Week to May 1st

Lockdown starts to ease in some areas, EU hawks and Fed doves, Sell in May bites a day early

MY CALL THIS WEEK : SELL GBPAUD

The week opened with news that many states, even New York, plan to re-open for business. NY Governor Cuomo is well-trusted in his plans. Earnings continued to be fair to moderate, and another remdesivir proved positive in the treatment of COVID-10. However, concern about elevated values, and another 3.8m initial jobless claims on Thursday, 300k more than estimate, caused a sharp collapse on Thursday, which continued Friday after President Trump started to blame China for the virus, and threatened new sanctions. Coupled with poor (AMZN) or absent (AAPL) forward guidance, indices which were 4% up ended flat for the week. Nevertheless indices booked their best calendar month since 1987.

The dollar fell all week in anticipation of and then reaction to Fed dovishness (additional measures) on Wednesday, followed by ECB hawkishness (no new QE) on Thursday. Haven assets were pulled both ways, and ended fairly flat, with Gold posting its first inside week since the COVID-19 market shock.

Next week sees some shifting in sentiment indicators. On the one hand, we do seem to have passed COVID peak (and even if there is a second wave, it won’t be immediate), and earnings are mostly done, but the mounting macro bad news crescendoes with Friday’s NFP, reflecting a full month of lockdown, and the worst estimate (2.1M) in history, way beyond the bottom of 2008. Add to this the “Sell in May” maxim and it is difficult to see anything good.

For the third week, we offer a table of major earnings estimates against current prices. The last column effectively shows the move in P/E ratio since the last ATH for that stock. As you can see, there is a distinct return to the trend where tech companies are more highly valued than other sectors, as you might expect given that anything to do with the internet has thrived through the lockdown. This is the final table in this series, as the bulk of major earnings are now released.

Mon Apr 27

Signs that several states, including New York are planning reopening of some parts of their economy gave markets a boost today, which were all up. The dollar continued its Friday decline, as traders were concerned about further Fed looseness, and were still worried about Oil, which fell sharply, although not as sharply as the USO proxy ETF, which dumped all its June futures and closed nearly 15% down on the day. Gold and bonds were both down in line with equities.

Tuesday April 28

Markets rallied in Europe today continuing yesterday’s trend, but then pulled back sharply on the US cash open, closing the futures gap, with tech fading most, possibly in anticipation of poor FANG results. The dollar followed a similar pattern, although the fall was sharper and all currencies were up against the greenback. The yen was up on additional BoJ stimulus, as were bonds, although Gold fell for a second day. Oil futures were flat, although the USO ETF was down again.

Wednesday April 29

The dollar was down again today on the GDP miss (-4.8% vs -4.0%) and a dovish Fed report, with further easing on offer, with a particular strong showing from commodity currencies AUD and CAD, and Gold was also up slightly. Another positive report on remdesivir helps to boost stocks, and a less than expected drop in GOOGL earnings the night before have indices their best day of the week, and GILDs own gain of 5.7% helped NDX to post a 3.5% gain on the day. Oil was up in line, and bonds were down.

Thursday April 30

The main event today was the ECB rate set meeting. Rates were unchanged, but the relatively hawkish outcome, with no further QE saw EUR soar with a consequent collapse of DAX. The effect spread with a similar rally in GBP and fade in FTSE. Some of this was of course also a further move out of USD following the previous night’s Fed. Also at the same time was yet another terrible Initial Jobless Claims figure, 3.8M (versus 3.5M estimated).

Equities had rallied on the Fed stimulus overnight, so the sharp fall meant a relatively modest red day in US equities and NDX, buoyed by index leader MSFT earnings the night before even managed a small gain. Oil was up in line (although not USO) and bonds were down. Gold was sharply down despite the other moves.

Another factor may have been end-of-month profit taking, as rotational funds change into defensives, ahead of the traditional change in sentiment at the end of April. Defensive ETFs XLV and XLP both outperformed SPX. Despite today’s move, SPX closed up 12.68% for the month, the best since 1987.

Friday May 1

Markets opened the new month after poor guidance from AMZN and none at all from AAPL. Also today the White House announced that China “will be held accountable” for coronavirus, and sanctions may be reintroduced. Sell in May certainly happened today, and stocks fell substantially, with markets down around 3%, despite the ISM Manufacturing PMI beat. Havens all responded as you would expect, with JPY, bonds and Gold up, and Oil, AUD and CAD down. Other currencies were mixed, with EUR adding to Thursday’s ramp whereas GBP retraced it.

WEEKLY PRICE MOVEMENT

The strongest index was DAX, although this is partly to do with its closure on Friday. Continuing Oil problems made CAD the weakest currency. As EUR was the strongest, buying EURCAD would have yielded 3.63%. Cryptos surged unlike FANGs whose variability reflected earnings.

