Week to Jul 20th

Monday July 16

The week opened with little market movement from the Trump-Putin meeting, but a strong effect from 3.79% plunge in the price of Oil. (BNO was down 4.6%), on concerns about Libya production resumption, and OPEC output increases generally. Most markets were down, particularly FTSE (down 0.8%), which is an oil proxy, but oil-free DAX was slightly up. SPX was helped by gains in XLF (after the BAC beat on earnings) balancing a 1.2% fade in XLE, leaving the primary index only 0.1% down. The big event was NFLX earnings. This over-extended stock actually beat on EPS, but underwhelming subscriber growth precipitated a 13% drop after hours. Other NDX heavyweights dropped in sympathy, as QQQ trades hit stops.

It was a quiet day for USD, with hint of downside across the board. DXY down 0.19%. Gold was flat in line. Surprisingly US Treasury 10-year bond yields were 3bp up, and the yield curve (US10Y-US02Y) widened by 1bp. NZD shrugged off the CPI miss at 22:45.

Tuesday July 17

Jay Powell’s optimistic Humphrey-Hawkins testimony at 14:00 delivered a Turnaround Tuesday in both equities and USD. All indices rallied strongly, with NDX, which opened 0.9% lower, but closed 0.63% high posting a prominent bullish engulfing candle. GS and JNJ both beat, but only the latter advanced.

The risk-on indicators (Gold -1.04% and JPY -0.53%) fell noticeably, as did all other currencies. GBP fell particularly hard on further Brexit worries, as the UK ruling Conservative party continues to squabble internally. Average earnings, the first of the three UK prints this week came in as estimated. 10-year yields were up 1bp, but the two year note advanced 2bp, cancelling Monday’s curve widening. Notably the 3-month note rose 4bp to 2.02% on Powell’s remarks, the highest yield in a decade. Oil slid slightly ahead of the API stock miss.

Wednesday July 18

With the second day of upbeat Powell testimony, It was a flatter, but still positive day for USD, with Europe weakened by the CPI misses in the UK (08:30) and Eurozone (09:00). All currencies (and Gold) dipped down against the greenback in the Asian and European sessions, but AUD, JPY and CAD climbed back later to post modest gains, the latter helped by Oil reversing back up by over a dollar, despite the EIA miss at 14:30. The net effect was a flat (up 0.06%) DXY, although USDJPY did break 113 intraday, a six-month high. Equities showed a similar pattern, flatter but still up, except NKY which dipped slightly. 10-year yields were up 2bp widening the curve as the 2-year bond remained flat. AA earnings beat, but the stock fell as 2018 guidance was downgraded because of tariffs. AA operates three smelters in Canada, which will be subject to tariffs.

Thursday July 19

Equities fell today on trade war concerns again. The exception was FTSE which managed a modest gain, buoyed by a weak GBP which hit a 10-month low, after the Retail Sales miss at 08:30 added to Wednesday’s CPI miss. Chinese stocks also fell and CNY fell to a 12-month low against USD.

USD had been doing well until President Trump said he was “not thrilled” by the Federal Reserve’s interest rate hiking policy and said a strong dollar “puts us at a disadvantage”.  The comment, at 17:00, immediately knocked 0.54% off DXY, and 0.71% off USDJPY. Some recovery, coupled with GBP (which hit a new 2018 low) and an equally weak CAD left DXY flat for the day. AUD (not part of DXY) was down 0.57%, despite a stellar jobs beat (51k vs 17k estimate). Gold was down $3 after earlier touching $1211.45 a 12-month low. WTI Oil was slightly up, but Brent fell, and the spread between the two fell sharply by over $1. Yields fell 3bp in line with the weaker dollar.

Friday July 20

Further remarks by Trump about tariffs on Chinese goods, plus his remarks about the dollar continued to upset markets. All indices were down, particularly DAX which fell over 1%. NDX however manage to end the day flat, after MSFT beat earnings after Thursday’s bell and put on 3.34%, although some of this faded during the day. Some of the movement today can be attributed to option expiry.

The fallout from Trump’s remarks continued, with DXY down 3.34% to 94.48, coincidentally exactly half way between the price on Apr 12 2017 (100.50) when the President said the dollar was “too high” and Jan 25 2018 (88.44) when he said it was too low. On this basis, another halfway point between the current price and the “too low” price would be 92.50. All currencies and Gold were up, CAD helped by the CPI beat at 12:30. The August Oil contract expired, and Oil was 1.2% up at $70.31. However the September contract traded nearly 2% lower. Bond yields did not follow the dollar’s fall, and rebounded to the earlier high of nearly 2.89%

Please note all figures and percentages given for daily movement on indices cover the entire cash and futures period in that day.

WEEKLY PRICE MOVEMENT

There was minimal movement in many currencies this week, especially AUD and CAD. Both NZD and JPY recovered, but GBP was hit by continuing Brexit turmoil. The best trade would have been to short GBPJPY. Indices were even flatter, with the tiny 0.16% drop in NKY being the strongest mover, belying a 400 point intra-week swing. Cryptos recovered, with BTC noticeably outperforming ETC.

AUDUSD 0.7418 (-0.05%)

EURGBP 0.8923 (+1.09%)

EURUSD 1.1719 (+0.30%)

GBPUSD 1.3127 (-0.80%)

NZDUSD 0.6806 (+0.61%)

USDCAD 1.3141 (-0.09%)

USDJPY 111.42 (-0.81%)

DAX     12561 (+0.12%)

FTSE     7666 (-0.01%)

NIFTY   11010 (-0.07%)

NKY     22538 (-0.16%)

SPX    2798.2 (-0.11%)

GOLD  1231.23 (-0.78%)

OIL     68.11 (-3.38%)

BTCUSD   7333 (+17.91%)

ETHUSD 449.09 (+3.92%)

(Crypto prices are given as at 0000GMT Saturday, two hours after the other markets close.)

NEXT WEEK (High volatility items are in bold)

Another G20 meeting in Buenos Aires for finance ministers and central bankers this weekend. TreasSec Mnuchin is there. Trade wars are likely to dominate.

Monday July 23

Today is fairly quiet. BoE Broadbent (centrist, voter) speaks at 17:00. Singapore inflation is released and Egyptian markets are closed. AABA, which is Yahoo Japan plus the BABA holding reports after the bell.

12:30 USD Chicago Fed National Activity Index 

14:00 USD Existing Home Sales (MoM)

17:00 GBP BoE MPC Member Broadbent Speech

Tuesday July 24

The day opens with German and Eurozone Markit PMIs, with all three prints (Manufacturing, Services, Composite) released simultaneously for each region. There is a public hearing on $16Bn of proposed tariffs on China, for consideration by the USTR. The UK Parliament goes into recess until Sep 4. There is a rate decision in Turkey. The first of three FANG earnings reports this week, GOOGL, comes after the US closing bell.

07:30 EUR Germany Markit PMIs

08:00 EUR Eurozone Markit PMIs

13:00 USD US Housing Price Index (MoM)

13:45 USD US Markit Services/Composite PMIs

20:30 WTI API Stock

22:45 NZD NZ Imports/Exports/Trade Balance

Wednesday July 25

Some political news on Wednesday; Trump campaign manager Paul Manafort’s trial opens in the US, and SecState Pompeo testifies to the Senate Foreign Relations Committee. As well as North Korea, he will be asked questions about the Trump-Putin summit. EC President Juncker is scheduled to meet President Trump for trade talks. The German IFO business sentiment indicators (Current Assessment, Business Climate, Expectations) have similar estimates to last month’s prints. It remains to be seen if they miss, like the investor sentiment figures on July 10 did. FB reports earnings today after the bell, as do KO, BA (before the bell) and V (after the bell). BA, KO and V make up 14.62% of DJIA, with BA 9.61% on its own.

