Forum is pre-recorded, so more attention will be given the the FOMC minutes.
06:00 Germany Industrial Production
12:10 ECB's President Lagarde speech
14:00 Canada Ivey PMI
18:00 FOMC Minutes
19:00 Fed Williams speech
Thursday October 8
Another day heavy on CB speakers and relatively light on news, a pattern we have seen all week.
06:00 Germany Trade Balance
10:15 ECB Mersch speech
11:30 ECB MPC Minutes
12:30 US Jobless Claims
12:30 BoC Gov Macklem speech
Friday October 9
As often happens when the US NFP is on the 1st or 2nd of the month, the Canadian equivalent is a week later. As well as China, markets are also closed in South Korea today.
01:45 China Caixin Services PMI
06:00 UK Manuf/Industrial Production
06:00 UK GDP
12:30 Canada NFP/AHE/UnEmp (NFP e230k p246k)
15:15 BoE Haldane speech