Week to Jan 21st

NDX collapse on rate hike fears, Oil makes 6-year high

MY CALL THIS WEEK : SELL NZDUSD

THIS WEEK

US indices were battered this week, over continuing concerns about tightening, exacerbated by the GS miss and other lukewarm earnings into OpEx day. The NFLX miss on new subscribers gave the stock its worst week in a decade, down 25%, which in turn pushed NDX down 7.5%, its worst week since the March 20 COVID crash. Heavily weighted AMZN fell 12%, its worst week since December 2018. The decline was considerably less in Europe, with FTSE briefly touching a new 2022 high before joining the trend. The dollar had an inside week, whereas yields briefly touched a two-year high before retreating, and German yields moved above 0% for the first time since early 2019. Gold rallied to a 9-week high in line with the market mood, and Oil briefly made a new 6-year high before pulling back.


WEEKLY PRICE MOVEMENT

The biggest index mover was NDX, down 7.51%. The top forex mover was NZDJPY down 1.81%. Bitcoin and Ethereum also fell heavily, and FANG fell even more than NDX. Red all over the place.

Last week's NZDCAD long position lost 0.26%, which when added to last week’s 0.33%, means I am ahead 0.07%, with 1/2 (50%) wins. This week I'll try selling NZDUSD, expecting a Fed dollar boost.

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

The final week of January sees the Fed rate decision, where the bar for hawkishness is high. It is also a key week of earnings season with nearly 30% of NDX reporting (AAPL, MSFT, TSLA, INTC) as well as DJI heavyweights IBM, JNJ and MCD. Also there is a Canadian rate decision, US final A4 GDP ad Australian inflation. A packed week for a depressed market to process.

CALENDAR  (all times are GMT)

Monday January 24
22:00 Aus Commonwealth Bank PMIs (Sunday)
08:30 Germany Markit PMIs (Mfr e57.0 p57.4)
09:00 Eurozone Markit PMIs (Comp e52.6 p53.3)
09:30 UK Markit Mfr & Svcs PMIs
13:30 Chicago Fed National Activity Index
14:45 US Markit PMIs

Tuesday January 25
00:30 Australia CPI (Trimmed Mean QoQ e0.7% p0.7%)
09:00 Germany IFO Sentiment Indicators
14:00 US Housing/Home Price Indices
15:00 US Consumer Confidence
21:00 MSFT ER

Wednesday January 26
10:30 Germany 10Y Bond Auction (time approx.)
15:00 BoC Rate Decision/Statement (e0.25% hold)
16:15 BoC Press Conference
19:00 Fed Rate Decision/Statement (e0.25% hold)
19:30 FOMC Press Conference
21:00 TSLA ER

Thursday January 27
07:00 Germany Gfk Consumer Confidence
13:30 US PCE (QoQ)
13:30 US Durable Goods (e-0.5% p2.6%)
13:30 US Q4 GDP (e5.6% p2.3%)
13:30 US Jobless Claims
15:00 US Pending Home Sales (MoM)(Dec)
21:30 AAPL ER
23:30 Tokyo CPI

Friday January 28
09:00 Germany Q4 GDP (QoQ p1.7%)
10:00 Eurozone Business Climate/Consumer Confidence
13:30 US PCE (MoM and YoY)
15:00 Michigan CSI

Week to Jul 17th

Earnings season opens, Shift out of tech, Gently declining dollar

MY CALL THIS WEEK : SELL GBPCAD

This week saw positive news, both on the vaccine front, and in comments from Fed Governor Brainard (admittedly a known dove) suggest even further stimulus. However, the COVID cases keep rising, and the net result was a fairly flat week with SPX attempting and failing to break 3235 twice, and NDX down. The pullback in the tech/industrial ratio is the most noticeable feature of this week’s market, and it was accelerated by NFLX missing on earnings, against beats by JPM, C and GS, the latter very strongly. The ratio has recently overshot the 2000 bubble level, had to happen at some point, although there is no reason it cannot go higher, as the NDX/SPX PE differential is nowhere near 2000 levels, indeed if anything it has fallen.

The ECB said nothing news, and the dollar chart was extremely similar to last week, slow and slight classic waves to the downside, and bonds and Gold were in consolidation at their current elevated level. JPY also consolidated and posted a flat week, as did Oil.