01:30 AUD Australia CPI (QoQ est 0.5% prev 0.4%)

08:00 EUR Germany IFO Business Sentiment Indicators

14:00 USD New Home Sales (MoM)

14:30 WTI EIA Stock

23:50 JPY Japan Foreign investment stocks/bonds

Thursday July 26

Today’s ECB rate set meeting would normally be the big event of the week, but little is expected (ie continuity) at this summer meeting. As always any fireworks will be at the press conference, not the actual rate release. If anything, a tendency toward dovishness is expected. The third FANG earnings report in as many days is AMZN, who report after the bell along with INTC. These two comprise 13.57% of NDX. Also reporting before the bell today is MCD, which is 4.26% of DJIA.

00:00 WTI OPEC meeting (all day)

06:00 EUR Germany Gfk Consumer Confidence Survey

11:45 EUR ECB Rate Decision (est 0% prev 0%)

12:30 EUR ECB statement and press conference

12:30 USD Jobless Claims

12:30 USD Durable Goods

23:30 JPY Tokyo CPI (YoY est 0.7% prev 0.7%)

Friday July 27

The lead story today is the Q2 US advance GDP release, with an estimate of more than double the last one, along with PCE (inflation proxy) figures. Bullard (dove, non-voter) makes the only Fed speech this week. Before the opening bell we have earnings from TWTR (surprisingly not in NDX), and also oil giants XOM and CVX, which together make up 5.51% of DJIA.

12:20 USD Fed Bullard speech

12:30 USD US GDP/PCE (YoY GDP est 4.2% prev 2%)

17:00 WTI Baker Hughes US Oil Rig Count

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Week to Jul 13th

Monday July 09

Monday saw the the previous week’s equity rally continue, with all indices up following the German Trade Balance beat at 06:00. In particular NKY had its best day since April 2, adding 1.53% on JPY weakness. This was led by XLF, which rose 2.3%, its best day since March, as attention moved from tariff to Q2 earnings. Currency activity was mixed, with AUD up, NZD flat and EUR, CAD and JPY down, the latter shedding 0.39% in line with the risk-on mood, although Gold was flat. DXY was marginally up by 0.12%

The most volatility was in GBP, which rallied 0.5% on the soft Brexit agreement news, but then gave up over 1.2% on the news that the ‘British Trump’ Boris Johnson (gaffe-prone, isolationist) had resigned from the UK cabinet. As the earlier resignation that day of Brexit Minister Davis had little effect on cable, one can only assume that traders worried about a party leadership bid (and therefore Prime Minister bid) by Johnson. This was also the first time two UK cabinet ministers had resigned on the same day for 36 years. Sterling closed 0.46% down, with a long lower tailed candle. Oil was marginally up (0.3%, which is nothing for Oil) on the day, although notably the BNO/WTI ratio hit a 12-month low. US Treasury 10-Year Bond yields were up 3.5bp tracking the stronger USDJPY.

Tuesday July 10

Verschlimmbesserung

After the overnight Chinese inflation beat at 01:30, equities were up again on Tuesday although the effect was less marked in SPX and NKY, and FTSE was flat. DAX was the strongest performer today, helped by EUR weakness, and despite a big miss at 09:00 in the German sentiment reports we highlighted last week. SPX fell heavily after the cash close, to close red for ES futures.

DXY had a similar day to Monday (up 0.11%) but the composition was different. AUD, GBP, NZD, Gold and yields all had Turnaround Tuesdays and reversed the previous day’s action, whereas EUR, CAD and JPY continued to fade. Oil again made marginal gains. In short, a dull day.

Wednesday July 11

As the US confirmed their further $200Bn of tariffs on Chinese imports, the dam broke with equities, and all moved sharply south. The rout started immediately after the Tuesday US markets closed, with NKY shedding 500 points in the Asian session (and ES futures down 1.12%). There was some recovery during the day, but European indices with their earlier close still ended more than 1% down.

Normally, a risk-off move in equities triggers yen (safe haven) and Gold appreciation but not this time. JPY shed 0.92%, its worst day since March. Other currencies and Gold were similarly down, and DXY was up 0.55%. Although CAD spiked up briefly by 0.57% after the rate hike at 14:00, it quickly erased that gain.

The most notable effect of the trade war was in WTI Oil, which faded 5%, its worst day in two years, (Brent fell 6.9%) and this is without any OPEC or Trump news, and notably, in spite of the EIA beat at 14:30 (-12.63M vs -4.49M), the strongest in two years. Despite the dollar strength, yields were down 3bp as money flowed from stocks to bonds.

Thursday July 12

Thursday’s US equity markets saw all the previous day’s losses erased and more. The trend started in Asia, where YM_F (DJIA futures) was up 100 before Europe even opened. SPX hit a 5-month high, and NDX briefly made a new all-time high. NKY similarly made a new high for the month. However, the European indices could only recover in part from the day before. Metals, including Gold also recovered, although Oil did not, sliding further down (although BNO was up, widening the spread).

The forex market was more subdued than usual, with main pairs EURUSD and GBPUSD virtually flat, as were yields. There was little reaction to the ECB Minutes at 11:30, or the Core US CPI print (2.3% as estimated) at 12:30. Overall, the trend was to dollar weakness (against the general trend for the week of dollar strength), with AUD, CAD and Gold up. Only JPY was down, continuing its unlinked pattern. Oil’s fade on 0.33% seemed flat compared to Wednesday. TRY hit a new all-time low.

Friday July 13

The equity rally started to falter. Although DAX and NKY posted gains they were more modest than the day before. FTSE was flat like Tuesday, and SPX faded in early, only to fall at the end and fining flat. Earnings season kicked off today in earnest, with bank heavyweights JPM, C and WFC reporting. Although the first two beat estimates, the market was unimpressed and all three lost ground, to leave XLF flat, and SPX only 0.2% up—which was still another five-month high. The Michigan Sentiment Index at 14:00 missed, as we predicted last week, although it had no appreciable effect.

Forex much the same as the day before, generally, although the GBP and EUR  candles had a long lower tails again as it dipped in early trade after Trump, visiting the UK said that the recently agreed ‘soft Brexit’ plan would hamper a US trade deal, and even that ‘Boris Johnson would make a great Prime Minister’. He later seemed to retract some of these remarks, calling reports ‘fake news’. JPY had a slight recover after four down days.

Gold, which has done its own thing for most of this year, counterintuitively fell. Oil at last turned up a little, and yields were down 2bp in line with the dollar.

Please note all figures and percentages given for daily movement on indices cover the entire cash and futures period in that day.

WEEKLY PRICE MOVEMENT

After last week’s dip, USD recovered across the board. JPY had its worst week since September 2017, and buying USDJPY was the best forex trade. It is therefore no surprise that NKY was the best index performer, and as in often the case, Oil was the most volatile of all. Cryptos gave up last weeks gains, to sit roughly where they were two weeks ago.

AUDUSD 0.7422 (-0.08%)

EURGBP 0.8827 (-0.10%)

EURUSD 1.1684 (-0.49%)

GBPUSD 1.3233 (-0.40%)

NZDUSD 0.6765 (-1.05%)

USDCAD 1.3153 (+0.49%)

USDJPY 112.33 (+1.70%)

DAX     12546 (+0.42%)

FTSE     7667 (+0.59%)

NIFTY   11018 (+2.76%)

NKY     22574 (+3.51%)

SPX    2801.4 (+1.50%)

GOLD  1240.91 (-1.08%)

OIL     70.49 (-4.58%)

BTCUSD 6219 (-5.80%)

ETHUSD 432.16 (-8.12%)

(Crypto prices are given as at 0000GMT Saturday, two hours after the other markets close.)