My call to sell NZDJPY failed, the pair was up 0.21%. Thirteen weeks, five wins, and a running total of +3.31%. This week, I am selling GBPAUD.

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. Recoveries in line were seen in most FANGs, but not NFLX, which has not really fallen like the others.

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

• Lockdowns may be selectively eased
• Major earnings season pauses
• Worst NFP estimate ever
• UK and Australia rate decisions

Monday May 4

Focus now is on the reopening of the economy, which it increasingly seems will not be uniform. Today’s news is fairly light. Markets are closed in China for Labor Day

01:00 AUD Aus TD Securities Inflation

07:55 EUR Germany Markit Manufacturing PMI(Apr)

14:00 USD US Factory Orders (MoM)(Mar)

Tuesday May 5

The ISM Non-Manufacturing PMI is the first since the crisis, and the estimate is for a record low figure. Disney reports after the bell. Markets are closed in Japan and South Korea.

04:30 AUD RBA Interest Rate Decision (e0.25% hold)

08:30 GBP UK Markit Services PMI (Apr)

09:00 EUR EC Economic Growth Forecasts (time approx)

12:30 USD US Trade Balance(Mar)

12:30 CAD Canada Trade Balance

13:45 USD US Markit Services/Composite PMI(Apr)

14:00 USD US ISM Non-Manufacturing PMI (e32.0 p52.5)

14:30 NZD NZ GDT Milk Index (time approx)

22:45 NZD NZ Emp/UnEmp/AHE (UnEmp e4.2% p4.0%)

Wednesday May 6

There is talk of a new 20-year bond being issued today when the Treasury announces its quarterly funding requirements. Also the ADP estimate at minus 2 million is unprecedented. Tech companies SQ SHOP and PYPL report after the bell. There are rate decisions in Poland and Brazil.

01:30 AUD Australia Retail Sales (MoM)(Mar)

01:45 CNY China Caixin Services PMI(Apr)

06:00 EUR Germany Factory Orders s.a. (MoM)(Mar)

07:55 EUR Germany Markit PMI Composite(Apr)

08:00 EUR Eurozone Markit PMI Composite(Apr)

09:00 EUR Eurozone Retail Sales (YoY)(Mar)

12:15 USD US ADP Employment Change(Apr) (e-13.0m p-27k)

14:30 WTI EIA Crude Oil Stocks Change(May 1)

23:50 JPY BoJ MPC Minutes

Thursday May 7

At a new early time, we get the first UK rate decision under new Governor Andrew Bailey. The key US stat today is the Initial Jobless Claims. There are also rate decisions in Norway and Czechia.

01:30 AUD Imports/Exports/TB

02:30 China Imports/Exports/TB (time approx)

03:00 NZD RBNZ Inflation Expectations (QoQ)(Q2)

06:00 GBP BoE Rate Decision/Statement (e0.1% hold)

06:00 EUR Germany Industrial Production (e-7.0%, p0.3%)

06:30 GBP BoE's Governor Bailey speech

12:30 USD US Initial Jobless Claims(May 1) (p3839k)

15:00 CAD Canada Ivey PMI

Friday May 8

The estimate for NFP is the largest in history, and reflects a full month of lockdown. Markets are closed in the UK and France for the 75th anniversary of VE Day. Germany is not closed.

01:30 AUD RBA Monetary Policy Statement

06:00 EUR Germany Imports/Exports/TB

12:30 USD US NFP/AHE/Unemp (NFP e-2M p-701k, UE e14% p4.4%)

12:30 CAD Canada NFP/AHE/Unemp (NFP e-350k p-1M, UE e7.2% p7.8%)

Week to Feb 21st

Four-day OpEx week, CV fears still present, Gold rises all week

MY CALL FOR THIS WEEK : SELL CADJPY

This Friday, 28 Feb, I will be speaking at 9.30am at the London Trader Show. You can get a free ticket by using the coupon code MATRIXTRADE.

In a shortened OpEx week, in which Apple issued a profit warning because of coronavirus, markets swung wildly on ‘good’ and ‘bad’ reports on the epidemic, rather reminiscent of phases of the trade war. The overall mood was clearly risk-off as haven assets rose all week, and even mighty USD capitulated on Friday, although this was largely due to strong PMIs lifting the euro from its support base.

Next week is expected to be more of the same, with little important news except GDP prints, as February and earnings season draws to a close.

Mon Feb 17
US markets were closed today. US futures and European indices were fairly flat, as often happens on US holidays. Also flat were Gold, Oil and Bond futures. DXY rose slightly, mainly due to a fall in ever-volatile GBP, other currencies also being flat. Japan’s GDP miss saw a small fall in JPY after a big miss in the preliminary Q4 GDP print.