Next week sees more of earnings season, with the main event being MSFT and TSLA reporting late on Wednesday. The fact that Canadian inflation and a PMI batch on Friday are the main events tells you how light the week is. Earnings and COVID news should therefore set the tone.

Mon Jul 13

After rallying earlier in the day on vaccine hopes from BNTX (up 20%) and DJIA stock PFE, markets sold off sharply in the US afternoon session, possibly on news of a new closedown in California, but also a rejection of the previous post-COVID high of 3235 from Jun 8th. Oil fell in line. Gold and bonds were up, but not JPY which was down, despite a general flat dollar (the JPY move was matched by a GBP fade).

Tuesday July 14

Indices rebounded with DJIA outperforming NDX, as JPM and C beat estimates. But banks themselves were not in favour, it was the archetypal industrial CAT that was the best mega-cap performer, up 4.83%. The dollar fell some more, down across the board, and yields and Oil were up in line, although Gold was up slightly.

Wednesday July 15

Markets were up again today after a strong earnings beat by GS, more positive vaccine news from MRNA (up 7% and 16% at one point), There was a call by Fed Brainard for more stimulus, although Lael Brainard is a known dove, this was still a positive mover. Once again there was strong divergence against tech, with NDX only up 0.11%. Oil was up in line. Gold and Bonds were flat, and the dollar once again fell across the board.

Thursday July 16

We had a reversal today after a sharp pullback in the China 300 index (4.75% its worst day since February), and a  miss in the Initial Jobless Claims figure, but also linked to the 3235 post-COVID high, which was reached on Jun 8, and again yesterday. Despite earnings beats from JNJ and BAC, SPX was down 0.34%, and for a fourth day NDX underperformed, down 0.70%. NFLX missed on earnings after the bell, was was down 10% in after-hours trading, although the stock is not heavily weighted on NDX, so the index move was modest.

And for a fourth day, yields and Oil were up in line, and Gold wasn’t! The dollar also bounced back up (evenly across all currencies), meaning for a fourth day, the yen did not move inversely to indices. This is interesting in a rare week where industrials outperform tech, perhaps those industrials can be seen as the safe haven.

Friday July 17

In the absence of significant earnings releases, the final day of the week was fairly flat, but again with SPX outperforming NDX. Both indices failed to advance even 1%, and DJIA posted a red candle. Haven assets were mixed, with JPY and Gold up, but bonds slipping slightly. The dollar gave up Thursday’s gains, and Oil was slightly down. A directionless day to end a fairly directionless week, as seen in the total flat Fed Funds Rate chart. The only major trend was the shift away from tech.

WEEKLY PRICE MOVEMENT

Europe outperformed this week, with DAX the strongest index. The top forex mover was EURGBP up 1.68%. Cryptos continued to stay flat, BTC now only moves like any currency, and FANGS noticeably underperformed, even more so than NDX as a whole. with NFLX and AMZN (the two with sky-high P/E ratios) hit the hardest.

A better week for my forex call. I managed to pick the best mover EURGBP, adding the 1.68% to my running total gives gains of 7.16% (24wks 11 wins). This week, the picture is not much clearer, but CAD looks the strongest and GBP the weakest, so I will sell GBPCAD.

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)

• Second week of earnings
• Emphasis on tech
• Canada inflation
• PMIs on Friday

Monday July 20

As is often the case, news is light today. Traditional DJIA bellwether IBM (although less so these days) reports after the bell. Markets are closed in Colombia.

23:50 BoJ MPC Minutes (Sun)

23:50 Japan Imports/Exports/TB

01:30 PBoC Interest Rate Decision (e3.85% hold)

06:00 Germany PPI

15:10 BoE Haldane speech

15:10 BoE Tenreyro speech

23:30 Japan National CPI

Tuesday July 21

Again, little scheduled news in this holiday season. DJIA heavyweight KO reports before the bell.

01:30 RBA Meeting Minutes

02:30 RBA Governor Lowe speech

08:30 UK PSBR

12:30 Chicago Fed National Activity Index (Jun)

12:30 Canada Retail Sales (MoM May e21% p19.1%)

Wednesday July 22

A third day of uneventful news, means the key event comes after the bell, with NDX stalwart and 11.1% weight MSFT and recent market darling TSLA (now no 7 and 2.58% weight) reporting. TSLAs recent price moves have been quite amazing, rising 320% in four months.