NEXT WEEK (High volatility items are in bold)

Over the weekend, we saw Trump change his position on the UK trade deal, withdrawing his criticisms of Friday. There was some action from Special Prosecutor Mueller late on Friday, charging Russian intelligence officers with hacking the Clinton campaign in 2016, potentially handing the election to Trump.

Monday July 16

Today President Trump meets Russian President Putin in Helsinki. Trump will undoubtedly speak to the press, and traders will be watching for a softening position on sanctions, and any comments about oil production. This would affect Oil and RUB. US Retail Sales (an inflation proxy) is the important print of the day. Earnings season continues with another bank BAC before the open, but more importantly, NDX star NFLX (2.15% of the index) after the bell. NFLX EPS estimates are usually very accurate.

00:00 USD Trump-Putin meeting (all day)

02:00 CNY China GDP/Industrial Production/Retail Sales (est 6.7% prev 6.8%)

12:30 USD US Retail Sales (MoM) (ex-autos est 0.4% prev 0.9%)

22:45 NZD NZ CPI QoQ (est 0.5% prev 0.5%)

Tuesday July 17

In the UK, BoE Carney and Deputy Gov Cunliffe speak at 08:00 to Parliament about the Financial Stability Report, followed shortly by the nearest thing the UK has to NFP. New jobs are not actually reported, but all the other stats are there, including the important Average Hourly Earnings. The disinflationary version of this (AHE-CPI) is used by central banks to determine whether the public can afford rate hikes on their mortgages.

At 14:00, we have first day of Fed Chair Powell’s semi-annual Monetary Policy Report to Congress, known as the Humphrey-Hawkins testimony, after the senators who introduced the bill that mandates the report. SPX price action looks very similar to the run-in to the previous report in February. GS and JNJ (together making 9.55% of DJIA, ie 24 points per 1% move) report before the bell.

00:30 AUD RBA Meeting Minutes

02:00 CNY China NBS Press Conference

08:30 GBP UK AHE (exc bonus est 2.7% prev 2.8%)

08:30 GBP UK Unemployment/Claimant Count Change

13:15 USD Capacity Utilization/Industrial Production (MoM)

14:00 NZD NZ GDT Milk Index (time approx)

14:00 Fed Powell gives Humphrey-Hawkins testimony Day 1

20:30 WTI API Stock

Wednesday July 18

Attention moves to Europe with the British inflation figure following hot on the heels of the jobs report. These are the figures which will determine the UK rate decision on Aug 2. Given the BoE vote shift in June (where a third of members voted for a hike), we can safely say that beats on both jobs and CPI will have a markedly positive effect on sterling. The second day of Humphrey-Hawkins is usually less dramatic.

More DJIA component reporting after the bell, with IBM and AXP (total 6.67% of the index). Also reporting is former Dow component AA, where it will be interesting to see if there has been any benefit to them from the recent aluminum tariffs.

00:00 EUR EcoFin Meeting (all day)

08:30 GBP UK CPI YoY (core est 2.2% prev 2.1%)

09:00 EUR Eurozone CPI YoY (core est 1.0% prev 1.0%)

12:30 USD US Housing Starts/Building Permits (MoM)

14:00 Fed Powell gives Humphrey-Hawkins testimony Day 2

14:30 WTI EIA Stock

18:00 USD Fed Beige Book

23:50 JPY Japan Imports/Exports/Trade Balance (YoY)

Thursday July 19

The Australian jobs report estimate is 40% higher than last month, and a beat may provide a boost for beleaguered AUD, which bounced off a 17-month low last week. The estimate of 17k is equivalent to 229k in the US which has 13.5x the population. The UK Retail Sales figure will add to the rate decision picture, although less so as it is only a proxy for CPI, released the day before. Fed Quarles (centrist, voter) speaks at 13:00. NDX giant MSFT (9.6% of the index, second only to AAPL and AMZN) reports after the bell.

00:30 AUD Australia NAB Business Confidence (QoQ)

01:30 AUD Australia NFP/PT jobs/Unemp/Participation (est 17k prev 12k)

08:30 GBP UK Retail Sales

12:30 USD US Jobless Claims

12:30 USD Philadelphia Fed Manufacturing Survey

23:30 JPY Japan National CPI (YoY)

23:50 JPY Japan foreign investment in stocks/bonds investment

Friday July 20

The week ends with OpEx day, the expiry of monthly options, which can cause of course heighten volatility. Fed Bullard (dove, non-voter) speaks at 12:00, and GE reports before the bell, the first earnings release since they left the DJIA after a 111-year run. The Canadian CPI estimate is slightly ahead of last month, but still below the May figure, as Canada still struggles to get traction in this area. As a rate hike already happened last week, it is difficult to foresee any CAD upside on this print.

04:30 JPY Japan All Industry Activity Index (MoM)

08:30 GBP UK PSBR

12:30 CAD Canada CPI/Retail Sales (core CPI est 1.4% prev 1.3%)

17:00 WTI Baker Hughes US Oil Rig Count

This report is published every week as an email by MatrixTrade.com - you can sign up to receive it here.

Week to Jul 6th

Monday July 02

After tariff-driven weakness in the Asian session, which left NKY and European markets down, a recovery in the US session allowed SPX to finish 0.3% up. Some of this was timing. NKY closes first and lost the most, and Europe’s closing bell is four and a half hours earlier than New York. DAX edged into positive territory by the US close. The dollar had a good day against all the major currencies with DXY up 0.26%, and Gold was down in line. US 10-year yields fell after the ISM Prices Paid miss at 14:00, but recovered in line with SPX to end 2bp up on the day. Oil was up on the day.

Tuesday July 03

It was Turnaround Tuesday in the pre-holiday shortened day for pretty much everything except NKY which continued to fall. SPX and DAX were down, but FTSE was up, and USD was down across the board, with Gold up and yields down in line. The yield gap or curve (the difference between the two and ten year yields) hit a fresh 10-year low, below 30bp. Oil briefly topped the psychological $75 mark for the first time since 2014, before pulling back to end the day down. AUD rose after the rate hold at 04:30, but only to recover the previous day’s losses.

Wednesday July 04

With US markets closed for Independence Day, today was very quiet, with low volumes. Although US futures traded, all indices were flat on the day, with very little volatility. USD advanced very slightly against all currencies except GBP, which, as we indicated last week, benefited from the Markit Services PMI beat at 08:30, recording an eight month high, and resulting in a flat DXY. Oil and Gold advanced slightly. There was no bond trading.

Thursday July 05

Markets often rally after a holiday, and today was no exception. Although NKY had fallen 250 points in the Asian session and only managed to close flat, SPX (up 0.61%), FTSE (up 0.53%) and DAX (up 1.17%) all advanced firmly into and through the FOMC Minutes at 18:00. However, the sentiment was not reflected in the dollar, which was down across the board against other currencies and Gold, again with GBP being the exception. Oil was down sharply (1.6%) after the EIA Stock miss (+1.24M vs -3.54M est) at 15:00, one day late this week because of the holiday. Yields were flat on the day.

