Week to Dec 29th

On Monday, most markets were closed for Christmas Day. However Japan was open, so there was a futures market in some instruments and USD declined slightly. However, as you might expect, the day was flat.

Tuesday was an official holiday in British Commonwealth countries (Canada, Australia, New Zealand and the UK), and an unofficial holiday elsewhere. Equities were slightly down, in muted trading. USD recovered slightly, yields were slightly down, and Gold was slightly up. The only significant forex move was ZAR, up 0.9% continuing the Ramaphosa rally. The surprise mover of the day was Oil, which put on 2.61%.

The markets fully resumed on Wednesday, but the equity flatness continued. USD continued to drift downwards against all currencies except JPY, and Gold rose again, and Oil was flat, holding the previous day’s gains. Notably, US 10-year bond yields fell sharply, giving up 7bp on the day.

Thursday’s big (given the week) event was a 48 pip (0.43%) ramp in JPY with a matching fade in NKY. DAX also faded, but SPX and FTSE were flat. Otherwise, the pattern of the week continued — all currencies and Gold continued to climb against USD, and Oil rose slightly to break through the $60 psychological barrier. Yields recovered slightly.

Finally on Friday, we saw some volatility. There was little synchronicity at all with indices. During the Asian session NKY fell, and DAX followed suit as Europe opened. However SPX rose through this period as did FTSE, which had a sudden strong 0.9% ramp in the last 30 minutes before London trading closed at 1230 for the New Year holiday. Having hit a new intraday high of 2697.4 before the open, just shy of the next roundpoint, SPX did exactly the opposite of FTSE and after fading all session, suddenly crashed by 17 handles (0.65%) in the final 30 minutes. The FTSE ramp has been put down to energy, but the SPX sudden sell-off can only be attributed to year end rebalancing (ie taking profits to book in 2017). 

When currencies move in one direction all week, we often see a turnaround on Friday as profits are taken. Not this week, the USD fade, if anything accelerated, with only CAD turning down. Gold and bonds (inverse of yields) rose in line, and DXY closed at a three-month low.

WEEKLY PRICE MOVEMENT

These are the prices movements for the week on the instruments we cover, with USD pulling back for a third week, quite strongly across the board. Buying EURUSD was the best trade (or Gold if you count that as forex), and only USDJPY had an inside week. Indices were weaker, although FTSE posted its fourth green weekly candle, but the best trade was to short DAX. Once again, Oil was the overall top performer. Bitcoin had an inside week, ‘only’ falling 5.3%

AUDUSD 0.7801 (+1.13%)

EURGBP 0.8878 (+0.06%)

EURUSD 1.2004 (+1.22%)

GBPUSD 1.3505 (+1.10%)

NZDUSD 0.7093 (+1.03%)

USDCAD 1.2579 (-1.16%)

USDJPY 112.65 (-0.54%)

DAX     12855 (-1.70%)

FTSE     7648 (+0.84%)

NIFTY   10530 (+0.35%)

NKY     22764 (-0.45%)

SPX    2671.8 (-0.41%)

GOLD  1302.67 (+2.19%)

OIL     60.10 (+2.77%)

NEXT WEEK (all times are GMT)

The holiday season is almost over and we are straight into a new year, and a four day week with both FOMC and NFP.

Monday is New Year’s Day, and all markets (even Japan) are closed.

Tuesday’s data is all PMIs, and little effect is expected. Of more significance is the post year end rebalancing which may cause volatility. Note Turkey and Japan’s markets are closed. API Oil Stock is not delayed, despite the Monday holiday.

Wednesday is FOMC Minutes day, but these relate to the December meeting where rates were raised. However the plan for 2018 may be revealed in more detail. Also important is the ISM Manufacturing PMI, especially if it contradicts the Markit figure from the day before. Japan is still closed. German Unemployment figures in the European morning can move DAX and EUR, if of course they vary from the estimate.

Thursday sees ADP, the ‘sneak preview’ of the Friday NFP report. The estimate is 190k roughly the same as NFP, and a similar estimate to previous months. A large miss could be the trigger to move US equities downwards, as we must assume the tax bill is fully priced in. The EIA Oil Stock report is a day late because of Monday’s holiday.

Friday is the biggest day of the week. We have Eurozone inflation first. Last time the Euro was at 1.20, the ECB made noises about it being too high. A miss here would be a perfect opportunity for traders to sell.

Then we have the dual NFPs from both sides of the 49th parallel. USDCAD hit two-month lows last week and anything negative from the Canadian side could result in a move up to at least 1.2625, the previous support which is now resistance. However, despite a record 79.5k jobs last month, the Canadian estimate is a conservative, and easily beatable 10k, whereas the US estimate is what we have come to expect. The pair is always volatile at this dual event. A Canada ‘win’ suggests the October support of 1.2470. Please be sure to recheck the estimates on the day, as they are often adjusted. Just to make it more exciting, there are also simultaneous releases of US and Canada trade figures. The focus stays with USDCAD, when both countries release PMIs at 1500.

Also on Friday, we have three Fed speakers, Bullard at 0500, Harker (centrist) at 1515, and Mester (mild hawk) at 1730. Mester speaks again on Saturday 6th at 1515.

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

Sun Dec 31

0100 CNY China PMIs

Mon Jan 01

2230 AUD AIG Performance of Manuf Index

Tue Jan 02

0145 CNY China Caixin Manuf PMI

0855 EUR Germany Markit Manuf PMI

0900 EUR Eurozone Markit Manuf PMI

0930 GBP UK Markit Manuf PMI

1430 CAD Canada Markit Manuf PMI

1445 USD US Markit Manuf PMI

2130 WTI API Stock

Wed Jan 03

0000 AUD Australia HIA New Home Sales

0900 EUR Germany Unemployment Rate (est 5.5% prev 5.6%)

0930 GBP UK PMI Construction

1500 USD US ISM Manuf PMI (est 58.1 prev 58.2)/Prices Paid (est 65.0 prev 65.5)

1500 USD US Construction Spending

1900 USD FOMC Minutes (no rate decision)

Thu Jan 04

0145 CNY China Caixin Services PMI

0855 EUR Germany Markit Services/Composite PMI

0900 EUR Eurozone Markit Services/Composite PMI

0930 GBP UK Consumer Credit/Mortgage Approvals

1315 USD US ADP Payrolls (est 190k prev 190k)

1445 USD US Markit Services/Composite PMI

1600 WTI EIA Stock

Fri Jan 05

0030 AUD Australia Trade Balance

0700 EUR Germany Retail Sales

1000 EUR Eurozone CPI (est 1.0% prev 0.9%)/PPI

1330 USD US NFP (est 189k prev 228k)

1330 USD US Unemployment (est 4.1% prev 4.1%)/AHE/AWH

1330 CAD Canada NFP (est 10k prev 79.5k)

1330 CAD Canada Unemployment (est 6.0% prev 5.9%)/Participation Rate

1330 USD US Trade Balance

1330 CAD Canada International Merchandise Trade

1500 USD ISM Non-Manuf PMI/Factory Orders

1500 CAD Canada Ivey PMIs

1730 USD Fed Mester speaks

1800 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.