00:30 Aus Westpac Leading Index (MoM)(Jun)

01:30 Australia Retail Sales

12:30 Canada CPI (BoC Core YoY e0.9% p0.7%)

13:00 US Housing Price Index (MoM)(May)

14:00 US Existing Home Sales (MoM)(Jun)

Thursday July 23

Jobless Claims is the first important US macro print in this quiet week, and another large NDX component (no 8 by weight) INTC reports after the bell. Markets are closed in Japan for Marine Day.

01:30 Aus NAB Business Confidence

06:00 Germany Gfk Consumer Confidence Survey(Aug)

11:00 BoE Haskel speech

12:30 US Jobless Claims

22:45 NZ Imports/Exports/TB (Jun)

23:00 Aus Commonwealth Bank Mfr PMI

Friday July 24

The Eurozone and German PMIs are expected to cross 50 today, the line between expansion and contraction. The US is already there of course. AXP reports before the bell. Markets are closed in Japan for Sports Day, which would have been the date of the Olympic opening.

06:00 UK Retail Sales

07:30 Germany Markit Mfr Prel PMI (e48.3 p45.2)

07:30 Germany Markit Composite Prel PMI (e50.3 p47.0)

07:30 Eurozone Markit Composite Prel PMI (e51.1 p48.5)

08:30 UK Markit Services Prel PMI (e51.0 p47.1)

13:45 US Markit PMIs

14:00 US New Home Sales

Week to Oct 18th

Sterling and Euro up on Brexit hopes, Fairly strong open to earnings season

Mon Oct 14

Trading was quiet on Columbus Day, with bond markets closed. Overall equities were slightly down, retreating from Friday’s euphoria.

USD advanced very slightly against most currencies but not haven assets Gold and JPY which were up.

Tue Oct 15

Earnings season opened with a raft of beats on EPS and revenue, with only GS spoiling the party. SPX added 1% and other indices were also green. A beat on the ZEW Sentiment reports at 0830 had already helped DAX earlier. A risk-on mood was clear, JPY, Gold and bonds fell sharply on the earnings reports (which come in around 1100-1200). Otherwise, currencies were mixed, with EUR and GBP rallying on reports of a new Brexit deal agreed with the EU. CAD was also up but the antipodean pair were down, as was Oil.

Wednesday October 16

With only BAC (of note) before the bell today, the Retail Sales miss at 1230 meant that the US rally did not continue, and after a pullback in early futures, SPX was flat all day, as were NKY futures. DAX did a little better, but FTSE had a second down day on GBP strength. In fact, with the exception of beleaguered NZD, all currencies, Gold and bonds were up. Oil had a brief spike up but settled flat on the day. Surprisingly, CAD was up despite the CPI miss at 1230.

Thursday October 17

Wednesday’s after hours earnings from IBM and NFLX were similar, both managed a beat on EPS, but missed on revenue, and subsidiary metrics were poor. Oddly, NFLX rallied after hours opened 6.3% up (unlike IBM which gapped down 5.5%). Such is the sentiment on growth companies versus long-established ones. However by the end of the day, both were red. Nevertheless a definite Brexit agreement announced by UK PM Johnson and the EU lifted all markets for a while, although some of this came off into the close.

The Brexit deal caused a sharp move up in all currencies (and Gold), obviously GBP, but also a sudden and sustained move in all others, even JPY. This may also have been helped by traders exiting USD on the poor Philly Fed (1230) and Industrial Production (1315) prints, the latter reporting -0.4% vs -0.1% estimated. Unusually Oil spiked up at the end of the day despite the Columbus Day-delayed EIA stock print at 1430. Yields were flat after a brief spike in line with the dollar move.

Friday October 18

The Chinese GDP miss at 0200, and start of some EU tariffs set the tone today, and lacklustre earnings from defensive stalwart KO before the bell didn’t help, and markets slid, with SPX down 0.4%. Some of this may have been OpEx related. DXY which had been failing all week, accelerated, and all currencies, although not Gold, were up. After a further rally, oil pared some on its gains, and yields were flat again.