Friday July 06

Equity markets rallied into and out of the comfortable NFP beat (213k vs 195k est) at 12:30. The pattern was repeated in non-US indices. However the miss on AHE (2.7% vs 2.8%), which indicates a possible delay in rate hikes, meant USD was down across the board, DXY giving up 0.42%. All currencies gained ground, but surprisingly, Gold was slightly off. CAD was stronger after their NFP beat, despite a miss in Unemployment.  after Oil recovered some of Thursdays losses. Yields were down in line with the weaker dollar.

Please note all figures and percentages given for daily movement on indices cover the entire cash and futures period in that day.

WEEKLY PRICE MOVEMENT

Last week was mixed, and this week was a clear dollar reversal, with DXY giving up 0.70%, its worst week since January. The strongest trade after two bad weeks was NZDUSD, up 0.90%. But overall, this was low volatility, also seen in indices, where DAX, FTSE and NIFTY had inside weeks (as did EURGBP). The the kiwi, DAX was the worst performer for two weeks, and this week was the strongest.

The reversal also applies to cryptos, up slightly, but still only showing a fraction of their previous volatility.

AUDUSD 0.7428 (+0.35%)

EURGBP 0.8836 (-0.10%)

EURUSD 1.1742 (+0.51%)

GBPUSD 1.3286 (+0.63%)

NZDUSD 0.6837 (+0.90%)

USDCAD 1.3089 (-0.34%)

USDJPY 110.45 (-0.20%)

DAX     12494 (+1.71%)

FTSE     7622 (+0.01%)

NIFTY   10722 (+0.07%)

NKY     21808 (-1.96%)

SPX    2759.9 (+1.49%)

GOLD  1254.52 (+0.13%)

OIL     73.87 (-0.53%)

BTCUSD   6602 (+6.42%)

ETHUSD 470.37 (+7.94%)

(Crypto prices are given as at 0000GMT Saturday, two hours after the other markets close.)

NEXT WEEK (High volatility items are in bold)

Monday July 09

The UK cabinet agreed to a soft Brexit plan late on Friday. There is a speech by ECB Coeuré (hawkish, voter) at 20:30 Sunday. Monday opens with two appearances by ECB President Draghi, at 12:00 to the European Parliament and 19:00 giving the opening address to the ECB Statistics Conference. Other speakers are listed below. There is little economic news.

06:00 EUR Germany Trade Balance s.a.

07:50 USD MPC Member Broadbent (centrist, voter) Speech

13:10 USD FOMC Member Kashkari (dove, non-voter) Speech

19:00 USD Consumer Credit Change

Tuesday July 10

Tuesday opens with a speech by BoJ Governor Kuroda at 00:30. The UK GDP print is a new statistic, a month-on-month estimate from the UK ONS. The normal QoQ figure is released on Jul 26th. The forward German ZEW confidence reports are likely to be balanced by relief over Italy, but concerns about the auto tariffs and CDU/CSU tensions.

00:01 GBP UK BRC Like-For-Like Retail Sales (YoY)

01:30 CNY China CPI/PPI

08:30 GBP UK Manufacturing/Industrial Production

08:30 GBP UK GDP estimate (MoM)

09:00 EUR Germany ZEW Economic Sentiment/Current Situation

12:15 CAD Canada Housing Starts s.a (YoY)

20:30 WTI API Stock

23:50 JPY Japan Machinery Orders

Wednesday July 11

A two-day NATO summit starts today. President Trump is likely to reiterate his complaints about underpaying members. The big story of the day is the Canadian rate decision, and the staggered release of the MPC report and press conference. A 25bp hike is expected, but commentators are expecting dovish rhetoric surrounding it, due to the ongoing trade wars. 

00:30 AUD Australia Westpac Consumer Confidence

01:30 AUD Australia Home Loans/Investment Lending

07:00 EUR ECB Non-MPC Minutes

09:40 EUR Germany 10-y Bond Auction (time approx.)

12:30 USD US Core PPI

14:00 CAD BoC Rate Decision/Statement (est 1.50% prev 1.25%)

14:30 WTI EIA Stock

15:00 CAD BoC MPC Report

15:15 CAD BoC Press Conference

15:35 GBP BoE's Governor Carney speech

20:30 USD FOMC Member Williams (hawk, voter) speech

23:50 JPY Japan Foreign stocks/bonds investment

Thursday July 12

A volatile day for EURUSD is expected with three important events. After German inflation, the ECB minutes will be examined closely. Following closely behind is the all-important US inflation figure, where an uptick is expected. The Eurogroup meeting will present its interim summer forecast/

00:00 EUR Eurogroup meeting (all day)

01:00 AUD Australian Consumer Inflation Expectation

02:15 CNY China FDI (time approx.)

06:00 EUR Germany CPI (est 2.1% prev 2.1%)

08:30 GBP BoE Credit Conditions Survey

09:00 EUR Eurozone Industrial Production s.a. (MoM)

11:30 EUR ECB MPC minutes

12:30 USD FOMC Member Kashkari (dove, non-voter) Speech

12:30 USD US Jobless Claims

12:30 USD US CPI (Core est 2.3% prev 2.2%)

16:15 USD FOMC Member Harker (centrist, non-voter) Speech

18:00 USD US Monthly Budget Statement

22:30 NZD Business NZ PMI

23:30 USD FOMC Member Kashkari Speech

Friday July 13

The week ends quietly. The European Economic and Financial Affairs council (EcoFin) is discussing VAT and the terms of reference for the G20 Finance Ministers meeting on July 21st. This is unlikely to affect EUR or equities. Other than the CB speakers, the main event of the day is the Michigan sentiment index. The estimate of 98.2 is unchanged from last month, although some commentators are expecting a miss on this figure.

00:00 EUR EcoFin Meeting (all day)

02:00 CNY China Imports/Exports/Trade Balance

11:00 GBP BoE MPC Member Cunliffe (dove, voter)Speech

14:00 USD Michigan Consumer Sentiment Index

15:00 USD Fed Monetary Policy Report

16:30 USD FOMC Member Bostic (centrist, voter) speech

17:00 WTI Baker Hughes US Oil Rig Count

This report is published every week as an email by MatrixTrade.com - you can sign up to receive it here.

Week to Jun 29th

Monday June 25

Over the weekend came more hawkish Trump trade rhetoric, limiting Chinese investment in US companies. Markets duly fell hard, with SPX giving up 1.31%, its worst day for two months, and cancelling all the gains for the month. In line, the VIX hit a two-month high. Other indices followed suit, DAX not being helped by the mixed IFO sentiment reports at 08:00. In currencies, DXY pulled back from the HOY reached last week, to close 0.2% down. GBP, EUR and JPY, the main components were up, but CAD was slightly down in line with drop in Oil prices, and AUD was notably down 0.34%. The result of the Turkish election  (Erdogan re-elected) produced a standout 3% gain in TRY, although this all evaporated by the end of the day. Gold did not follow either the risk aversion or USD trend and was down $3. It started a decline which lasted all week, following a technical trend to Dec 12 low. US 10-year Treasury Bond yields were flat.

Tuesday June 26

A slight Turnaround Tuesday today, but not much, with only really tech and energy performing, the latter boosted by a 3.61% jump in the WTI price, which spiked after we got a ‘white swan’, as the US State Department ordered buyers to cut Iranian imports. SPX added 0.2%, and NKY was also up, helped by a weaker yen. The inter market importance of oil was shown by contrasting the oil-free DAX (flat) with the oil proxy FTSE (up 0.84%, much more than SPX). All this was before a significant shift in the API Oil Stock print at 20:30, improving to -9.29M from -3.02M (lower is better).