Tuesday February 18

Indices were down today on a profit warning from AAPL lowering their guidance because of coronavirus (CV). Gold was up in line. It was however, a clean sweep day for USD, which rose against all currencies. The big misses in the German Economic Sentiment readings at 10:00 caused sharp drop in EUR. GBP rallied on a drop in the Claimant Count at 0930 and a positive tweet from the new Chancellor of the Exchequer (Finance Minister) shortly afterwards. JPY fell on a big miss on Machinery orders. Oil and bonds were flat on the day.

Wednesday February 19

China’s National Health Commission reported a slowdown in CV cases today, and that was enough to push markets back up, with the FOMC minutes taking SPX, NDX and DAX to new all-time highs, with AAPL adding 1.4% to recover Tuesday’s losses. The dollar was up overall, but like Monday, large due to a GBP fade. EUR, CAD and Gold were up, other currencies down. JPY was sharply down, over 1.5 yen on the day, to make a 9-month high. Oil and yields were up in line with the equity move.

Thursday February 20

More CV negative sentiment returned today, with markets falling hard on the US open, pulling back from the all-time highs. Gold was up in line. However, it was a strong day for the dollar following the Fed minutes, with all currencies down. Bonds were up in line with the equity move, however Oil continued to rise.

Friday February 21

The negative CV mood returned continued today, and this time the dollar finally capitulated. Indices were down across the board, and gold, bonds and yen were up in line. The dollar receded against all currencies, and after the German PMI Manufacturing beat, the euro surged notably, reversing four days of decline to close positively for the week. Oil bucked the trend again, and fell on the day.

WEEKLY PRICE MOVEMENT

The top forex trade this week was to buy CADJPY, which was up 1.83%, our pick EURNZD did well up 1.56%, so we still have a 100% success rate, and 4.16% up after picking pairs for three weeks. This week’s call is to sell the week’s strongest mover CADJPY. I try to pick crosses as they are not affected by dollar moves. All indices fell this week, with risky NDX falling the most. Cryptos also fell after several good weeks, as did FANGs with AAPL faring the worst after their profit warning.

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)

• Quiet news week
• German, Canadian and US GDP
• HD closes DJIA earnings
• End of the month

Monday February 24

Little news today, as we start the final week of February. It will be interesting to see if the German business confidence matches last weeks PMIs. Fed Mester (hawk, voter) speaks today. There is a rate decision in Israel. Markets are closed today and tomorrow in Brazil for Carnival.

21:45 NZD NZ Retail Sales (Sun)

02:30 CNY China Retail Sales/Ind Production (time approx.)

09:00 EUR Germany IFO Business Climate/Expectations

13:30 USD Chicago Fed National Activity Index

Tuesday February 25

The most important news today is the German GDP. The retail phase of earnings season continues with HD and M reporting before the bell. There is an important EU/UK meeting to discuss the Brexit framework. There is a rate decision in Hungary.

07:00 EUR Germany 19Q4 final GDP (QoQ e0.0% p0.0%)

14:00 USD US Housing/Home Price Indices

15:00 USD US Consumer Confidence

17:45 CAD BoC Lane speech

20:00 USD Fed Clarida speech

Wednesday February 26

Another quiet day with little news. ECB President Lagarde speaks in Germany.

15:00 USD US New Home Sales

21:45 NZD NZ Imports/Exports/TB

Thursday February 27

Clearly the biggest day of the week for economic releases, the most important being the Durable Goods and inelegantly named Non-Defence Capital Goods ex Aircraft released at the same time as the second preliminary reading of US GDP at 1330. Fed Evans speaks at 1630. There is a rate decision in Hungary.

01:30 JPY BoJ Kataoka speech

10:00 EUR Eurozone Business Climate (Feb)

13:30 USD US Durable/Capital Goods (Cap Goods MoM e-0.1% p-0.8%)

13:30 USD US 19Q4 Prelim GDP (YoY e2.1% p2.1%)

13:30 USD US PCE QoQ

13:30 USD US Jobless Claims

13:30 CAD Canada Current Account (Q4)

15:00 USD US Pending Home Sales

21:45 NZD NZ Total Filled Jobs

23:30 JPY Tokyo CPI (Core YoY e0.6% p0.7%)

23:30 JPY Japan Jobs/Unemployment

23:50 JPY Retail Trade

Friday February 28

The last day of the week and month may bring additional rotation volatility. Fed Bullard (dovish, non-voter) speaks today. All eyes will be on the polling for Super Tuesday on Mar 3rd.

08:55 EUR Germany Unemployment Rate/Change

10:00 EUR ECB Weidmann speech

13:00 EUR Germany CPI (YoY e1.5% p1.6%)

13:30 USD US PCE MoM and YoY

13:30 CAD Canada 19Q4 GDP (QoQ e0.2% p1.3%)

14:45 USD Chicago PMI

15:00 USD Michigan CSI

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 Twitter, Facebook, Stocktwits, TradingView or Linkedin (all open in separate windows). Details of how I compile the report are here.