WEEKLY PRICE MOVEMENT

NKY was this week’s best performing index, closely followed by NIFTY. GBPJPY was the top performing forex pair for a second week, adding another 2.56% to last week’s 3.24% gain. Cryptos were quiet again, and FANGS were relatively muted with only NFLX reporting.

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)

• ECB Draghi’s swansong
• Earnings season continues
• Brexit saga rolls on
• Trade war still at the fore

Monday October 21

Further talks between US TreasSec Mnuchin and USTR Lighthizer and Chinese Vice-Premier Liu He are planned this week. Also after Saturday’s defeat, further Brexit fireworks are expected in the UK parliament.

23:50 JPY Japan Trade Balance

01:30 CNY PBoC Interest Rate Decision (e4.2% hold)

06:00 EUR Germany PPI

15:00 GBP BoE Haldane speech

Tuesday October 22

Major earnings reports today are PG, TRV and UTX (together making 10% of DJIA). There is a general election in Canada. The Turkish-Kurd ceasefire agreed with the US ends. Markets are closed in Japan for a Bank Holiday. There is a rate decision on HUF, hold expected.

08:00 EUR ECB Bank Lending Survey

08:30 GBP UK PSBR

12:30 CAD Canada Retail Sales (p0.4%)

14:00 USD US Existing Home Sales (MoM)

14:30 CAD BoC Business Outlook Survey

21:45 NZD NZ Trade Balance

22:20 AUD RBA Kent speech

Wednesday October 23

Earnings are the main focus today with BA and CAT (12% of DJIA combined reporting before the bell, and MSFT and PYPL after hours. MSFT alone is is 11.26% of NDX. Markets are closed in Hungary for Republic Day

09:40 EUR DE10Y Bond Auction

13:00 USD US Housing Price Index (MoM)

22:00 AUD Aus Commonwealth Bank Manuf PMI

Thursday October 24

The main event today is Mario Draghi’s final session as ECB President, he is replaced by Christine Lagarde on Nov 1st. Another important earnings day with MCD and TWTR before the bell, and AMZN, INTC and GILD (together 13% of NDX) and V after hours. VP Mike Pence is due to speak today on US-China relations. There are also rate decisions on SEK, NOK and TRY. Turkey is expected to hike from 16.5% to 17.25%.

08:30 EUR Germany Markit PMIs

09:00 EUR Eurozone Markit PMIs

11:45 EUR ECB Rate Decision/Statement

12:30 EUR ECB Draghi Final Presser

12:30 USD US Jobless Claims

12:30 USD Capital/Durable Goods

13:45 USD US Markit PMIs

14:00 USD New Home Sales (MoM)

Friday October 25

Today sees only sentiment indicators from both Germany and the US. DJIA defensive MMM reports before the bell.

06:00 EUR Germany Gfk Consumer Confidence

08:00 EUR Germany IFO Business Expectations

14:00 USD US Michigan Consumer Sentiment Index

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 June 14th

Mexico boost fades for a flat week, US CPI miss reduces rate cut likelihood

Mon Jun 10

As we said last weekend, markets were bound to rise on the cancellation, or at least postponement of Mexican tariffs. SPX and FTSE were up, although NKY faded after the cash close to end flat. DAX was not open and also was flat. The dollar was also up (DXY +0.22%) against all currencies except JPY. Gold and Oil were down in line, as were bonds (inverse to yields) as money flowed into equities.

Tuesday June 11

Tuesday’s price/action was similar to Monday, a ramp during Asia and Europe that was sold off in the US session. SPX was slightly down whereas non-US indices (which close earlier) were up. This is a common pattern, the index future trading being less than the cash stocks volume. DXY hardly moved with losses in JPY and CAD balancing an advance in GBP after the AHE beat at 0830. Oil, Gold and yields were also flat.

Wednesday June 12

Markets were down slightly today after the US CPI slight miss at 1230, falling to 1.8% (e1.9%), below the Fed ideal rate of 2%, and so reducing the chance of a rate cut next week, which in turn rallied USD. DXY was up 0.25% against all currencies except JPY which was flat (the risk off and stronger dollar balancing each other). Bonds were up in a reverse of Monday. Oil fell on the stronger dollar and the EIA miss at 1530. So every asset reacted as you would expect.