EUR had a full turnaround, giving up Monday’s gains, and all other currencies were down slightly, giving DXY a healthy 0.5% gain on the day. Gold was down to a new 2018 low, and yields had a second flat day.

GE over a century

Tuesday was also was a bittersweet day in the history of GE. On Nov 7, 1907, the doughty US conglomerate replaced the Tennessee Coal, Iron and Railroad company to join the DJIA, where it remained for 111 years, the last company from that era to do so, and the longest member of any US index by far. GE was also a member of the original Dow 12 index calculated by Charles Dow himself in 1896. In 2000, it was the largest company in the world by market capitalisation. Today, after falling 60% in the last two years to a weight of less than 0.5% of the index, the stock was ejected in favour of pharmacy chain WBA. Sic transit gloria mundi? Perhaps not. This came on the same day that the company announced divestment of its Baker Hughes oil division, and the shares rose 8%, the best one-day performance for three years.

Wednesday June 27

A mixed picture, for once, on indices as an early rally in US and Japanese stocks on a potential softening of Trump’s China trade position faded and both ended in the red. As always, sentiment in currency tends to last longer and DXY was sharply up 0.62% again by the end of the day, the corollary of which is that the weakened EUR and GBP delivered a green candle for both DAX and FTSE.

The rest of the currency profile was risk-off as AUD (substantially) and CAD (slightly) also fell, yet JPY was flat. CAD was helped by a further Oil advance after the substantial EIA beat (-9.89M vs -2.57M est) at 14:30, in line with the API print, and the sharpest weekly decline since September 2016. Gold, increasingly unreliable as a risk-off indicator fell for the third day, another 2018 low. Also counter-intuitive were yields, which fell 5bp, rather a lot for a weakly risk-off day and not in line with the stronger dollar. Oil continued the ‘Iran’ rally, adding another 2.34% to a new three-and-a-half year closing high.

Thursday June 28

Despite the US GDP partial miss (on the annualised figure) at 12:30, equities staged a recovery rally on Thursday, SPX putting on 0.58% to recover the previous day’s losses. DJIA new entrant WBA got off to a bad start, dropping 10% on news that AMZN are entering their market. NKY and FTSE were also up, the latter being help by the continuing Oil rally (up 1.32%) which also saw CAD add 92 pips (0.69%). DAX, as ever does not participate in Oil rallies, and was down again. Indeed, the automotive sector (20% of DAX) are ultimately consumers not producers of Oil. Coupled with Chancellor Merkel’s political problems, and potential car sanctions, this was proving to be the weakest index for a second week.

EUR and AUD were fairly flat, and GBP lost ground to a new seven month low, on worries about that the EU was stepping up unilateral plans for Brexit, resulting in a nearly-flat (up 0.04%) DXY, which nevertheless still hit a new 2018 record. Gold and JPY were down, and yields up in line with a return to risk-on. The US10Y-US02Y spread narrowed to 0.32%, the lowest in a decade. 

Friday June 29

Equities were mixed today. All rallied then faded, with SPX closing flat, NKY and FTSE down, and DAX actually showing a slight upturn after the European Council immigration deal (referred to last week). The early rally in the SPX was probably helped by the PCE (CPI proxy) YoY beat at 12:30, coming as it did after the QoQ miss the day before.

The immigration deal gave a strong boost to EUR, it was up 90 pips in the Asian session, and finished the day 114 pips up. Coupled with strong gains elsewhere, including CAD after the GDP beat at 12:30, and GBP after an upward revision in Q1 GDP, DXY had its worst day since January, shedding 0.88%. Even NZD and Gold turned up after falling all week. Counterintuitively again, yields were slightly up. Oil continued its rally, up another 1.3% today, and 16% up in the last two weeks to close at $74.26, a 19-month high. The 61.8% fib from the 2014 high is less the $3 away.

Please note all figures and percentages given for daily movement on indices cover the entire cash and futures period in that day.

WEEKLY PRICE MOVEMENT

A mixed week for USD, up against some and down against others. The weakest currency for a second week was NZD, and the best trade would have been to sell it against CAD, making 3.00%. Also for the second week, DAX was the worst performing index, and Oil was the biggest mover. For the first time, the two major cryptos moved in opposite directions, but again with little volatility.

AUDUSD 0.7402 (-0.51%)

EURGBP 0.8845 (+0.71%)

EURUSD 1.1682 (+0.23%)

GBPUSD 1.3203 (-0.41%)

NZDUSD 0.6776 (-1.91%)

USDCAD 1.3133 (-0.96%)

USDJPY 110.67 (+0.63%)

DAX     12284 (-2.23%)

FTSE     7621 (-0.59%)

NIFTY   10714 (-1.02%)

NKY     22243 (-1.24%)

SPX    2719.4 (-1.29%)

GOLD  1252.95 (-1.30%)

OIL     74.26 (+7.20%)

BTCUSD   6204 (+2.33%)

ETHUSD 435.77 (-5.72%)

(Crypto prices are given as at 0000GMT Saturday, two hours after the other markets close.)

NEXT WEEK (High volatility items are in bold)

Monday Jul 02

The weekend saw two tariff changes. Canada introduced their retaliatory tariffs on steel, and conversely, China reduced their import tariffs on cars and auto parts. Also over the weekend is the Mexican Presidential election, where left-winger AMLO is widely expected (20% ahead) to win, potentially a game changer for NAFTA. The UK Manufacturing PMI is important as GBP is as an 8-month low, and rate hikes are on a knife-edge. Markets are closed in Canada and Hong Kong due to local holidays.

23:30 AUD Australia AiG Performance of Mfg Index (Sunday)

23:50 JPY Japan Tankan Large Industry/Manufacturing Index (Sunday)

01:45 CNY China Caixin Manufacturing PMI

07:55 EUR Germany Markit Manufacturing PMIt

08:00 EUR Eurozone Markit Manufacturing PMI

08:30 GBP UK Markit Manufacturing PMI

09:00 EUR Eurozone Unemployment Rate

14:00 USD US ISM Manufacturing PMI/Prices Paid

22:00 NZD NZIER Business Confidence (QoQ)

Tuesday Jul 03

The key release today is the RBA Rate Decision. A hold of 1.5% is expected, so the market will be looking for something hawkish from Governor Lowe after AUD briefly dipped under, then bounced off a 13-month low last week. The currency is currently suffering from the intermarket effect of gold’s decline, and recent risk-off sentiment in global markets. It does not of course help that the 1.5% rate, once attractive for carry, now lags USD. In other news, there is a rate decision on SEK (4.2% of SXY), Turkish CPI at 07:00, and the NZ GDT milk auction, which we have found does have a consistent effect on NZD (which like AUD is at 13-month lows). US markets close early at 17:00 (ie 13:00 EDT) in advance of Independence Day.

01:30 AUD Australia Building Permits (MoM)

04:30 AUD RBA Rate Decision/Statement (est hold 1.5%)

08:30 GBP UK PMI Construction

13:00 NZD NZ GDT Price Index (time approx)

13:30 CAD Canada Markit Manufacturing PMI

14:00 USD US Factory Orders (MoM)

20:30 WTI API Stock

Wednesday July 04

Today is Independence Day and all US markets are closed. Futures on US markets are electronically traded globally but close at 17:00 (VIX at 15:15). Volume, and therefore volatility is expected to be very low. The UK Services PMI is important for the reasons mentioned on Monday above. BoJ Harada (dove) speaks at 01:30.