Week to Dec 20th

Phase 1 China Deal, Santa Rally begins, GBP fades election spike

Mon Dec 16

The Friday ‘Phase 1’ trade deal inevitably gave a boost to indices, with FTSE outperforming, to join the FTSE250 after the euphoria of GBP last week came off. In currencies it was a mixed picture. Despite the poor German and Eurozone PMIs, EUR still rose, as did CAD following Oil. Gold was slightly up, and bonds were down in line with the equity move.

Tuesday December 17

A much flatter day on equities saw a slight rise in the US and Japan, but FTSE and particularly DAX fading as UK election euphoria cooled. In currencies, DXY was up mainly because GBP largely gave up its post election gains, falling 1.13% in addition to Monday’s 0.48% drop. Otherwise it was mixed with haven trio Gold, JPY and bonds slightly up, as was EUR and CAD following Oil, which had a good day.

Wednesday December 18

DAX continued to fall today, on concerns about the fallout for Europe on an accelerated Brexit, promised by UK PM Johnson, although other indices managed very slight advances. FTSE itself was slightly up as GBP continued to fall for the same reason, as did EUR. Nevertheless commodity currencies followed Oil up and haven trio Gold, Bonds and JPY were down, showing the market was still seasonally bullish.

Thursday, December 19

A mixed picture today as different forces moved indices. The US indices were quiet in futures, and then all rallied to new all-time highs in the cash sessions. DAX fell 80pts to hit a bottom before picking up US momentum to close flat, and FTSE climbed gently but only really in response to a further fade in sterling. The dollar had a flat day overall, with EUR hardly moving, but a 40 pip recovery in JPY after a series of misses in US data balancing the GBP slide. Oil followed stocks, but CAD was flat, as were yields. Gold surprisingly rallied all day, following the data misses but not the equity positive momentum.

Friday, December 20

The last day before the Christmas week coincided with quadruple witching day (the day, week, month and significantly, the quarter which is the expiration of index futures contracts). US indices rose sharply when the session opened, following earlier spikes up in the NKY and DAX opens, helped by GDP figures at 1330 and the Michigan CSI beat at 1500. Only FTSE was muted, affected by a further decline in GBP on the UK government’s decision to leave the EU on 31 Dec 2020, whether any agreement is in place or not. DXY followed SPX in a clear up day, pushing Gold and all currencies except AUD down. Oil moved sharply down, but this was a function of OpEx backwardation, the February contract having been traded about 60c lower. Yields were flat on the day.

WEEKLY PRICE MOVEMENT

A complete reversal of last week’s sterling euphoria meant shorting GBPAUD would have been the best trade. The falling pound inevitably pushed FTSE to pole position on index performance. Although BTC was flat, ETH moved down sharply, and a creditable performance from FB was outshone by a double-digit advance in NFLX.

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)

Monday December 23

This is the Christmas week, the quietest week of the year. Only today are there any meaningful released. Australian markets are closed.

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

05:00 JPY Leading Economic Index (Oct)

13:30 USD US ND Capital Goods (MoM e-0.3% p1.1%)

13:30 USD Chicago Fed National Activity Index (Nov)

13:30 CAD Canada GDP MoM

15:00 USD New Home Sales (MoM)

23:50 JPY BoJ MPC Minutes

Tuesday December 24

Many markets are closed for a half-day including the US, and some, such as Germany, Sweden, Denmark and Portugal are closed all day. There are no important news releases.

Wednesday December 25

All major world markets except Japan are closed for Christmas Day.

Thursday December 26

Many markets, although not the US, are closed for Boxing Day. News is again light. The ‘core’ Santa Rally in US stocks is supposed to start today. There is a rate decision on EGP.

00:00 JPY BoJ's Governor Kuroda speech

13:30 USD Jobless Claims

23:30 JPY Tokyo CPI YoY (e0.6% p0.6%)

Friday December 27

Still light, with many traders taking the full week as holiday.

09:00 EUR Economic Bulletin

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 Twitter, Facebook, Stocktwits, TradingView or Linkedin (all open in separate windows). Details of how I compile the report are here.

Week to Aug 23rd

Trump tariff tweets, Muted FOMC Minutes, Sterling rally on Brexit hopes

Mon Aug 19

Today President Trump tweeted “we are doing very well” with the China trade talks, and there was a temporary reprieve for Huawei. This slight thaw kept markets up, and saw bond yields rise from last week’s lows. The 10-year was up 6.6bp. Equities and Oil carried on rising. The dollar was up evenly against all currencies, with CAD notably lower. Gold was down in line with the dollar, and bonds down in line with the equity move.

Tuesday August 20

As Italy’s government teetered on the brink of collapse, indices pulled back today after a three-day winning streak. All markets were down, particularly of course Italy with MIB down 1.1%. The FTSE fade was also notable as GBP joined other currencies rallying against USD. Gold and bonds rose for the same reason as yesterday as DXY gave up 0.21%. Oil was flat on the day.