Thursday June 13

After the tanker incident in Oman, Oil shot up today, adding 0.7% in 10 minutes on the news. Markets were up, led by energy reacting to the Oil price, and otherwise defensives such as Consumer Staples (XLP) and Utilities (XLU). World markets followed suit. The dollar did not react, another flat day with DXY moving 0.08% up. A slight move up in CAD (on Oil) balanced fades elsewhere. Gold and Bonds continued to rise.

Friday June 14

Markets retreated on Friday as the mood was sourced by the Michigan CSI miss at 1500 and also AVGO cutting guidance (a profit warning) blaming the trade war. Their stock fell 5.6%, but cast a shadow over the sector (SOXX down 2.4%), index (NDX down 0.8%), and market (SPX down 0.2%). A textbook exercise in sentiment contagion.

We have seen over the last year how the trade war is bad for stocks, but good for the dollar (or if you like, bad for non-US economies), and today saw a sharp move up in DXY of 0.43%, evenly across all currencies. Gold fell in line, and for once yields followed the dollar rather than bonds taking equity money, although to be fair they had been falling since Tuesday. Oil had an inside day, but was slightly up.

WEEKLY PRICE MOVEMENT

A flat week after last week’s rally saw only NKY break the 1% barrier to make it the strongest index of the week. The dollar advanced everywhere, with NZDUSD, down 2.61%, the biggest mover. NFLX bucked the FANG trend and fell on concerns that DIS will eat into their market. Cryptos resumed their upward climb.

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)

• Will the Fed cut rates
• UK and Japan rate decisions
• USTR hearings on tariffs
• UK and Canadian inflation

Monday June 17

The USTR public hearings on China tariffs are scheduled for today. Markets are closed in Greece, Cyprus, Romania, Ukraine, Iceland, South Africa, and Argentina.

09:00 EUR Eurozone Labour Cost Q1

18:30 CAD BoC Schembri speech

21:00 NZD NZ Westpac Consumer Survey

Tuesday June 18

The economic sentiment part of the three ZEW surveys in Germany will be watched closely for some recovery in the beleaguered Eurozone leader, otherwise one of the quieter days this week.

01:30 AUD Aus House Price Index (QoQ)

01:30 AUD RBA Meeting Minutes

06:00 EUR Germany PPI (MoM)

09:00 EUR Eurozone CPI (Core MoM e0.4% p0.0%)

09:00 EUR Germany ZEW Economic Sentiment (e0.5, p-2.1) 

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

14:00 NZD GDT Milk Index

20:30 WTI API Oil Stock

23:50 JPY Japan Imports/Exports/TB

Wednesday June 19

The CME Fedwatch predicts a surprisingly high 23% likelihood of a cut, which means a hold may boost the dollar. This is after important inflation prints from the UK and Canada. President Trump launches his re-election campaign in Florida today. Markets are closed in Hungary.

08:30 GBP UK RPI/PPI/CPI (CPI YoY e2.2% p2.1%)

12:30 CAD Canada CPI (BoC Core YoY e1.2% p1.5%)

14:30 WTI EIA Oil Stock

18:00 USD FOMC Rate Decision/Statement (e2.5% hold)

18:30 USD FOMC Press Conference

22:45 NZD NZ 19Q1 GDP (QoQ e0.7% p0.6%)

Thursday June 20

Two more major rate set meetings today, although of more importance will be any Brexit remarks from BoE Gov Carney. There are also rate decisions on NOK (25bp hike expected) and IDR. Markets are closed in Brazil, Austria, Poland, Croatia, Portugal and Argentina.

01:15 AUD RBA Governor Lowe speech

01:30 AUD RBA Bulletin

02:00 JPY BoJ Rate Decision/Statement

04:30 JPY BoJ Press Conference

08:00 EUR Eurozone Economic Bulletin

08:30 GBP UK Retail Sales (ex-Fuel MoM e-0.5% p-0.2%)

11:00 GBP BoE Rate Decision/Statement (e0.75% hold)

12:30 USD US Jobless Claims

12:30 USD Philly Fed Manufacturing Survey

23:50 JPY Japan National CPI 

Friday June 21

The longest day of the Northern Hemisphere year and start of summer is also OpEx day. Expect heightened volatility. Fed Daly (non-voter) speaks today. Markets are closed in Sweden and Finland.