Week to Dec 22nd

As the tax bill neared completion, markets rose again on Monday, with SPX, DJIA and NDX all closing at record highs again. An index we don’t normally cover, the Nasdaq Composite index (IXIC, normally traded with the COMPQ ETF) crossed the psychological 7000 mark. Other indices followed suit with DAX, NKY and FTSE also up. NIFTY spiked down 3.3% on early polling returns in the Gujarati election, but bounced back as Modi’s BJP emerged victorious. The election of Cyril Ramaphosa as head of the ruling ANC caused a huge surge in ZAR, up 4.3% at one point. USDZAR closed down 2.7% on the day. USD was weak across the board, giving up ground against all currencies, particularly GBP which rose 0.5%, reversing the previous Friday’s losses. Gold was up in line, however 10-year bond yields were surprisingly also up slightly.

It was a clear Turnaround Tuesday this week. SPX pulled back sharply, triggered by a large bond sell-off, with 10-year yields up 7bp. Gold was up in line, and other indices were also down, although FTSE held steady as GBP performed a turnaround as well. Although JPY and CAD were also down, a 0.5% rise in EUR (57.6% of DXY) on the back of positive German IFO Sentiment at 0800 meant the dollar index was down on the day. Gold and its proxy AUD were flat, but Oil also did the Tuesday thing, and recovered the previous day’s losses. 

Wednesday’s price/action was largely a repeat of Tuesday in many markets. SPX and other indices fell again, as the tax bill was finally completely in the Senate, suggesting that there might be a “buy the rumor, sell the news” pattern in play. DAX in particular fell sharply, giving up 214 points (1.62%) at one point, following the Producer Price Index miss at 0700, and the continuing strength of the euro. NKY and FTSE were relatively muted but still gave up ground. The bond sell-off continued, adding another 4bp to yields, and JPY and GBP continued to fall. However the continued strength of EUR mean another red candle for DXY, and indeed AUD with Gold and CAD with Oil were also slightly up. The SEK rate decision we mentioned last week caused a 70 point spike up for the Stockie which was immediately retraced.

Despite the misses on US GDP and Personal Consumption Expenditure at 1330, SPX was back up again on Thursday as the bond sell-off ended, and yields were flat on the day. Elsewhere, the standout performer was FTSE up over 1% intraday, and closing at 7601, a new all-time high. However DAX recovered only slightly, and NKY was flat, with price/action similar to Wednesday. After the GDP and PCE (CPI proxy)  misses at 1330, USD was down again against most all currencies except EUR, which gave up some of its earlier gains. AUD was particularly strong, pushing through the 200-day moving average to put on 51 pips (0.67%) on the day, and the ASX200 index closed at a new 10-year high. Similarly CAD rose sharply rising 120 pips (0.93%) after the Canadian CPI beat at 1330. Gold was flat, and Oil continued upwards, and NZD was up substantially after the GDP beat at 2145 Wednesday.

Friday was a half-day for the Christmas holiday. The US Government shutdown was kicked down the road to Jan 19th, and the Catalan separatists won their election, causing a 1.2% decline in the IBEX. The big story of the day was Bitcoin. The cryptocurrency had been falling all week from last week’s near $20,000 high. On Friday it plunged 31% to a low of $10,414 (on Coinbase) before recovering. However, the currency is still up on the month.

SPX fell at the US open although it then recovered to close only slightly down. European indices were flat, given the half-day, as was NKY. NIFTY was up, and posted a closing all-time high. The forex session ran for the full day, but dollar movement was also muted. CAD briefly spiked down 80 pips on GDP miss at 1330, but other than a GBP pullback movement was slight, and DXY finished 0.1% up. Bond yields were similarly flat, but surprisingly Gold had a small $7 rally. Oil continued up to close at a 4-week high.

WEEKLY PRICE MOVEMENT

These are the prices movements for the week on the instruments we cover, with USD pulling back for a second week, against all currencies except JPY. After two weeks as worst performer, CAD was the best this week, so buying CADJPY would have been the best forex trade, up 1.70%. NZD, GBP and JPY all had inside weeks against USD. NIFTY was the strongest index, although FTSE rose over 1% for the third week in a row. Once again, Oil was the overall top performer.

AUDUSD 0.7714 (+0.97%)

EURGBP 0.8873 (+0.67%)

EURUSD 1.1859 (+0.96%)

GBPUSD 1.3358 (+0.31%)

NZDUSD 0.7021 (+0.47%)

USDCAD 1.2726 (-1.10%)

USDJPY 113.26 (+0.60%)

DAX     13077 (-0.49%)

FTSE     7584 (+1.21%)

NIFTY   10493 (+1.55%)

NKY     22866 (+1.39%)

SPX    2682.7 (+0.15%)

GOLD  1274.75 (+1.57%)

OIL     58.48 (+1.95%)

NEXT WEEK (all times are GMT)

As you would expect, next week is very quiet.

Monday is Christmas Day and all markets, including forex, are closed. On Tuesday, known as Boxing Day in the UK, Australia and New Zealand, all major markets except the US and forex are also closed.

Business proper commences again on Wednesday, but trading is expected to be light. It will be interesting to see if the second ‘Santa Rally’, the one between Christmas and New Year materializes. The news calendar is very light, as it is on Thursday. The only major volatility item this week is German inflation on Friday, although even this is unlikely to make waves.

Markets will again be closed the following Monday for New Year’s Day, and 2018 starts on the Tuesday.

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

Mon Dec 25

2330 JPY Japan CPI/Household Spending

2330 JPY Unemployment/Jobs to Applicants

2350 JPY BoJ MPC Minutes

Tue Dec 26

1300 USD S&P/Case-Shiller Home Price Indices

1400 USD Dallas Fed Manuf Business Index

Wed Dec 27

1500 USD US Pending Home Sales

2130 WTI API Stock

2350 JPY Japan FDI

2350 JPY Japan Retail Sales

Thu Dec 28

0900 EUR Eurozone Economic Bulletin

1330 USD Jobless Claims

1600 WTI EIA Stock

Fri Dec 29

1300 EUR Germany CPI

1800 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.

Week to Dec 15th

Monday saw the opening of Bitcoin Futures on the CBOE, with an initial volume surge, although overall volume was very small compared to mainstream markets. Here is a chart of the first week of the January future, which traded at a premium to the cash instrument quoted on cryptocurrency exchanges.

XBT Futures First Week

Back in the real world, SPX and DJIA continued their advance to new closing all-time highs again, although the picture was not universal. NKY was flat, and DAX slipped. FTSE made gains but this was largely a reflection of weak GBP, down 0.4% on continued Brexit negotiation fears. Oil and energy stocks were up sharply, on news that the North Sea’s main oil pipeline had developed a crack, and would be closed “for weeks” to facilitate repair. NZD was up over 1% on the market’s approval of the appointment of new RBNZ Governor Adrian Orr. The other currencies were generally flat, with USD giving up less than 1%. Gold declined again, its biggest five-day drop in over six months to a five-month low of $1,242. US Treasury 10-year bond yields were up slightly.