Wednesday August 21

Markets recovered again today on strong earnings from retailers TGT and LOW, the former rising 20%. Indices were all up. USD was generally up (DXY +0.11%), except against CAD which outperformed after the Canadian inflation beat at 1230. Gold and bonds again moved in line, and Oil faded after a spike up following the EIA beat at 1430. The FOMC minutes were as generally expected and did not move the market.

Thursday August 22

Another directionless day as markets awaited Jackson Hole. SPX and NDX were slightly down with DJIA slightly up due to a rally in BA. DAX and EUR rallied briefly following the important German Manufacturing PMI beat at 0800, but ended the day lower. Today DXY shedded 0.05% but in reality was up generally against currencies and Gold. The reason was a strong rally in GBP up over 1% on Boris Johnson meeting European leaders and hopes of a Brexit deal.

Friday August 23

Today should have been all about Jackson Hole but it wasn’t. Fed Chair Powell’s speech was overshadowed by a curiously timed 4-tweet tirade by President Trump against China, ‘ordering’ US companies to repatriate their manufacturing jobs, and saying further tariffs would be announced later. The effect was brutal. SPX dropped 2.6% in a couple of hours, with similar moves seen around the world. 

Normally, bad tariff news has no effect or even helps USD. Not today. DXY fell 0.96%, it’s largest one-day move since Jan 12, 2018 - a day of index ATHs and a three-year dollar low. This ‘equities and currency’ panic, where both fall sharply together (like FTSE and GBP on Brexit day), is always followed by a swift recovery in one or the other sooner or later.

Obviously Gold and JPY soared, but so did every other currency, as Oil and yields fell sharply with equities. Immediately after the bell the President announced a 10% increase in certain China tariffs, causing even further fading in the small Friday AH market.

WEEKLY PRICE MOVEMENT

In this risk-off week, NDX fared worst amongst indices. EURCAD was the strongest pair, up 1.75%. FANGs are more volatile than NDX as a whole, and fared worse, with NFLX the biggest loser. A very flat week from crypto, we have rarely seen BTC move less than 1% in a week.

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)

• Trade war hots up
• Germany, Japan, Eurozone inflation
• US and Canada GDP
• End of calendar month

Monday August 26

Markets will be reacting the the G7 conference, and of course President Trump’s late Friday announcements on tariffs, and his flip-flop position on this over the weekend. The Durable/Capital Goods print moved markets notably last month, maybe it will do so again. Markets are closed in the UK, so expect reduced forex volatility as London is the centre for forex.

22:45 NZD Imports/Exports/TB (Sunday)

05:00 JPY Japan Leading Economic Index

08:00 EUR Germany IFO Business Sentiment

12:30 USD Chicago Fed National Activity Index 

12:30 USD Durable/ND Capital Goods (NDC e0.0% p1.5%)

23:50 JPY Japan Large Retailers' Sales

Tuesday August 27

With no particular news, markets are still likely to be dominated by the trade war. Note there are also US-Japan and US-EU trade talks this week. There is a rate decision on HUF, hold expected.

06:00 EUR Germany 19Q2 Final GDP

13:00 USD US Home/Housing Price Indices

14:00 USD US Consumer Confidence

Wednesday August 28

Another quiet day with only Germany providing planned news. There is a rate decision on ILS, hold expected.

06:00 EUR Germany Gfk Consumer Confidence Survey

09:40 EUR DE10Y Bond Auction

Thursday August 29

The heaviest news day of the week with US GDP and PCE dominating. Remember PCE is the Fed’s preferred gauge of inflation.

07:55 EUR Germany Unemployment Rate/Change

09:00 EUR Eurozone Business Climate

12:00 EUR Germany Preliminary CPI (YoY e1.3% p1.1%)

12:30 CAD Canada Current Account

12:30 USD US Jobless Claims

12:30 USD US GDP 19Q2 Prelim (Annualised e2.0% p2.1%)

12:30 USD US PCE QoQ

14:00 USD US Pending Home Sales (MoM)

22:45 NZD NZ Building Permits s.a. (MoM)

23:01 GBP UK GfK Consumer Confidence

23:30 JPY Tokyo CPI (Core YoY e0.8% p0.9%)

23:30 JPY Japan Jobs/Unemployment

23:50 JPY Japan Retail Trade

Friday August 30

The final day of the week and calendar month may bring additional volatility in equities and also in USDCAD after the GDP print.

06:00 EUR Germany Retail Sales (MoM)

09:00 EUR Eurozone Unemployment Rate

09:00 EUR Eurozone CPI (YoY e1.1% p1.0%)

12:30 USD US Personal Spending

12:30 USD US PCE MoM/YoY

12:30 CAD Canada 19Q2 Final GDP (QoQ e0.7% p0.4%)

13:45 USD Chicago PMI

14:00 USD Michigan CSI

his 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 Twitter, Facebook, Stocktwits, TradingView or Linkedin (all open in separate windows). Details of how I compile the report are here.