07:30 EUR Germany Markit PMIs (Manuf e44.5 p44.3)

08:00 EUR Eurozone Markit PMIs (Composite e51.7 p51.8)

08:30 GBP UK PSBR

12:30 CAD Canada Retail Sales (MoM e1.0% p1.1%)

13:45 USD US Markit PMIs

14:00 USD US Existing Home Sales (MoM)

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 Jan 11th

Mon Jan 07

After a dip before the open, the Friday rally continued after Fed Chair Powell’s dovish comments last week, and positive comments from TradeSec Ross on China, and despite the miss in ISM PMI at 1500. Once again, there was a timing issue. As DAX and FTSE closed at 1630 before the rally reached its top, they posted red days unlike SPX and NKY (futures). The dovish Fed remarks fed (if you’ll pardon the pun) through to the dollar. DXY was down 0.52% on the day, with all major currencies (and Gold) rising, except for JPY which posted a flat day. Yields also dipped but ended the day up in line with the risk-on mood. Oil was up in line with equities.

Tuesday January 08

The bullish mood continued on news that the China talks, currently in progress in Beijing would be extended to a third day. All indices were up, with the three US majors (SPX, DJIA and NDX) adding 1%. Non-US indices and Oil posted similar gains, and yields were up again in line with risk-on. USD had a Turnaround Tuesday, and DXY added 0.22%, with most currencies (and Gold) down. Once again we saw the continuing recovery of commodity currencies, with AUD remaining flat, and CAD adding 0.37%.

Wednesday January 09

FOMC members Bostic and Rosenberg continued the dovish theme today, with the former indicating only one rate hike in 2019. The published minutes confirmed the stance. The more specific information is, the stronger the effect on the market, and USD fell sharply, with DXY giving up 0.7% on the day, its worst day since Nov 1st.  All currencies and Gold were up. US equities of course responded positively, however NKY and DAX were down, following the sharp spike up in JPY and EUR. FTSE managed a slight gain, as the GBP rally was less intense. Oil had another good day despite the EIA miss at 1530. Bond yields fell in line with the dollar, and after the auction of new 10-year paper at 1800 which yielded 2.728%. The BoC held rates as expected, and other than a brief (5 minute) 50 pip spike up, CAD ran in line with the other currencies.

Thursday January 10

After coming off slightly in the Asian and European sessions, stocks continued their rally at the US Open, as the dovish Fed mood continued from Wednesday’s minutes. This was despite lack of detail in the China talks, and the continuing government shutdown. You normally see a fast fades in sentiment in stocks, and more slowly in currency, but today was the other way round. But remarks from Chair Powell that the Fed would continue to shrink its balance sheet to a more normal level saw a reversal in DXY, up 0.42% day, with Gold and the major currencies pulling back. Only AUD posted a modest gain. Oil posted its eight green candle in a row, although at 0.29% up, it was practically flat. Yields followed the dollar back up.

Friday January 11

The end of the week saw a flat SPX, as the positives (slower tightening, China talks) and the negatives (shutdown, lack of China progress) balanced. The indecision was clear with JPY slightly down but Gold slightly up. US Core CPI provided no assistance, as it printed at 1330 at 2.2% as expected. Elsewhere fared worse, with DAX, FTSE and NKY clearly down on the day, although retaining some of Thursday’s gains. The relatively small move in DXY, up 0.22% to follow through from Thursday masked a notable move in GBP, which was up sharply, adding 0.77%. The MoM GDP beat (0.2% vs 0.1%) at 0930 added 0.4%, and then a fast three minute spike from 1051 added 0.71%, as speculation mounted that the UK would seek to delay its withdrawal from the EU. There is more on this in the outlook for next Tuesday below. The GBP spike was accompanied bye a small tick up in EUR, although the single currency was sold off in the US session, giving EURGBP its first 1% down day since Nov 1st. Oil pulled back slightly, perhaps for profit taking. The CLG19 (Feb) contract expires on Jan 22nd.

Please note all figures and percentages given for daily movement on indices cover the entire cash and futures period in that day. Currency moves are stated in relation to the US dollar. Dollar moves are referenced from the DXY basket.