Tuesday was a turnaround day for DAX as it often is, and the index recovered Monday’s losses. FTSE continued to rise, again helped by a falling pound, which spiked briefly on the UK CPI beat, before resuming its downward trend. NKY repeated Monday’s pattern, a dip in the Asian session, recovery in futures during the European and American day, to end up roughly flat. However although SPX made another intraday all-time high, it receded to end the day slightly down, as oil gave up the previous day’s gains. The day was strong for USD, with DXY hitting its highest level for a month. Yields were up in line, and Gold hit a new low for the week of $1236.39. The only currency to advance was AUD, which is not part of DXY.

Wednesday produced the long-awaited Fed rate hike of 25 basis points, and a continuation of current policy. As we predicted last week (as about 10% of traders were expecting 50bp), the dollar fell sharply against all currencies, yields were down and Gold was sharply up. The greenback had been falling all day, not helped by a miss on the ‘ex food/energy’ CPI print at 1330, but the pace accelerated after the Fed announcement. Oil also fell, despite the EIA Stock beat at 1530. Indices. Despite all this, SPX managed to eke out yet another intraday high of 2671.88 before closing roughly flat. Other indices were down, no doubt partly because of their respective currency strengths.

Concern about the pace of the tax bill resurfaced on Thursday when Marco Rubio said he would not vote for the bill unless some changes to child tax credits were made. SPX gave up all its gains for the week so far (an inverted-V). The other indices followed suit. DAX had a brief rally mirroring the fall in EUR after the ECB press conference at 1330, however this did not last, and it fell in the US session to finish down. In general USD had a good day, and was up against all currencies except AUD and CAD, the latter seeing a 150 pip surge after hawkish comments from BoC Governor Poloz after his speech at 1725. In line with the USD performance, Gold fell slightly, but yields did not respond and were flat on the day. Notably, the GBP rate hold had little effect on the market, whereas EUR which had rallied sharply on Wednesday gave up over half those gains. Oil touched a bottom for the week, but ended the day up.

Friday saw Senator Rubio change his mind and agree on his  tax bill vote, and SPX and DJIA made closing all-time highs again. DAX, NKY and FTSE were also up substantially as their denominated currencies weakened against USD. GBP and CAD were sharply down to Tuesday’s level, forming inverted-V shapes for the week. Surprisingly, given the dollar strength, Gold and bond prices (inverse to yields) were slightly up. Oil had its flattest day of the week, ending only slightly up.

WEEKLY PRICE MOVEMENT

These are the prices movements for the week on the instruments we cover, with a generally retreating USD picture. However, for the second week in a row, CAD was the worst performer, and so he best forex and overall trade would have been to buy NZDCAD, up 2.4%. Despite the SPX ATH, the strongest index was, for once, FTSE up 1.17%. Only EURGBP had an inside week.

AUDUSD 0.7640 (+1.76%)

EURGBP 0.8814 (+0.26%)

EURUSD 1.1746 (-0.20%)

GBPUSD 1.3317 (-0.48%)

NZDUSD 0.6988 (+2.24%)

USDCAD 1.2867 (+0.16%)

USDJPY 112.58 (-0.80%)

DAX     13142 (-0.15%)

FTSE     7493 (+1.17%)

NIFTY   10333 (+0.66%)

NKY     22553 (-1.43%)

SPX    2678.6 (+1.06%)

GOLD  1255.01 (+0.52%)

OIL     57.36 (+0.03%)

NEXT WEEK (all times are GMT)

The weekend seems the South African ANC congress, with the party’s announcement of their new president. Expect movement when the markets open. The ZAR is already at a three-month high on expectations that Cyril Ramaphosa will beat the incumbent Jacob Zuma. The week is expected to be light, given the approaching holidays, with the tax bill being centre stage.

Monday opens the final week before the Christmas holiday. It is possible there may be a Senate vote on the tax bill, although it is more likely to be on Tuesday. The only significant data release is Eurozone inflation. In India, results are expected for the Gujarat provincial election, Prime Minister Modi’s state. It is expected to be a pointer to his chances of re-election in 2019.

Tuesday sees the Australian RBA monthly minutes in the Asian session, although little reaction is expected. The Senate vote on the tax bill is expected, and if they have voted Monday, then it would be the House vote. ECB Hansson speaks at 0900GMT on the outlook for Eurozone, and we have the forward looking US Housing Starts.

Wednesday is the final day if the EU Withdrawal Bill Committee Stage, although there is no vote yet, and the aim is for the tax bill to be with Trump for signature. BoE Governor Carney speaks to the UK Treasury Select Committee on the November Financial Stability report, but no volatility is expected there. The Swedish Riksbank rate decision is at 0730. A hold and extension of QE is expected. SEK is 4.2% of DXY.

Thursday’s Asian session has the BoJ rate decision, although this rarely causes the same volatility as other major currencies. In Europe there is a Catalonian regional election. A pro-independence result is likely, although no particular new activity regarding secession is expected. The CZK interest rate decision is at 1200. The major data releases of the week come at 1330, US GDP and the QoQ Personal Consumption Expenditure, an inflation proxy. This is probably the strongest trigger (other than the tax bill) for USD this week. Also important is Canadian inflation and Retail Sales, also at 1330. We know that CAD likes to make strong sudden moves.

Friday is a half-day for markets in the UK, Canada and New Zealand in early observance of Christmas Eve. Markets will be winding down, so volume is expected to be light. However, funds may well be rebalancing, and traders may be closing positions for the holiday period. Canadian GDP is reported, and If there had been a sudden move on Thursday, a print in the opposite direction could reverse that move. It is also the next US government shutdown deadline, although commentators are not factoring this in, expecting there to be yet another extension.

Next weekend, our report will be somewhat shortened, given the holiday period. MatrixTrade is open for business on all days that the market is open.

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

Sun Dec 17

2350 JPY Japan Trade Balance/Imports/Exports

Mon Dec 18

0115 AUD Australian Mid-Year Fiscal and Economic Outlook

1000 EUR Eurozone CPI

1500 USD NAHB Housing Market Index

2100 NZD Westpac Consumer Survey

Tue Dec 19

0030 AUD RBA Meeting Minutes & Bulletin

0430 JPY Japan All Industry Activity Index

0800 EUR Germany IFO Expectations

1000 EUR Labour Cost

1330 USD Housing Starts/Building Permits

2145 NZD NZ Trade Balance/Imports/Exports

Wed Dec 20

0700 EUR Eurozone PPI

1315 GBP BoE Carney speaks

1530 WTI EIA Stock

2145 NZD NZ GDP

2350 JPY Japan FDI

Thu Dec 21

0001 GBP UK Gfk Consumer Confidence

0200 JPY BoJ Rate Decision (-0.1% hold expected)

0630 JPY BoJ Press Conference

0930 GBP UK PSBR

1230 USD Philly Fed Manuf Survey

1330 USD US GDP (est 3.3%, prev 3.3%)

1330 USD US PCE QoQ (inflation proxy) (est 1.4%, prev 1.4%) 

1330 USD Chicago Fed National Activity Index

1330 USD Initial/Continuing Jobless Claims

1330 CAD Canada CPI

1400 USD US Housing Price Index

Fri Dec 22

0000 USD US Government Shutdown Limit

0700 EUR Germany Gfk Consumer Confidence Survey

0930 GBP UK GDP

1330 USD US PCE YoY & MoM

1330 CAD Canada GDP

1330 USD US Durable Goods Orders

1500 USD US New Home Sales

1800 WTI Baker Hughes 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 Dec 8th

Monday saw the effect of the tax bill being passed in the Senate. Indices gapped up and SPX made yet another new intraday all-time high of 2665, but a sharp 100-point sell-off in NDX dragged SPX down to finish 0.1% on the day. NKY followed suit, but the European picture was mixed. After some volatility, DAX edged a small gain, but although FTSE was flat by the cash close, overall it was down on a strong British pound, which rose sharply on positive Brexit news, although some of these gains faded later. Otherwise USD was slightly down against JPY and CAD. Gold, EUR, AUD and 10-year yields were flat, and Oil was down slightly.