Week to May 3rd

Fed ‘no rate cut’, Strong NFP but weak AHE, AAPL up GOOGL down on earnings

Mon Apr 29

Markets were subdued today, although SPX made a new intraday high before closing at 2943. The best US Consumer Spending print (1230) since August 2009 was subdued by a miss on PCE, the inflation metric used by the Fed at the same time. DAX and FTSE were also slightly up but NKY futures (Japan was closed all week) were down. USD was flat (DXY -0.05%) with slight advances in most currencies being matched by a pullback in JPY and Gold. Oil and yields were slightly up. GOOGL missed on earnings after the bell and the stock dropped 5%.

Tuesday April 30

After a sharp pullback at the open, SPX rallied into the close to make a new all-time closing high of 2945.83. NDX was less fortunate as the GOOGL loss extended to 7.5% trimming 0.7% from the index. Similar patterns were seen on other markets, although FTSE only managed to end flat due to GBP strength. The AAPL beat at 2030 kept SPX futures rallying.

There was a definitely trend down in the dollar (DXY -0.20%), as EUR rose firmly on a string of strong data from Europe, German (0755) and Eurozone (0900) unemployment, European GDP (0900) and German inflation (1200) all beat estimates, whereas the US Home Price Indices (1300) and Chicago PMI (1345) missed. Other currencies (and Gold) advanced, especially GBP breaking back through $1.30 for the first time in three weeks. Only AUD was weighed by the China PMI miss (0100) and was flat on the day. Oil advanced slightly, and yields were flat after an earlier rally.

Wednesday May 01

The new month opened with PMI misses at 1345 and 1400, and markets began to fade. The Fed at 1900 did not mention rate cuts in the minutes and would not discuss them at the presser. Together with the PMIs, “Sell in May” sentiment, and of course all-time high resistance, SPX fell 0.8%, its worst day since March 22. Other world markets behaved similarly, although notably they had started falling earlier. The ADP jobs beat had little effect.

USD of course spiked up on the dismissal of cuts although it had already been falling all day. DXY ended up 0.1% up. GBP and JPY ended flat, but other currencies were slightly down. Yields were also flat, the Fed spike recovering earlier losses, as was Oil, after a wobble at the EIA miss at 1430.

Thursday May 02

We often remind you that the Fed effect continues into the next day, and so it was today, with DXY adding 0.22%, yields advancing again and SPX falling further. The German Manufacturing PMI at 0755 missed and slipped further to a new low of 44.4, although this was countered by the weaker EUR and DAX ended up on the day. FTSE and NKY rallied by were both dragged down by SPX in the US session.

All currencies and Gold moved down against the ’no rate cut’ dollar, although GBP’s move was more muted after a hawkish BoE. Oil gave up 3.4% in line with the two-day equity pullback.

Friday May 03

After two days of pullback, the blowout NFP at 1330 (263k vs 190k) changed the mood completely, and SPX added 1%, and risk-on NDX 1.6%. World equities joined in the party. The AHE print missed, and this is bad for USD (workers need wage inflation to afford higher interest rates), as did the ISM Services PMI at 1400. USD declined sharply, with DXY shedding 0.36%, and all currencies and Gold up, with a particularly strong showing from GBP, with cable adding 175 pips from 1100 onwards. Yields were down in line with the dollar, and Oil recovered some of Thursday’s collapse.

WEEKLY PRICE MOVEMENT

DAX was the winner this week, as US indices reacted to the Fed, and GBPJPY up 2.41% was the standout forex pair. Crypto rallied again, and the big FANG moves were on earnings, AAPL up and GOOGL down substantially.

Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on UUP. 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)

• Rate decisions in AUD and NZD
• Trade Talks resume
• US and China Trade Balances and inflation
• Earnings season largely over

Monday May 06

Markets are closed in the UK, Ireland and Japan, and there is no US news, and earnings season is largely over. Expect a quiet Monday, with the China PMI setting the tone.

01:45 CNY China Caixin Services PMI

08:00 EUR Eurozone Markit PMI Composite

09:00 EUR Eurozone Retail Sales (YoY)

13:30 USD Fed Harker speech

17:45 CAD BoC Governor Poloz speech

22:30 AUD Aus AiG Performance of Construction Index

Tuesday May 07

After earlier Australian releases, the RBA official consensus is a hold, but some commentators are predicting a 25bp cut. Uncertainty predicts a material move in AUD. Another day with no US (or European) news of note.