WEEKLY PRICE MOVEMENT

Like last week, USD was down half a percent , and AUD and CAD, joined this week by NZD, were strong, whereas JPY hardly moved. Risk barometer AUDJPY was the strong pair at 1.42%, although AUDUSD was similar. The best index was NDX, inline with risk, and the best stock in our group was NFLX which outperformed for the second week running. The movie giant is up an amazing 44.5% since Christmas. The ETHBTC rally collapsed again this week. We are seeing more and more divergence between the two leading cryptocurrencies.

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

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold). 

Monday January 14

Today the earnings season kicks off, with the first mega cap, Citibank reporting before the bell. The market in Japan is closed for ‘Coming of Age’ Day. The most interest release of the day is the China Trade Balance. This rose continually throughout 2018, and consensus is a massive increase again. A miss could indicate tariffs are starting to bite, and halt the recent CNY rally.

00:00 AUD Aus Consumer Inflation Expectation

02:00 CNY China Imports/Exports/Trade Balance (est 51.53B prev 44.71B)

02:15 CNY China FDI

10:00 EUR Eurozone Industrial Production

21:00 NZD NZIER Business Confidence (QoQ)

Tuesday January 15

A big day today for the UK, with the rescheduled parliamentary vote on the ‘with deal’ ie ‘soft’ Brexit. As recent tactics by Europhiles have blocked the government from preparing for ‘no deal’, a failure for the Government motion to be carried is actually bullish for GBP, as it implies Mrs May and her cabinet would now either delay the exit date and/or run a second referendum. Although anything that suggested a general election would create uncertainty, and push the pound down. The earnings season continues with JPM, UNH and WFC reporting before the bell. The first two are 9.76% of DJIA so a Dow/SPX divergence is possible. Conversely, no divergence shows the sentiment of the results is carried into the market as a whole. Fed über-hawk Esther George speaks at 1800, it will be interesting to see if she contradicts the dovish statements from last week. George going dovish would be big news.

00:00 GBP UK Parliamentary vote on Brexit (time unspecified)

13:30 USD US Core PPI

14:00 NZD NZ GDT Milk Index

15:00 EUR ECB President Draghi's Speech

21:30 WTI API Stock

Wednesday January 16

Important inflation data from Germany and the UK starts the day, and may have an outsized effect on a volatile GBP from the day before. Today is the first day that the USTR can initiate new trade negotiations with Japan, so some statement may be forthcoming. After hawk George yesterday, we get the most dovish FOMC member Kashkari at 1630. He is no doubt with the ‘patient’ group, but is not a voter this year. The earnings season rolls on with two more banks BAC and GS reporting before the bell, and tariff-sensitive AA after the close. There is a rate decision on IDR.

07:00 EUR Germany CPI (est 1.7% pr 1.7%)

09:30 GBP UK CPI/RPI/PPI (Core CPI est 1.8% pre 1.8%)

13:30 USD US Retail Sales (MoM) (Core est 0.2% pr 0.2%) 

15:30 WTI API Stock

19:00 USD Fed's Beige Book

23:30 AUD Aus Westpac Consumer Confidence

Thursday January 17

The first FANG reports today. NFLX earnings are out after the bell, and historically this has meant big moves in the stock, NDX and even SPX. Also two more banks report before the bell, DJIA component AXP and merchant bank MS. Fed Quarles (centrist, 2019/2020 voter) speaks on the anniversary of his appointment. There is a rate decision on ZAR.

00:00 EUR G20 Meeting (all day)

00:30 AUD Aus Home Loans/Sales

10:00 EUR Eurozone CPI (Core est 1% pr 1%)

13:30 USD US Jobless Claims

13:30 USD Philadelphia Fed Manufacturing Survey

21:30 NZD Business NZ PMI

23:30 JPY Japan National CPI

Friday January 18

The main news today is Canadian inflation, although the day is generally expected to be quieter than the big days of Tuesday and Wednesday. No important stocks report today, although next week is packed, however today is Opex day for January. Fed Harker (dove, non-voter) will be speaking, as will Williams (hawkish, voter).

00:00 EUR G20 Meeting (all day)

09:30 GBP UK Retail Sales

13:30 CAD Canada CPI

14:15 USD US Industrial Production/Capacity Utilization

15:00 USD Michigan Consumer Sentiment Index

18:00 WTI Baker Hughes US Oil Rig Count

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