Weakness in equities continued on Tuesday, fuelled by misses on US Trade Balance (1330) and PMIs (1445/1500), and concern that the Senate had failed to repeal corporate ‘alternative minimum tax’, a provision which limited the tax advantages for some companies. DAX and FTSE also fell, although NKY managed to stay flat. In forex, AUD put on 50 pips (0.67%) on the Retail Sales beat at 0030, and the Chinese Caixin Services beat at 0145. There was however little reaction to the rate hold. These gains were given up in the European session to end flat on the day. Otherwise USD was slightly up across the board (as were yields), with GBP faded particularly sharply. It then recovered in an almost perfect reversal of Monday’s price/action. Gold fell $9 to £1,266, and touched a two month intraday low of $1,261. Oil was generally flat after a choppy day, on concerns that the rising price will re-open significant US shale capacity.

Early Wednesday was the low point of a V-shaped week for all equity indices. NKY started the ball rolling in the Asian session by giving up 300 points (1.33%), its biggest one-day drop for eight months, the HSI fell 2.1%, and when the DAX future opened at 0700, it immediately gave up 150 (1.15%) points before the cash index and component shares opened. FTSE and SPX had sold off the previous day and so were not affected. Having touched these lows, all indices then recovered throughout the European and US sessions, helped by the ADP jobs beat at 1215, and closed positively, but not by much.

USD had a similar low point, and recovered today. The dollar was up against all currencies, and Gold was down again to a new low. Surprisingly bond yields did not respond and ended 3bp down. As we predicted last week, the Canadian rate decision (1.0% hold) caused a 153 pip (1.21%) spike up for USDCAD, reversing most of last week’s payrolls movement, but no doubt assisted by the sharp drop in the price of Oil. AUD was very volatile after the GDP miss, and ranged 0.86% with a minute, a rare stop-hunting exercise we rarely see these days. It ended up 0.6% on the day.

However, the story of the day was Bitcoin, which put an amazing 21.18% on to reach a new record high of $14,099. The move was so extreme that there were huge differences between the various exchanges. We are quoting Coinbase (gdax.com) which was the most extreme. The price was $5,870 three weeks ago. But it didn’t end there.

Thursday was a quiet day for news. HoweEquities continued upwards, and as tech stocks belatedly joined the party, we finally got the risk-off triple signal: Gold, JPY and bonds (inverse to yields) were all down (This was despite further falls in China). The only index to fall was FTSE, as GBP rallied sharply in the US session, putting on 165 pips (1.24%) between 1200 and 1830, on news that the UK had settled the Northern Ireland border issue.

Other than against GBP, the dollar was stronger against all the other currencies. It was another risk-on day with Gold and bond prices falling with JPY. GBP and JPY completed their V-pattern returning to their Monday levels, and Oil moved in that direction as well.

Two days of Bitcoin

And if you thought the previous day’s Bitcoin was a spike, today was without precedent. The Coinbase exchange reached an intraday high of $19,694, that’s 39.6% on the previous close. It then pulled back 23% in 15 minutes, the largest and fastest pullback in the crypto-currency’s history, to finish ‘only’up 22.63% on the day. In the three and a half hours before the spike, BTCUSD rose more than SPX has risen during the entire Trump presidency.

We have often said that one sign of a top is when everyone is talking about something, ie it moves out of Wall Street into Main Street. Thursday’s Bitcoin surge was the lead story in the London Times on Friday morning.

London Times Front Page Dec 

We told you last week that Friday was the government shutdown deadline. As he did earlier in the year, President Trump signed another stop-gap bill, to kick the problem down the road, but this time only for two weeks (until December 22nd). NFP did not disappoint, beating the revised (something we also mentioned last week) estimate of 200k by 28k. Unfortunately, the sticking point in the economic recovery, as we have mentioned before, is Average Hourly Earnings which missed (print 2.5% vs est 2.7%). You can see from this chart how this month’s print was particularly poor.

Average Hourly Earnings since 2014

Markets initially sold off the NFP although SPX recovered later in the day to post another gain, and finish the V-pattern for the week, and a closing all-time high of 2650.6. Other indices followed suit, although not at the same time. NKY and DAX made all their gains in the early part of their respective cash sessions, whereas FTSE rose throughout all three sessions, largely following the 1c-plus profit-taking fade in Cable, despite beats on the UK Manufacturing (0930) and NIESR GDP Estimate (1300) prints. Overall both GBP and FTSE posted an inside week (as did NZDUSD in the instruments we cover)

 In currencies, JPY continued downward, but otherwise USD was flat against other currencies. Gold and bond yields were also flat. Oil decided to join the V-shapes by recovering all Wednesdays losses, putting on $1.25 (2.21%) at one point. Bitcoin was quiet too, it ‘only’ dropped 5.37% by midnight.

WEEKLY PRICE MOVEMENT

These are the prices movements for the week on the instruments we cover, with a recovery across the board for USD. The best forex trade would have been to buy USDCAD, up 1.29%. For the second week, NIFTY was the most volatile index but for the first time in ages, the worst performer was Gold which had its worst week since the beginning of May, making a four-month low.

AUDUSD 0.7508 (-1.33%)

EURGBP 0.8791 (-0.34%)

EURUSD 1.1769 (-1.05%)

GBPUSD 1.3381 (-0.68%)

NZDUSD 0.6835 (-0.76%)

USDCAD 1.2846 (+1.29%)

USDJPY 113.49 (+1.19%)

DAX     13162 (+1.67%)

FTSE     7406 (+1.05%)

NIFTY   10265 (+1.42%)

NKY     22881 (+0.27%)

SPX    2650.6 (+0.27%)

GOLD  1248.55 (-2.40%)

OIL     57.34 (-1.63%)

NEXT WEEK (all times are GMT)

As we enter the penultimate week before the holiday closure, it will be interesting to see if the packed schedule produces the  volatility you would expect, given potentially declining volume. Over the weekend we had China PPI and inflation figures, which missed (YoY CPI 1.7% vs 1.8% est). In New Zealand, Finance Minister Robertson speaks at 1900GMT Sunday, followed by Retail Sales at 2145, when forex markets are open.

Monday is quiet, although the US10Y auction may jolt the current yield price out of the torpor it has shown in the last two months. The next round of NAFTA talks start, and will last all week. One interesting event is the opening of XBT Futures (at 2300), the new CME instrument to trade Bitcoin without going to the trouble of wallets etc. For the first time institutional and professional investors, including HFTs of course will be active in the short-term market. Volume is likely to be enormous. If you thought Bitcoin was volatile already, wait for this.