01:30 AUD Australia Retail Sales s.a. (MoM)

01:30 AUD Australia Imports/Exports/Trade Balance

01:45 CNY Caixin China Services PMI

07:55 EUR Germany Markit Composite/Services PMI

08:00 EUR Eurozone Markit Composite/Services PMI

08:30 GBP UK Markit Services PMI

Thursday July 05

Commentators are looking for an indication in the FOMC minutes of how close to ‘neutral’ (rates track GDP) the bank thinks rates are, as US growth forecasts are more positive than the inflation or earnings figures. Focusing on this metric would be seen as hawkish. Also today we have the ADP ‘sneak preview of NFP’ report, one day late because of the holiday. The estimate is only 10k apart from the NFP estimate. A surprise may move markets a day early. As well as BoE Governor Carney, CB speakers today include BoJ Masai (centrist) at 01:30, and ECB Mersch (hawkish) at 17:15.

10:00 GBP BoE's Governor Carney speech

11:15 EUR German Buba President Weidmann speech

12:15 USD US ADP Employment Change (est 180k prev 178k)

12:30 USD US Jobless Claims

13:45 USD US Markit Services/Composite PMI

14:00 USD US ISM Non-Manufacturing PMI

15:00 WTI EIA Stock

18:00 USD FOMC Minutes

22:30 AUD Australia AiG Performance of Construction Index

23:30 JPY Japan Overall Household Spending (YoY)

Friday July 06

The big story on the first Friday of the month is always NFP, and this month, the Canadian and US figures are back in sync, meaning that USDCAD volatility is almost guaranteed. Today the first wave of 25% US ‘Section 301’ tariffs on Chinese goods is applied. China may say something about retaliation. Also there is a major UK cabinet meeting about Brexit transition.

05:00 JPY Japan Leading Economic Index

06:00 JPY Japan Industrial Production n.s.a. w.d.a. (YoY)

12:30 USD US NFP/AHE/Unemployment/Participation (est 190k prev 223k)

12:30 CAD Canada NFP/Unemployment/Participation (est 17.5k prev -7.5k)

12:30 USD US Trade Balance

12:30 CAD International Merchandise Trade

14:00 CAD Ivey PMI

17:00 WTI Baker Hughes US Oil Rig Count

This report is published every week as an email by MatrixTrade.com - you can sign up to receive it here.

Week to Jun 22nd

Monday June 18

All the equity markets we cover continued the slide from Friday, on trade war fears escalating over the weekend. DAX fell particularly heavily (284 points, 2.18% and a marubozu candle) on the German political problems relating to Chancellor Merkel’s increasing unpopular refugee policy, and the arrest of the CEO of Audi, part of Volkswagen, Germany’s biggest company. VOW shares actually outperformed the DAX, falling only 2.16%, but they had already fallen 3.55% on Friday.

The risk-off mood mean Gold and JPY were up, as was EUR after its heavy fall last week, and commodity (risk) currencies AUD and CAD were down, as was GBP, which, along with a rise in Oil, limited the FTSE selloff, which recovered from a 111 point drop to finish only 21 points down. US 10-year yields were down in line with the fall in DXY.

Tuesday June 19

On Monday evening, President Trump confirmed the market’s fears by announcing proposals to put $200Bn of further tariffs on Chinese goods. The total of $250Bn represents nearly half of all Chinese exports to the US. The reaction was strong in the Asian session with DJIA down 300 points and NKY down 550, and JPY up 85 pips. CNY touched a five month low. The markets recovered somewhat during the European and US sessions, but still all ended in the red. This was a good day for USD, despite the yen move DXY was up 28c (0.29%) to a new 2018 high as all the other currencies faded, with EUR touching a two-week low as at Sintra, ECB President Draghi reiterated that there would be no rate rises funtil September 2019. Gold and Oil were down in line with the stronger dollar, but the reaction was not seen in bonds as yields took the risk-off view (money rotated from equities into bonds) rather than tracking DXY, in contrast to Gold which tracked USD rather than acting as a safe haven. We know of course that for much of this year, Gold has acted as a commodity rather than a safe haven. Oil’s move also reflected concerns about the forthcoming OPEC meeting.

Wednesday June 20

Other than the DAX (down slightly by 20 points), markets recovered on Wednesday, but only slightly, as money rotated into tariff-insensitive tech stocks, with NDX hitting a new intraday ATH of 7310.  This was probably only a technical move, as there was no further trade war news. At Sintra, Fed Chair Powell reiterated the case for rate hikes, and there was an immediate reaction in yields, which closed up 4bp on the day. USD was also up, but only very slightly. Gold was down $4 in line to hit a six-month low as USD and equity risk status were pointing in the same direction. Oil staged a small recovery after the EIA beat at 14:30.

Thursday June 21

Traders had swallowed their fears on Wednesday, the last day of spring (in the Northern Hemisphere), but one swallow does not make a summer, and today saw the trade war inspired downward slide in equities continue. Again DAX suffered most, as President Trump threatened to increase German car tariffs (DAI, BMW, VW and CON are 20% of the DAX).

In forex the main story was the BoE rate decision. Although the 0.5% rate was held, the voting was 6-3 against 7-2 estimated, and importantly it was Chief Economist Andy Haldane who changed sides. GBP put on 0.91% after the announcement. EUR and AUD were also up, and although JPY and CAD were slightly down, this was enough, along with the Philly Fed Manufacturing print miss to bring DXY back from an early 2018 high of $95.53 to close 0.29% down on the day. Gold was flat on the day. Oil was up again, after hopes rose that cuts might stay in place at the OPEC meeting. Yields were down in line with DXY. NZD briefly hit a new 2018 low following the contraction of GDP from 2.9% to 2.7%, before recovering in the US session.

Friday June 22

The OPEC meeting closed with some increase in production output agreed, but not as much as the market had feared. The reaction in Oil was strong, with a green marubozu candle (don’t often get two in one week) up 5% on the day, and the intermarket effect was seen in oil proxies FTSE (up 114 points, 1.51%, recovering all the week’s losses) and CAD up 0.31% despite  a 107 pip (0.81%) spike down after the miss on CPI and Retail Sales at 12:30.

NKY was also strong, recovering all Thursday’s losses and more, but SPX and DAX only recovered about half the previous day’s drop, the latter reacting to automobile worries and strong EUR. The single currency had its best day this month, putting on 0.49% after the Eurozone PMIs beat at 08:00, but in any event USD was down across the board, slipping against all the majors and Gold, with DXY down 0.35%. NZD rallied 0.63% but still ended the week down. Yields were flat on the day. Notably Bitcoin made a new 2018 low, dipping briefly below the $6,000 roundpoint and previous Feb 6 (from 21:00 to 23:00).

Please note all figures and percentages given for daily movement on indices cover the entire cash and futures period in that day.

WEEKLY PRICE MOVEMENT

The dollar was fairly flat this week, although there were some good intraday trades, such as USDCAD on Friday. The biggest movement for the week was NZDJPY down 1.03%. Index traders had the best result from shorting the DAX. Cryptos continued to fall although not as sharply as last week.

AUDUSD 0.7440 (+0.00%)

EURGBP 0.8783 (+0.54%)

EURUSD 1.1655 (+0.42%)

GBPUSD 1.3258 (-0.13%)

NZDUSD 0.6908 (-0.49%)

USDCAD 1.3260 (+0.44%)

USDJPY 109.98 (-0.61%)

DAX     12564 (-3.77%)

FTSE     7666 (-0.04%)

NIFTY   10824 (+0.08%)

NKY     22523 (-1.26%)

SPX    2754.9 (-0.85%)

GOLD  1269.46 (-0.79%)

OIL     69.27 (+7.83%)

BTCUSD   6063 (-5.32%)

ETHUSD 462.21 (-5.17%)

(Crypto prices are given as at 0000GMT Saturday, two hours after the other markets close.)