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

01:30 AUD Aus Imports/Exports/TB

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

14:00 NZD NZ GDT Milk Index

14:00 CAD Canada Ivey PMIs

20:30 WTI API Oil Stock

23:01 GBP UK BRC Retail Sales

23:50 JPY BoJ MPC Minutes

Le jour de gloire est arrivé

Wednesday May 08

Amazingly, a third day without US major releases, so we turn to Asia. A 25bp cut in the NZD rate is priced in at 70%, so like Australia, uncertain enough to cause a move either way. Trade talks are back on the agenda, with Chinese vice-PM Liu visiting Washington. There are rate decisions on BRL (6.5% hold expected), and THB. South Africa holds a general election. Markets are closed in France for VE Day, oddly not celebrated in the UK. The only significant earnings release of the week is DIS, after the close. Guidance should include their new Disney Plus streaming service projections.

02:00 CNY Imports/Exports/TB

02:00 NZD RBNZ Rate Decision/Statement (e 1.50% p 1.75%)

03:00 NZD RBNZ Press Conference

06:00 EUR Germany Industrial Production

14:30 WTI EIA Oil Stock

20:05 DIS Earnings

Thursday May 09

The third major print from China this week is inflation, and may set the initial tone in the absence of European releases, although the US Trade Balance will be watched closely, being topical. There are rate decisions on NOK, CLP and PHP. Russian markets are closed for Victory Day.

01:30 CNY China CPI (YoY e 2.5% p 2.3%)

12:30 USD US PPI

12:30 USD US TB

12:30 USD US Jobless Claims

12:30 CAD Canada Imports/Export/TB

13:45 USD Fed Bostic speech

21:30 NZD NZ Business NZ PMI

22:45 NZD NZ Retail Sales

23:30 JPY Japan Overall Household Spending (YoY)

Friday May 10

Today is the most important news day this week, with the key US CPI release, estimated to improve despite last week’s PCE miss. Canada’s NFP comes a week later than the US this month. It would normally be a chance to see CAD reaction in isolation, but the US CPI print is simultaneous, so USDCAD could go either way. Plenty of Fed speakers today, with Bostic, Evans, Brainard and last but not least Chair Powell on the roster.

01:30 AUD Aus Home Loans

01:30 AUD RBA MPC Statement

06:00 EUR Germany TB

08:30 GBP UK 19Q1 Prelim GDP (QoQ e 0.2% p 0.2%)

08:30 GBP UK Manuf/Industrial Production

12:30 USD US CPI (Core YoY e 2.1% p 2.0%)

12:30 CAD Canada NFP/UnEmp/AHE/Participation (NFP est 1k p -7.2k)

13:05 USD Fed Bostic speech

17:00 WTI Baker Hughes Rig Count

18:00 USD US Monthly Budget Statement

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 Twitter, Facebook, Stocktwits, TradingView or Linkedin (all open in separate windows). Details of how I compile the report are here

Week to Mar 29th

Further Brexit defeats, NZD collapse, Mueller exonerates Trump (for now)

Mon Mar 25

After last Friday’s collapse following the 10-year/3-month bond inversion, markets were subdued today, with SPX flat, although non-US markets showed some recovery. USD was similarly flat, with slight moves down in GBP being matched by slight increases elsewhere.  Oil, Gold and bonds (inverse to yields) were up on the day, with the 10-year yield down 4.4bp. Apple’s product event underwhelmed the market, and the stock dropped 1.5%.

Tuesday March 26

All equity indices were up today as market digested the Mueller report exonerating, which was announced at weekend, but probably took a day to digest. Sometimes they do this on a ‘no news’ day. The dollar was also up as the drop in yields halted. DXY added 0.28% but the picture was mixed. The usual risk-on profile was seen. Gold and JPY were down, but AUD and CAD were up. EUR fell after the Germany Gfk confidence miss at 0700, whereas GBP was slightly up as some Brexiteers softened on the Theresa May deal, not enough however for the vote, which was cancelled. Oil had another good day.

Wednesday March 27

The day started with the RBNZ joining the dovish CB chorus. The kiwi fell sharply, finishing nearly 2% down on the day. Also Trump potential Fed nominee Stephen Moore called for a policy reversal and rate cut. Yields naturally fell again, but surprisingly USD held its own with DXY adding 0.17%, in a mixed day where JPY advanced as rates fell, as did GBP, but others declined. Gold and Oil were down in line with the stronger dollar. The dovishness caused an early rally in SPX futures, but this sold off hard at the open despite the trade balance beat, and did not fully recovery. DAX and FTSE were choppy but ended roughly flat helped by weaker currencies. NKY fell all day. An odd day, where markets behaved counter-intuitively.

Thursday March 28

Markets recovered on Thursday as the US QoQ GDP and PCE beats at 1230 (although the YoY figure missed). Housing and Jobless Claims data was mixed. All indices were up on the day. DXY was up again, only 0.17% but all currencies were down, GBP sharply (over 1%) as British MPs voted down a series of alternatives to the Prime Minister’s deal. Gold was notably down 1.5%. Oil dipped during the session on growth expectations, but ended the day flat.