Tuesday is important for AUD with the Australian Outlook Report. Also Governor Lowe is speaking at 2215. UK inflation is expected to rise to 3.1%, although it is so close to the rate set on Thursday, that it is unlikely to affect it. The Alabama Senate seat election (to replace AG Jeff Sessions) will report the result after the markets have closed. With Trump’s thin majority, failure of the controversial candidate Roy Moore to hold the state for the Republicans can only be seen as negative for the markets. Current polling has Moore ahead by seven points, but we all know how accurate pollsters have been in the last couple of years. Moore leans to the right of the party, so he will be a safe voter for the Trump agenda.

Wednesday is the long awaited December rate decision. A hike to 1.5% is widely expected, although the CME FedWatch tool actually has a non-trivial 9.8% chance of a 50bp (to 1.75%) raise. Traders will look for hints to further rate rises, and if they are not found, this suggests that the 25bp increase may actually depress USD. As well as the Alabama result, there is also the important inflation print at 1330, although clearly this is far too late to affect the Fed news. The German inflation and UK unemployment figures make EURGBP worth watching in the European morning session.

Thursday is even busier than Wednesday, and it all happens very quickly. Following Eurozone PMIs and UK Retail Sales, we have a 90 minutes period with both GBP and EUR rate decisions/statements, and the important US Retail Sales. Expect considerably volatility in both currencies against each other and USD. If that were not enough, the two-day EU Council meeting begins, and it is vital for UK PM May that the EU27 confirm that “sufficient progress” has been made, although this may not come until the following day.

In relatively minor news, there are also rate decisions on CHF, NOK, TRY, and MXN  (and for that matter South American currencies COP, CLP, and PEN), the NZ Outlook Report at 0000, and the Australian ‘NFP’, BoC Governor Poloz speech at 1740 (published at 1725). All this as USD follows post-Fed volatility, and NAFTA, the tax bill reconciliation, Russiagate and Brexit roll on. Is that enough for you?

Friday doesn’t have much in the way of releases, but the Eurozone and NAFTA conferences end, and some traders will be finishing for the holiday and therefore rebalancing their positions. BoE newly-converted hawk Haldane speaks at 1315. Russia makes a rate decision, a 25bp cut is expected.

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

Sun Dec 10

2145 NZD Electronic Card Retail Sales

Mon Dec 11

0000 AUD HIA New Home Sales MoM

1700 USD US 10Y bond auction

Tue Dec 12

0030 AUD Mid-Year Economic & Fiscal Outlook Report

0030 AUD House Price Index

0200 CNY China FDI

0430 JPY Tertiary Industry Index

0930 GBP UK PPI

0930 GBP UK CPI est 3.1% prev 3.0%

1000 EUR Germany ZEW Sentiment

1900 USD Monthly Budget

2130 WTI API Stock

2330 AUD Westpac Consumer Confidence

Wed Dec 13

0700 EUR Germany CPI YoY est 1.5% prev 1.8%

0930 GBP UK ILO Unemployment Rate/Claimant Count

1000 EUR Eurozone Industrial Production

1330 USD US CPI

1530 WTI EIA Stock

1900 USD Fed Rate Decision est 1.5% prev 1.25%

1900 USD FOMC Economic Projections

2350 JPY Japan FDI

Thu Dec 14

0000 AUD Consumer Inflation Expectation (CPI proxy)

0001 GBP RICS Housing Price Balance

0030 AUD Employment Change/Unemployment Rate (equivalent to NFP)

0200 CNY China Retail Sales/Industrial Production

0830 EUR Germany Markit PMIs

0900 EUR Eurozone Markit PMIs

0930 GBP UK Retail Sales

1200 GBP BoE Rate Decision (0.5% hold est)

1245 EUR ECB Rate Decision

1330 USD US Retail Sales

1330 EUR ECB MPC Statement and Press Conference

1330 USD US Jobless Claims

1445 USD US Markit PMIs

2130 NZD Business NZ PMI

2350 JPY Japan Tankan Manu Outlook

Fri Dec 15

0600 EUR Germany Wholesale Price Index

1000 EUR Eurozone Trade Balance

1415 USD US Industrial Production/Capacity Utilisation

1800 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.

Week to Dec 1st

The markets entered the week after Thanksgiving quietly. As we predicted last week, AMZN made further gains on Monday, gapping up past $1,200 to close the day $10 up. However, a 0.72% fall in the Shanghai Composite index weighed, and all indices were down. However SPX, NDX, and DJIA managed to eke out slight new all-time highs. The slight risk-off mood was confirmed by advances in Gold, JPY and bond prices (inverse to yields). Otherwise USD fell in early trading, but recovered to end the day slightly up against all other currencies. Oil was down ahead of the OPEC meeting.

Once again we had Turnaround Tuesday. All indices were well up (with further US ATHs) on the tax cut momentum, and comments from new Fed Chair Jay Powell on easing of financial regulation. Gold and JPY were down as were bond prices initially, although they ended up flat. After an initial dip, GBP was up on the day after it was confirmed that the UK intended to fully honour the Brexit ‘divorce bill’ removing the largest obstacle to a post-Brexit trade deal. However, it was on its own, all other currencies fell against the USD and DXY was 0.4% on the day. Oil was down slightly again, down 0.2% to $57.99 anticipating the API Stock miss at 2130 after the pit closed.

On Wednesday SPX and DJIA were up again, touching new intraday highs after the US GDP beat at 1330. However, other equity indices fell, NDX giving up 1.20% on the day, as tech stocks rotated into financials. DAX and FTSE posted losses, the former despite the inflation beat at 1300, and NKY was roughly flat. The ongoing progress in Brexit pushed GBP above $1.34 to a new two-month high. USD rose against all other currencies except EUR, which rose slightly, with a net result of a flat DXY. This was reflected in higher bond yields, up 6bp at 2.39% and lower Gold prices.

The market still had no news on the OPEC cuts, and after an early rally, Oil dropped sharply by $1 (1.71%) on the EIA stock miss, although unusually, the sell off was into the miss. The price recovered 45 minutes later, to sell off again into the close.

Thursday was a blowout for US indices after Trump critic and former presidential candidate John McCain confirmed he would support the tax bill, with DJIA putting on 1.28% and together with SPX making another ATH. NKY also ramped as JPY continued to slide along with Gold and bond prices (inverse to yields), very much risk-on. The mood was not shared in Europe, DAX and FTSE both fell after early rallies following the German Unemployment beat at 0900. The forex trend for the week continued with GBP (and EUR) outperforming the dollar, but other currencies giving up ground. Oil performed an almost exact repeat of Wednesday’s price action, as OPEC and Russia agreed to extend cuts until the end of 2018.

Friday was the most volatile day of the week, and indeed for many months. SPX had given up 1% in the Asian session, and was slowly climbing again on anticipation of the tax cut, when a bombshell dropped. Trump’s former national security advisor Michael Flynn had already pleaded guilty to lying to the FBI, but an ABC report at 1600 (1100 EST) said that Trump instructed him to contact Russian officials before the election which would have been illegal. SPX immediately dropped 45 handles (1.7%). However, it turned out that the story was “fake news”, and the instruction was actually issued after Trump became President-elect, a perfectly normal action. The market quickly recovered and finished the day slightly up, although it couldn’t quite make another high. The picture elsewhere was mixed. USDJPY fell on the Flynn news and did not recover, and NKY, already down, fell with it. DAX had already collapsed in the morning, and did not recover. Only FTSE managed modest gains, as GBP turned down slightly after a week of gains.