NEXT WEEK

Monday June 25

A quiet start to a quiet week as we enter summer. There may be some fallout from the Turkish General Election on Sunday, although this will be limited to TRY. The focus is on whether incumbent President Erdogan can win 50% of the votes to avoid a second round.  No speakers today, but the German IFO sentiment prints are of heightened importance given the worries about the automobile industry and the political survival of Chancellor Merkel. There are no CB speakers today

Tuesday June 26

Tuesday is even quieter. Fed Speakers Kaplan (non-voter) and Bostic (voter) are both centrists, so given Chair Powell's clear position at Sintra, they are unlikely to say anything which moves markets. The only hope of volatility (save of course a Trump black swan), are the NZ trade figures which precede the rate decision on Wednesday (Thursday local).

Wednesday June 27

Three CB speeches today, with BoE Governor Carney speaking in London on the Financial Stability Report, and BoC Governor Poloz on transparency and trust at the Greater Victoria Chamber of Commerce in British Columbia. Also a rare appearance by Fed Rosengren (hawkish, non-voter) at 16:45. A hold at 1.75% is expected, but anything hawkish from the RBNZ could have a strong effect on the Kiwi.

Thursday June 28

Following the business sentiment print on Monday, we have the German consumer sentiment today, followed by the inflation figure at 12:00. German estimates are known to be accurate (many more print ‘as estimate’ than other countries), so no surprises as expected. GDP is less of a market mover than CPI and jobs, but any serious variation in the US print would nevertheless cause volatility. The two-day European Council meeting is likely to focus on immigration, although Brexit may also be covered, which would affect sterling. NKE (2.06% of DJIA) reports after the bell.

Friday June 29

The end of the week, quarter and half year should bring some volatility as investor rebalance their portfolios. The economic prints are less important as in both cases, the major releases have been front run. The PCE print is overshadowed by the quarterly print the day before, and Eurozone CPI comes after all the individual countries report.

Also, all eyes will be on the weekend which is unusually busy. Announcements on restrictions for Chinese investment is US tech are due on Saturday, ironically as pre-agreed (and priced in) Chinese import tariff cuts come into place the next day. Also on Sunday, staying with the trade war, Canada is due to announce retaliatory tariffs on $12.8Bn of US products. Note however, that this is less than 0.1% of US GDP. And finally, there is the Mexican general election is likely to return hard-left candidate Obrador. The focus will be on his party’s majority. Weekend gaps in MXN and CNY are a distinct possibility.

CALENDAR (all times are GMT). High volatility items are in bold

Mon Jun 25

05:00 JPY Leading Economic/Coincident Index

08:00 EUR Germany IFO Business Climate/Current Assessment/Expectations

12:30 USD Chicago Fed National Activity Index 

14:00 USD US New Home Sales (MoM)

Tue Jun 26

13:00 USD US S&P/Case-Shiller Home Price Indices (YoY)

17:00 USD FOMC Member Bostic speech

17:45 USD FOMC Member Kaplan Speech

20:30 WTI API Stock

22:45 NZD NZ Imports/Exports/Trade Balance

Wed Jun 27

07:00 EUR ECB non-MPC Minutes

08:00 EUR ECB Economic Bulletin

08:30 GBP BoE's Governor Carney speech

08:30 GBP UK Financial Stability Report

12:30 USD Durable Goods Orders

14:00 USD US Pending Home Sales (MoM)

14:30 WTI EIA Stock

16:45 USD Boston Fed Pres Rosengren Speech

19:00 CAD BoC Governor Poloz Speech

21:00 NZD RBNZ Rate Decision/Statement (1.75% hold expected)

Thu Jun 28

00:00 EUR European Council meeting (all day)

06:00 EUR Germany Gfk Consumer Confidence Survey

09:00 EUR Eurozone Business Climate

12:00 EUR Germany CPI (YoY) (est 2.1% prev 2.2%)

12:30 USD Jobless Claims

12:30 USD GDP YoY/PCE QoQ (GDP est 2.2%, prev 2.2%)

14:45 USD Fed Bullard speech

23:30 JPY Tokyo Core CPI (est 0.6% prev 0.5%)

23:30 JPY Japan Unemployment/Jobs ratio

23:01 GBP UK Gfk Consumer Confidence

Fri Jun 29

00:00 EUR European Council meeting (all day)

01:00 AUD Australia HIA New Home Sales (time approx)

06:00 EUR Germany Retail Sales (MoM)

08:00 EUR Germany Unemployment

08:30 GBP UK GDP

08:30 GBP UK Mortgage Approvals

09:00 EUR Eurozone CPI (est 2.0% prev 1.9%)

12:30 USD US PCE/Personal Income (MoM and YoY)

12:30 CAD Canada GDP (MoM)

13:45 USD Chicago PMI

14:30 CAD BoC Business Outlook Survey

17:00 WTI Baker Hughes US Oil Rig Count

This report is published every week as an email by MatrixTrade.com - you can sign up to receive it here.

Week to Jun 15th

Monday June 11

Despite the acrimonious fallout from the G7 meeting, there were positive comments from Italy’s new finance minister, and equities advanced on Monday, with SPX making a three-month closing high. The dollar was virtually flat, as was Gold. DXY added 0.09%, mainly because of a 0.5% drop in CAD (9.1% of the basket) after Trump’s remarks were specifically directed at Canadian PM Trudeau. Oil put on 0.4% towards the end after a largely flat day. US 10-year bond yields were flat.

Tuesday Jun 12

The much vaunted Trump-Kim meeting turned out to be a damp squib, with nothing of note, either good or bad being reported. Equities were mixed but volatility was light. The US was slightly up, after the partial US CPI beat (core print as expected, raw—including food and energy—beat) with SPX adding 0.2%, and notably the Nasdaq Composite ($COMPQ, not the Tech 100) hit an intraday ATH. However the other equity markets did a Turnaround Tuesday and generally gave up the previous day’s gains, probably because the dollar was up (slightly) across the board. Gold and Oil were down in line, and yields had another flat day.

Wednesday June 13

The Fed raised rates to 2% as widely predicted, and indicated two further rises this year, one more than predicted, and the effect was seen in SPX which (a) once again followed the weekly average pattern we mentioned last week, ie turn at the end of Wednesdays and (b) the normal negative reaction of equities to a rate hike. The US benchmark fell by 0.61% from its 15:00 high. NKY, which had put on 100 points during the Asian session gave up all that. FTSE and DAX were less affected and ended the day fairly flat.

The hawkish Fed comments did not affect currencies as you would think, although JPY was down. However, DXY was down overall 0.3% on the day, after a strong showing from EUR. CAD and Gold were also up, and AUD and GBP were flat. However bond yields were up 2bp and the curve narrowed, with the two-year yield up 3bp. The rate hike was priced in, so maybe traders were now waiting to see what the ECB did the next day. Oil rose 1.1% on the day after a beat on the EIA stock print at 14:30.

Thursday June 14

The US rate hike was priced in, but the hawkish dot-plot was not. The ECB confirmed the asset purchase taper in December, as predicted by BuBa President Weidmann last week. This was also priced in. What was not priced in was a signal that any Euro rate hike would not come before Summer 2019. As you might expect EUR promptly fell hard (2.42% by the next morning, the worst 24 hours since the Brexit vote), but as you can see from this chart, after a muted response on Wednesday, all the other currencies fell sharply (JPY less so) after the ECB announcement at 11:45 (not the press conference at 12:30). These falls therefore must be a delayed reaction to the Fed, rather than solely linked to the ECB.