Friday March 29

A final rally on Friday, fuelled by China trade talks optimism, and another upturn in the Michigan Sentiment Index gave the indices their best quarterly increase since 2010, and the best SPX Q1 since 1998. A flat DXY belied substantial currency movement, in particular an immediate 0.68% move up in CAD after the GDP MoM beat at 1230 (0.3% vs 0.0% best), and a wildly choppy GBP after the third Brexit deal vote was lost, down 1.16% on the day. Yields carried on upwards, and Oil rallied in line with equities.

WEEKLY PRICE MOVEMENT

After last week’s work performance, DAX was the best index this week. Four weeks in a row now for GBPJPY as the biggest mover, like last week a sell. Cryptos had another quiet week.

We have problems with Google Finance data this week, so no table

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

• RBA Rate Decision
• More China trade talks
• Lots of Manufacturing data
• Non-farm Payrolls
• 
  

Monday April 01

This week Chinese Premier Liu travels to the US to continue trade talks. One of the busiest Mondays in months has a day packed with Manufacturing PMIs. China’s is very important, as it’s on the cusp on expansion/contraction, and may cause even more of an effect than the US ISM figure later in the day. Note that the UK and Europe are now on DST, but we stick with GMT in our listings. Also of course we start a new month and quarter.

01:00 CNY China Mfr & Non-Mfr PMIs (Sunday)

23:50 JPY Japan Tankan Large Mfr Index/Outlook (Sunday)

00:00 AUD HIA New Home Sales (MoM)

01:45 CNY Caixin Manufacturing PMI Mar (est 49.9 prev 49.9)

07:55 EUR Germany Markit Manufacturing PMI

08:30 GBP UK Markit Manufacturing PMI

09:00 EUR Eurozone CPI (Core est 1%)

12:30 USD US Retail Sales (Feb Control Group best 0.4% prev 1.1%)

13:30 CAD Canada Markit Manufacturing PMI

13:45 USD US Markit Manufacturing PMI

14:00 USD US ISM Manufacturing PMI (est 54.4 prev 54.2)

21:00 NZD NZIER Business Confidence (QoQ)

Tuesday April 02

The big story is the RBA statement, where traders will be looking for a repeat the RBNZ dovish line last week. Fed Bostic (dovish, non-voter) speaks today. Argentina's markets are closed today. There is a rate decision on RON (2.5% hold expected)

00:30 AUD Aus Building Permits (MoM)

03:30 AUD RBA Rate Decision/Statement (est 1.5% hold)

06:30 CHF Switzerland CPI

09:00 EUR Eurozone Unemployment Rate

09:30 GBP UK Markit Construction PMI

12:30 USD US Non-defense Capital Goods (est 0.3% prev 0.8%)

14:00 NZD NZ GDT Milk Index

20:30 WTI API Oil Stock

Wednesday April 03

Unusually quiet for a Wednesday on the data front. Watch for the ADP print, an indicator for Friday’s NFP. Fed Mester (hawk, 2019 voter) speaks today. There is a rate decision on PLN (1.5% hold expected)

00:30 AUD Aus Retail Sales s.a. (MoM)

00:30 AUD Aus Imports/Exports/TB

01:45 CNY China Caixin Services PMI

08:00 EUR Eurozone Markit PMI Composite

08:30 GBP Markit Services PMI

09:00 EUR Eurozone Retail Sales (YoY)

12:15 USD US ADP Employment Change

13:45 USD US Markit Services/Composite PMI

14:00 USD US ISM Non-Manufacturing PMI (est 58.7 prev 59.7)

14:30 WTI EIA Oil Stock

Thursday April 04

Another slow data day. Fed Bostic is on again today. There is a rate decision on INR (6.25% hold expected)

06:00 EUR Germany Factory Orders s.a. (MoM)

12:30 USD Jobless Claims

14:00 CAD Canada Ivey PMI

21:30 AUD Aus AiG Performance of Construction Index

23:30 JPY Japan Overall Household Spending (YoY)

Friday April 05

US and Canadian NFPs as always almost guarantee USDCAD volatility. After last month’s shocker, traders will be looking to see if there is any further shutdown effect on the March report. It's the end of the UK income tax year today. Hong Kong and China are closed for Ching Ming.

05:00 JPY Japan Leading Economic Index

06:00 EUR Eurozone Industrial Production s.a. (MoM)

12:30 USD US NFP/AHE/Unemp/Participation (est 175k prev 20k)

12:30 CAD Canada NFP/AHE/Unemp/Participation (prev 55.9k)

17:00 WTI Baker Hughes Rig Count

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 Twitter, Facebook, Stocktwits or Linkedin (all open in separate windows). Details of how I compile the report are here