We promised volatility in CAD last week, and we got it. In a standout move, the loonie recovered all the week’s losses, after the best jobs report for over four years. The print of 79.5k (equivalent to 715k in US NFP terms) blew away the 10k estimate, and CAD put on 193 pips (1.5%) on the day. This was of course helped by the weakened dollar and a sharp (2.5%) rise in Oil as traders digested the OPEC news.

All the currency patterns for the week were reversed, EUR and GBP were down, whereas AUD and Gold were sharply up in line with JPY. Bond yields were also down.

WEEKLY PRICE MOVEMENT

These are the prices movements for the week on the instruments we cover, with a mixed USD pattern. The best forex trade would have been to buy GBPJPY, up 1.76%. For once, NIFTY was the most volatile index and overall biggest mover, down 2.58% on poor fiscal deficit news.

AUDUSD 0.7609 (-0.01%)

EURGBP 0.8821 (-1.40%)

EURUSD 1.1894 (-0.29%)

GBPUSD 1.3472 (+1.00%)

NZDUSD 0.6887 (+0.17%)

USDCAD 1.2683 (-0.20%)

USDJPY 112.16 (+0.61%)

DAX     12946 (-0.93%)

FTSE     7329 (-1.08%)

NIFTY   10121 (-2.58%)

NKY     22819 (+0.79%)

SPX    2643.4 (+1.58%)

GOLD  1279.19 (-0.71%)

OIL     58.29 (-1.15%)

NEXT WEEK (all times are GMT)

Another busy week ahead with two rate decisions and NFP, not to mention the ongoing tax bill and Flynn situations.

Early on Saturday morning, the Senate passed the tax bill as expected, and Greece (remember them) reached a preliminary deal on further reforms needed to leave the bailout plan next August.

Monday is deadline day for the UK Government to come up with an improved ‘divorce’ offer. ECB member Costa speaks in Portugal, but news is light, and we expect the tax bill and the Flynn case to continue to dominate.

Tuesday has a raft of PMIs, but the main area of focus is Australia, where retail sales is reported shortly before the interest rate decision. AUD is still very weak and traders will be listening for policy guidance, although little is expected. There is also a rate decision in Poland.

Wednesday gets busier. The House and Senate start to reconcile their versions of the tax bill. ADP, the ‘sneak preview’ of NFP is published, with an estimate 15% higher than the NFP estimate. The biggest news of the day is the Canadian rate decision. It will be interesting to see if this pushes USDCAD up, having reached channel support last Friday, or whether hawkish remarks push CAD higher.

On Thursday, Germany’s ruling SPD party starts a three-day convention in Berlin, the pressing issue being the still unresolved coalition. There are some signs of hope which would be positive for EUR and DAX. The main news release is Eurozone GDP, although the effect of this is muted as it comes after the individual countries report.

Friday is the US government shutdown deadline, although there are already plans to avert this with a stop-gap bill. The big news, as always is NFP, with particular focus on wage growth (AHE) if the figure is broadly in line with estimates. Please recheck the estimate on the day, as it has been known to move as the week progresses.

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

Mon Dec 04

0000 AUD HIA New Home Sales

0000 AUD TD Securities Inflation

0930 GBP UK Construction PMI

1000 EUR UK Producer Price Index

1500 USD US Factory Orders

Tue Dec 05

0001 GBP UK BRC Like-for-like Sales

0030 AUD Australia Retail Sales

0145 CNY China Caixin Services PMI

0330 AUD RBA Rate Decision (1.5% hold est)

0855 EUR Germany Markit Services PMI

0900 EUR Eurozone Markit Services PMI

1330 USD US Trade Balance

1330 CAD Canada International Merchandise Trade

1445 USD US Markit Services/Composite PMI

1500 USD US Non-Manuf PMI

2135 WTI API Stock

Wed Dec 06

0030 AUD Australia GDP

0800 EUR ECB Non-MPC minutes

1000 (approx) EUR German Euro Bund Auction

1315 USD US ADP (est 214k prev 235k)

1330 USD US Productivity/Unit Labor Costs

1500 CAD Canada Rate Decision (1.0% hold est) 

1530 WTI EIA Stock

2230 AUD Australia Performance of Construction Index

2350 JPY Japan FDI

Thu Dec 07

0030 AUD Australia Trade Balance/Imports/Export

0500 JPY Japan Coincident/Leading  Economic Indices

1000 EUR Eurozone GDP (est 2.5%, prev 2.5%)

1330 USD US Jobless Claims

1500 CAD Canada Ivey PMI

1900 USD US Consumer Credit Change 

Fri Dec 08

0000 USD US Government Shutdown Limit

0030 AUD Australia Investment Lending/Home Loans

0200 CNY China Trade Balance

0500 JPY Japan Eco-Watchers Survey

0700 EUR Germany Trade Balance

0930 GBP UK Manuf/Industrial Production

1300 GBP UK NIESR GDP estimate

1330 USD US NFP (est 185k prev 261k)/Unemployment/AHE/AWH

1700 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.

Week to Nov 24th

The German coalition problems weighed on Monday, causing pressure on EUR during the Asian session. It rebounded sharply at the European open, only to fade again and end the day roughly flat from Friday’s close. DAX reacted inversely and was up 0.5% on the day. It was risk-on as Gold, JPY and US 10-year bond prices (inverse to yields) fell heavily. The Bund was flat. SPX NKY and FTSE were also up on the day, the latter being in spite of GBP also being up on positive Brexit news. In a similar pattern to last week AUD was down with Gold, and CAD was down with Oil, which took a slight rest from its upward trajectory.

Tuesday was another good day for equities with SPX ramping to touching another all-time high, briefly breaking the 2600 roundpoint. DJIA, NDX and RUT closed at fresh records. DAX added 1% on a flat Euro, and FTSE and NKY added to Monday’s gains. Yields were down as was USD against all other currencies, and so was Gold and Oil, the latter making another two-year high after the API beat at 2135.

Something very strange happened in Hong Kong. The HSI cash had just closed at 0900, touching a record and roundpoint 30,000. When the futures opened at 0915, there was a huge 4.5% momentary spike (to 31339) which immediately retraced. This then induced volatility and the index traded between 30,200 and 29,600 for the rest of the week, completely unlinked to other indices.

Wednesday saw the UK budget, and as we predicted last week, housebuilding stocks moved sharply downwards on news that the government is going to investigate their land-banking policies. FTSE had spiked up in the morning, but gave all that up after the Budget to end the day a mere 0.1% up. SPX showed its strength by only falling 0.1%. However, NKY was down sharply as JPY rose, as was DAX, giving up the gains earlier in the week on continued German political uncertainty, but partly on a rising Euro, which in turn was the effect of USD which had been falling all day again (against all currencies) and was accelerated by dovish FOMC minutes. The December hike is fully priced in (in fact, CME Fedwatch now has an 8.5% chance of a 50bp hike rather than 25bp) , but the minutes showed concern about low inflation. DXY hit its lowest level for a month. As you would expect Gold and bond prices rose quite significantly. Risk-off again, and Wednesday turned around Tuesday. Oil was flat, despite the EIA miss at 1530. 