The SPX recovered some of the Fed-inspired decline putting on 0.31%, and NKY was up after losing 100 points in the Asian session, but the real story was in Europe where DAX added 2.2% and FTSE 1.1% as a direct reaction to their respective currency fades. 

DXY had its best day for virtually two years (since Brexit vote day, when GBP dropped 8%), adding 1.47%. Despite this, Gold was up $4—the reaction came later, and equally surprisingly bond yields fell 4bp, with the US10Y-US02Y gap closing by 3bp to a new 10-year low. Oil continued Wednesday’s rally to hit a high for the week, briefly nudging above $67. The jobs miss at 01:30 in Australia may have contributed to the AUD decline, which as you can see, started earlier than the others.

Friday June 15

Fresh concerns about the US-China trade war surfaced on Friday, and indices gave up some of Thursday’s gains. It was also Opex day. All indices were down. Currencies were mixed. After the large moves the previous day, EUR and GBP recovered some ground, the latter after a stellar Retail Sales beat (4.4% vs 2.5% est), whereas risk-on commodity currencies CAD and AUD continued to fall, (the former to a 2018 and near 12-month low), a pattern we have seen in previous weeks. JPY, which has been a little detached from the others recently, stayed flat after the BoJ rate hold. Gold had a delayed reaction to the USD rally, and gave up 1.72% to make a new 2018 low. Oil also fell sharply, losing over 4% on a mixture of the strong dollar and concerns that Saudi Arabia and Russia were planning to increase output at the OPEC meeting next week. 10-Year yields were down 2bp, as were the 2-year notes.

Please note all figures and percentages given for daily movement on indices cover the entire cash and futures period in that day.

WEEKLY PRICE MOVEMENT

The net result of the various rate decisions was a strong week for USD, with DXY putting on 1.34%, and all currencies down. The biggest loser was CAD, down 2.14%. The fall in the euro meant DAX was the winner in indices. Crypto-currencies crashed again, heading towards new 2018 lows. 

AUDUSD 0.7440 (-2.04%)

EURGBP 0.8736 (-0.40%)

EURUSD 1.1606 (-1.37%)

GBPUSD 1.3275 (-1.00%)

NZDUSD 0.6942 (-1.28%)

USDCAD 1.3202 (+2.14%)

USDJPY 110.65 (+1.04%)

DAX     13056 (+2.02%)

FTSE     7669 (-0.44%)

NIFTY   10815 (+0.54%)

NKY     22810 (+0.50%)

SPX    2778.5 (-0.02%)

GOLD  1279.56 (-1.48%)

OIL     64.24 (-1.91%)

BTCUSD   6404 (-16.19%)

ETHUSD 487.39 (-19.10%)

(Crypto prices are given as at 0000GMT Saturday, two hours after the other markets close.)

NEXT WEEK (all times are GMT)

Monday June 18

The week opens with the ECB’s Sintra conference (in Sintra, Portugal), where President Draghi will make the opening remarks. This is Europe’s equivalent to the US Jackson Hole conference. Fed member William Dudley (centrist, voter) makes his final speech and retires, to be replaced by existing FOMC member John Williams (hawkish, voter). Chinese markets are closed for the Dragon Boat (Tuen Ng in Hong Kong) festival. There is little news.

Tuesday June 19

Sintra continues with a further speech from Draghi. Fed Bullard (dove, non-voter) is also speaking at the conference. Away from Sintra, ECB Hakkarainen is on in Frankfurt at 10:15. Again, not much economic news. Tech heavyweight ORCL reports after the bell.

Wednesday June 20

The final day at Sintra has ECB President Draghi, RBA Governor Lowe and Fed Chair Powell all on together at 13:30, preceded by ECB Lautenschläger (hawkish, voter) and Coeuré (hawkish, voter). Elsewhere ECB Villeroy (centrist, non-voter) speaks at 07:30, as does BuBa President Weidmann (hawk, voter) at 09:45, both in Paris. The 7th OPEC two-day international seminar opens in Vienna, and traders will particularly be watching for remarks from the ‘Global Oil Market Balance Metrics’ session which starts at 12:30. In Japan, the current session of the Diet closes today.

Thursday June 21

After the raft of speeches earlier in the week, focus turns to the BoE and the GBP rate decision. A hold is expected, but last week’s data was mixed. The important core CPI was as expected, with a miss on the food/energy inclusive figure, yet there was a blowout beat on CPI proxy Retail Sales. Nevertheless the miss, and reversal on Average Earnings will probably service to kick the decision down the road. Watch for the voting figures, the consensus is 7-2. There are also rate decisions today in Switzerland (07:30) and Norway (09:00). The OPEC conference continues for a second day.

Friday June 22

The OPEC seminar is followed by the 174th Ordinary OPEC meeting, where output changes will be decided. This may be more important than the conference. Otherwise the main event of the day is Canadian Retail Sales and GDP. CAD broke to a near 12-month low last week with the Fed rate hike, NAFTA concerns, the Trump/Trudeau spat, and the receding price of Oil. Something positive in these prints could make a big difference.

CALENDAR (all times are GMT). High volatility items are in bold

Sun Jun 17

23:50 JPY Japan Imports/Exports/Trade Balance

Mon Jun 18

12:45 USD Fed Dudley speech

17:00 USD FOMC Member Bostic speech

17:30 EUR ECB President Draghi's Speech

19:45 USD FOMC Member Williams speech

22:00 AUD Westpac consumer survey

Tue Jun 19

01:30 AUD Australia House Price Index (QoQ)

01:30 AUD RBA Meeting's Minutes

08:00 EUR ECB President Draghi's Speech

08:30 EUR ECB's Praet Speech

11:00 USD Fed's Bullard speech

12:30 USD US Housing Starts/Building Permits

14:00 USD NZ GDT Price Index (time approx)

20:30 WTI API Stock

23:50 JPY BoJ MPC Minutes

Wed Jun 20

06:30 JPY BoJ Governor Kuroda Speech

08:00 EUR ECB Lautenschläger Speech

10:30 EUR ECB Coeuré Speech

13:30 EUR ECB President Draghi Speech

13:30 AUD RBA Governor Lowe Speech

13:30 USD Fed Powell Speech

14:00 USD US Existing Home Sales (MoM)

14:30 WTI EIA Stock

21:45 NZD NZ GDP

Thu Jun 21

00:00 EUR Eurogroup meeting (all day)

00:00 WTI OPEC meeting (all day)

01:30 AUD RBA Bulletin

04:30 JPY Japan All Industry Activity Index (MoM)

08:30 GBP UK PSBR

11:00 GBP UK Rate Decision/Statement (est hold 0.5%)

12:30 USD US Jobless Claims

12:30 USD Philadelphia Fed Manufacturing Survey

13:00 USD Housing Price Index (MoM)

23:30 JPY Japan National CPI

Fri Jun 22

00:00 EUR EcoFin Meeting (all day)

00:00 WTI OPEC meeting (all day)

07:30 EUR Germany Markit PMIs

08:00 EUR Eurozone Markit PMIs

12:30 CAD Canada Retail Sales (est 0.0% prev 0.6%)

12:30 CAD Canada CPI YoY (est 1.4% prev 1.5%)

13:45 USD US Markit Composite & Services PMIs

17:00 WTI Baker Hughes US Oil Rig Count

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