Thursday was Thanksgiving and US and Japanese markets were closed. Of course futures were still traded around the world, but volume was thin, and so were the price movements. Indices were all slightly up, despite a heavy sell-off in China (see HSI note above). DAX had an early rally despite the GDP miss at 0700, mixed PMIs at 0830, and a climbing Euro. SPX futures were active around this time, but stopped moving around the time the US session would have opened.

Currencies were directionless on this holiday, with EUR (after the Eurozone PMI beat), and AUD slightly up, but GBP (after UK GDP came in as expected), JPY and CAD slightly down. The Canadian Retail Sales print was interesting. It missed, but it is not normally regarded as a high-volatility event. However on this day of thin trading, the miss caused CAD to drop an instant 42 pips (0.33%), and continue to fall until Friday morning. The overall effect was that DXY edged down another 0.1%, Oil continued its advance to new (two year) highs, and Gold was flat. The bond market was closed.

Friday was a half-holiday in the US, and of course the famous Black Friday shopping day. Even without any instant sales results, AMZN traders just assumed they would perform, and the shares rose throughout the short session to finish 2.67% up on the day and 5.37% on the week. Similar enthusiasm was shown across the board, with all indices rising again, SPX and NDX closing at record highs, and the VIX at an all-time low. DAX and EUR rose in unison (the latter to a two-month high). following the upbeat IFO sentiment prints at 0900, and some progress on German coalition talks. NKY was also up as JPY fell (with Gold - risk-on again), and only FTSE struggled with rising GBP to end flat.

Surprisingly, despite USD falling against all currencies except AUD (a Gold proxy), and particularly against EUR, leading to a 0.4% fade in DXY to a now two-month low, bond yield were actually up, although this was a gap-up following Thursday’s holiday.

Oil was up again, this time following news of a leak in the Keystone pipeline, and expectations that cuts will be extended at next week’s OPEC meeting.

WEEKLY PRICE MOVEMENT

These are the prices movements for the week on the instruments we cover, with USD down across the board. The best forex trade would have been to buy EURUSD, up 1.20%. Once again NKY was the most volatile index, but the overall winner was, as is often the case, WTI, with the January contract rising 3.82%

AUDUSD 0.7610 (+0.61%)

EURGBP 0.8946 (+0.36%)

EURUSD 1.1929 (+1.20%)

GBPUSD 1.3338 (+0.94%)

NZDUSD 0.6875 (+0.94%)

USDCAD 1.2709 (-0.47%)

USDJPY 111.48 (-0.54%)

DAX     13067 (+0.69%)

FTSE     7409 (+0.34%)

NIFTY   10389 (+1.03%)

NKY     22641 (+1.09%)

SPX    2602.4 (+1.00%)

GOLD  1288.29 (-0.41%)

OIL     58.97 (+3.82%)

NEXT WEEK (all times are GMT)

As we move into the final week of November, and the holiday season, the question is are we poised for the Santa rally, covered in our email earlier this week. 

Monday is a quiet day, as is the weekend. However, there may be some delayed volatility following the holiday on Thursday and half-holiday on Friday. In particular retail stocks which report a bumper Black Friday should see movement, although retail leader AMZN already rose over 2% on the day.

Tuesday’s highlight is the confirmation hearing for Jay Powell, the new Fed chair at the Senate Banking committee at 1445. Traders will be looking for any variance from Janet Yellen’s views. There is also a BoC press conference at 1615, with Governor Poloz and Senior Deputy Governor Wilkins. Economic data is light.

Wednesday is stronger on data, with German inflation (giving a hint to Eurozone inflation the next day), followed by US GDP and QoQ Personal Consumption Expenditure, the latter being a strong inflation proxy.  Fed Williams (centrist) is speaking at 1745 after Janet Yellen.

Thursday is month end, and some volatility should be seen for month-end rotation. Main news is German unemployment and Eurozone inflation. The MoM and YoY PCE figures are important, but any serious change will have been shown in the QoQ on Wednesday. OPEC hold a one-day meeting in Vienna, and are expected to discuss cut extensions, which have been working well, and of course have driven up the price of Oil 28% in under five months. A six-month extension is the consensus, so a longer or shorter period would most likely produce a noticeable move in the price. There is also a minor speech from Fed Kaplan.

Friday sees a new month, and a raft of Markit Manufacturing PMIs. These don’t in themselves tend to move currencies much, but as always, a big miss from one and a strong beat from another could move the pair in question. The final Manufacturing PMI of the day is the US ISM at 1500. This is more important, although no large variation is expected. Although it is the first Friday of the month, the US NFP data is not until next week. However, the Canadian jobs report is today, with a modest 10k estimate, along with Canadian GDP at the same time, so volatility in CAD is very likely.

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

Mon Nov 27

0900 EUR EU Financial Stability Review

1500 USD US New Home Sales

1530 USD Dallas Fed Manuf Business Index

Tue Nov 28

0700 EUR Germany Gfk Consumer Confidence

1400 USD US Home Price Indices

1445 USD New Fed Chair Powell testifies

2350 JPY Japan Retail Trade

Wed Nov 29

0930 GBP UK Consumer Credit/Mortgage Approvals

1000 EUR Eurozone Sentiment Indicators

1300 EUR Germany Harmonised Index of Consumer Prices

1330 USD US GDP

1330 USD US PCE QoQ (CPI proxy)

1500 USD Pending Home Sales

1530 (approx) Fed Yellen speaks

1530 WTI EIA Stocks

1800 USD Fed Beige Book

2000 NZD RBNZ Financial Stability Report

2145 NZD NZ Building Permits

2350 JPY Japan FDI

Thu Nov 30

0000 AUD Australia HIA New Home Sales

0001 GBP UK Gfk Consumer Confidence

0100 CNY China PMIs

0700 EUR Germany Retail Sales

0900 EUR Germany Unemployment Rate/Change

1000 EUR Eurozone Unemployment Rate

1000 EUR Eurozone CPI

1330 USD US Personal Income

1330 USD US PCE MoM and YoY (CPI proxy)

1330 USD US Jobless Claims

1330 CAD Canada Current Account Q3

1445 USD Chicago PMI

2230 AUD Australia AiG Performance of Manuf Index

2330 JPY Japan CPI/Overall Household Spending

2330 JPY Japan Job/Applicants, Unemployment

Fri Dec 01

0145 CNY Caixin Manuf PMI

0855 EUR Germany Markit Manuf PMI

0900 EUR Eurozone Markit Manuf PMI

0930 GBP UK Markit Manuf PMI

1330 CAD Canada GDP

1330 CAD Canada Employment/Unemployment

1430 CAD Canada Markit Manuf PMI

1445 USD US Markit Manuf PMI

1500 USD ISM Manuf PMI/Prices Paid

1500 USD US Construction Spending

1700 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.

Week to Nov 17th

NKY fell 1.3% in the Asian session on Monday partially giving up spectacular gains in previous weeks, but also affected by the continuing oil price rise. Japan imports all its oil. Otherwise it was fairly flat for indices after the previous week’s red candle. Nevertheless, SPX managed a 0.1% rise despite the 7.6% drop in GE after they announced a dividend cut. DAX fell sharply, down 165 points at one point, and breaking the psychological 13,000 barrier. However it recovered in the US session to close only 18 points down on the day.

Currencies only moved slightly, and were mixed. DXY was slightly up (0.11%) on the day and 10-year yields advanced 1bp, but this belied a mixed picture. EUR was up a little, JPY was flat, GBP fell 0.5%, and AUD and CAD were notably down. Gold and Oil were also flat.

Tuesday was another weak day for equities, and all indices fell, in particular DAX which was reacting to a strong Euro.  Markets also reacted to a sharp drop in Oil, down 3% on the day, and further weakness from GE, the SPX and DJIA’s oldest component. EUR had its best day for months, up 1.13% after German GDP beat expectation at 0700 and Eurozone GDP held as expected at 0.6% at 1000. GBP also rose 50 pips (0.4%) on the UK CPI beat at 0930. The risk-off in equities was confirmed by the classic rises in JPY and Gold, and fall in yields. Only AUD and CAD failed to make progress and were flat on the day.

The equity downtrend continued on Wednesday, with all indices lower. Analysts cited high PE ratios (important) and uncertainty about the slow progress of the tax reform. In particular the SPX recorded its biggest one day drop in ten weeks, although this was only 0.6%, but the VIX touched its highest level since mid-August.

Currencies were again mixed, despite the beats on US Retail Sales and CPI at 1330. GBP and JPY were slightly up, and yields were down. However, EUR gave up a little ground after an early spike to a one-month high, and AUD and CAD were down again, as was Gold. Oil was flat on the day. AUD in particular fell sharply (53 pips) on the big Consumer Confidence miss (-1.7 vs +3.6) at the Asian session open, and this fade held all day.

On Thursday, the House of Representatives voted to approve their version of the tax bill, and this turned the trend in equities. SPX was up 0.8%, erasing the week’s losses, and other indices followed suit ,and bond yields were up. It was not completely risk-on, as although JPY only faded slightly, and Gold was even slightly up on the day. DXY was almost flat (0.09% up), because EUR was nearly flat (after the Eurozone CPI came in as expected at 1000), and GBP and CAD advanced. AUD and Oil were flat on the day. The Australian payrolls miss at 0030 (3.7k vs 17.5k) had surprisingly little effect. 

Friday was option expiry day. The reversal in indices was short-lived, and the downtrend resumed — SPX was down 0.3%. FTSE manage to remain flat, perhaps on the ramp in Oil, which nearly recovered all Tuesday’s losses, possibly because of option expiry and rollover, although there was remarkably less contango this time. This was put down to fresh news that US Special Prosecutor Mueller has issued subpoenas to several of President Trump’s campaign officials.

In line with this, Gold, JPY and bond prices (the inverse of yields) were up, as were EUR and GBP. CAD fell sharply after the CPI print came in as expected at 1330, giving up 0.5%, although most of this was recovered by the end of the day. Nevertheless, CAD and the beleaguered AUD ended the day down.

So in summary, a risk-off week seeing appreciation in Gold, JPY and bond prices, and a clear separation between EUR and GBP advancing, and AUD, NZD and to an extent CAD fading. However, despite a change in sentiment from, say, two weeks ago, SPX only fell 0.18% on the week, and is still up on the month.

WEEKLY PRICE MOVEMENT

These are the prices movements for the week on the instruments we cover. A risk-off week with JPY and Gold both up, and all indices down, but otherwise a mixed picture for USD. A bad week for AUD and NZD, and the best forex trade would have been to buy EURNZD, up 2.74%. After four weeks as the strongest riser, it is not surprising that NKY fell the most this week.

AUDUSD 0.7564 (-1.21%)

EURGBP 0.8914 (+0.84%)

EURUSD 1.1787 (+1.07%)

GBPUSD 1.3214 (+0.18%)

NZDUSD 0.6811 (-1.67%)

USDCAD 1.2769 (+0.66%)

USDJPY 112.08 (-1.25%)

DAX     12978 (-1.14%)

FTSE     7384 (-0.81%)

NIFTY   10283 (-0.38%)

NKY     22396 (-1.26%)

SPX    2576.7 (-0.18%)

GOLD  1293.64 (+1.47%)

OIL     56.80 (-0.18%)

NEXT WEEK (all times are GMT)

The holiday season starts this week, and data is light, and the FOMC and ECB Minutes will be the main events.

On Monday, we get a lot of ECB speakers. Draghi speaks at 1400 and 1600, and also on the roster are Nwotony at 1145, Lautenschlager at 1215 and Constancio at 1415. Data is light.

Tuesday sees the RBA minutes, and also a speech from Governor Lowe. AUD touched a five-month low last week. Traders will be wondering how low it can go. The monthly GDT milk auction has had little effect on NZD recently, but give the currency’s recent strong move to the downside, again this is one worth watching.

Wednesday is a bit busier, with the UK Budget statement, although this is primarily a tax change bill, and nothing major is expected, except in the area of housing. Volatility will probably be limited to UK Housebuilding stocks. The FOMC minutes will be keenly watched. The current consensus on the CM FedWatch tool is a 96.7% chance of a hike in December. Any dovish remarks which put this in doubt could therefore put negative pressure on USD. The US Durable Goods print is not expected to produce much volatility, given its proximity to the Fed minutes.

Thursday is Thanksgiving and US and Japanese markets are closed. (Japan call it Labor Thanksgiving Day). Trading is therefore expected to be very light. Focus is of course on Europe, with UK GDP and then the ECB Minutes. The latter is the big event, watch for EURUSD volatility all day. There is also a rate decision on the South African ZAR, 6.75% hold expected.

Thanksgiving is followed by Black Friday, the retail bonanza. Expect bullish announcements from AMZN even before the end of the day. US Markets are open, but expect reduced volatility as many traders make a long weekend of the holiday, and data is light.

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

Sun Nov 19

2350 JPY Japan Trade Balance

Mon Nov 20

0700 EUR Germany Producer Price Index

1400 EUR ECB President Draghi speaks

Tue Nov 21

0030 AUD RBA Minutes

0430 JPY Japan All Industry Activity Index

0900 EUR EU Financial Stability Review

0900 AUD RBA Governor Lowe speaks

0930 GBP UK PSBR

1330 USD Chicago Fed National Activity Index

1430 (approx) NZD GDT Milk Auction

2030 WTI API Stock

2300 USD Fed Yellen speaks

Wed Nov 22

0800 EUR ECB non-MPC Minutes

1300 (approx) GBP UK Budget Statement

1330 USD US Initial Jobless Claims

1330 USD US Durable Goods Orders

1530 WTI EIA Stock

1800 USD FOMC Minutes

Thu Nov 23

0700 EUR Germany GDP

0830 EUR Germany Markit PMIs

0900 EUR Eurozone Markit PMIs

0930 GBP UK GDP

1230 ECB MPC minutes

2145 NZD NZ Trade Balance

2350 JPY Japan FDI

Fri Nov 24

0900 EUR Germany IFO Sentiment

1445 USD US Markit PMIs

1700 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.