Sunday 27 May 2018

Week to May 25th

Monday May 21
Comments from President Trump and TreasSec Mnuchin saying “we’re putting the China trade war on  hold boosted equity markets which markets which all gapped up substantially from Friday’s close, with DJIA pushing through 25,000, and making a two-month closing high. The Italian MIB was, however 1.5% down, for the political reasons we mentioned last week, as Italian 10-year yields rose 15bp to hit a 14-month high.

DXY briefly hit a new 2018 high, before pulling back to end 0.1% down, due to slight advances in all currencies except GBP, which continued its downtrend from last week. Gold, Oil and US 10-year bond prices (inverse to yields) were up in line with the weaker dollar. Also down was the Turkish lira, making a new all-time low.

Tuesday May 22
The momentum continued at first on Tuesday, with DAX rising sharply as it had been closed the day before. Other indices showed a similar trend. However, the 2740 resistance area (from the May 14th high) proved too much of a barrier, and markets retreated hard in the late US session, after Europe had closed.

The currency situation was much calmer with DXY again pulling back 0.1%, a combination of slight increases in JPY and GBP, and slight pullbacks in CAD and EUR. AUD was also down. Gold and bond yields were flat. After making a new three-year intraday high, Oil pulled back on talk of OPEC easing production limits. TRY made another ATL.

Wednesday May 23
DAX gave up 0.66% in the first 20 minutes and fell 1.17% today on Italian and Turkish worries (despite progress, after an emergency rise in TRL interest rates added a huge 7.25% to the currency), and NKY (after a very strong yen Asian session) and FTSE were also sharply down, all following SPX the day before. However, the relatively dovish FOMC remarks gave a lift in the US afternoon, and SPX actually finished slightly up.

The same remarks only put slight dent in a good recovery day for USD. DXY added 0.4%, and EUR and GBP were well down, the former on Italy worries, and the latter after the inflation miss at 08:30. Oil fell again on OPEC issues.  Counterintuitively Gold was a little up, and bond yields were down, so together with JPY the risk-off signs were there, even with SPX up. A warning sign for Thursday perhaps?

Thursday May 24
President Trump called off the North Korea summit today, and threatened to impose car import tariffs. Also the falling price of Oil, down again today, had a knock-on effect on energy stocks. All this pushed SPX down sharply by 1% at the open, although it quickly recovered to close only 0.2% down, as defensive stocks rallied. A similar pattern was seen across the other world indices.

The risk-off mood was seen in currencies with JPY and Gold up, although yields were down 3bp, closing back below 3%. Gold has its best day since Apr 11 and  broke back through $1,300. USD generally had a poor day, with only CAD doing worse, following a further fade in the Oil price. TRY made a another closing ATL, although not as low as the intraday spike on Wednesday,

Friday May 25
The big move today was Oil, after OPEC and Russia indicated that output would increase. It dropped 4.6% to touch its 50-day moving average, the worst single-day fall since June 7, 2017. The energy heavy SPX and FTSE fell in line, whereas the DAX, which contains oil consumers (cars, tyres) but not producers put on modest gains, as did the oil-free NDX. NKY also fell, probably more on a strengthening yen.

It was a strong day for the dollar, with DXY up 0.48%, and all currencies (and Gold) receding. EURUSD hit a six-month low on further Italian, and now Spanish (Catalonia and corruption) worries. Both Spanish and Italian 10-year yields rose sharply, whereas UK, US and Germany yields fell. The MIB and IBEX also fell 1.5% and 1.8% respectively.

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


A very mixed week for USD, with strong JPY appreciation, but GBP fading after the CPI miss. Selling GBPJPY would have yielded 2.46%. Non-US Indices fells, the strongest being NKY which reacted to the stronger yen. Shorting this was the best index trade.

Cryptos took another tumble this week, giving up a month’s gains. There has been a little recovery at the time of writing.

AUDUSD 0.7545 (+0.51%)
EURGBP 0.8759 (+0.25%)
EURUSD 1.1648 (-1.02%)
GBPUSD 1.3294 (-1.21%)
NZDUSD 0.6912 (-0.10%)
USDCAD 1.2970 (+0.70%)
USDJPY 109.36 (-1.25%)
DAX     12930 (-1.08%)
FTSE     7714 (-0.76%)
NIFTY   10605 (+0.08%)
NKY     22451 (-1.68%)
SPX    2717.6 (+0.21%)
GOLD  1300.70 (+0.65%)
OIL     67.40 (-5.55%)
BTCUSD   7400 (-9.90%)
ETHUSD 570.86 (-17.22%)

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

NEXT WEEK (all times are GMT)

Monday May 28
Today is Memorial Day in the US and Spring Bank Holiday in the UK. Both markets are closed, although Europe and Asia are open as normal. There are no major news releases.

Tuesday May 29
Fed Bullard (dove, non-voter) speaks in Tokyo at 04:40 shortly after the Japanese jobs data. Five ECB speakers today: Villeroy (dovish, voter) at 07:45, Visco (dove, non-voter) at 08:30, Mersch (hawkish, voter) at 09:30, Lautenschläger (hawkish, voter) at 15:30, and Coeuré (hawkish, voter) at 16:00. News is again light in Europe and the US, although expect additional American volatility because of the Monday holiday.

Wednesday May 30
The main event today (and second most important of the week) is the Canadian rate decision. No change is expected, while NAFTA rumbles on. It should be noted that USDCAD is approaching long-term trend resistance. Also important are the simultaneous US GDP and PCE (inflation proxy) prints. Spanish inflation is also published today, not normally an important release, but heightened by the recent strong decline in IBEX (see above). Today is also ADP, the ’sneak preview’ for NFP. The estimate is 190k, slightly ahead of the NFP estimate of 185k. Of course the figures were 40k apart last month. In speakers, as well as Kuroda (listed below) we have RBNZ Governor Orr at 01:10.

Thursday May 31
The final day of May is likely to see some portfolio rebalancing into the summer.  Today is a ‘hard deadline’ for compromise on NAFTA. Fed Brainard (centrist, was a dove, voter) speaks at 17:00 (time approx), also we have Bullard, still in Tokyo at 10:00, and Bostic (centrist, voter) at 16:30. Canadian GDP is mostly important for its potential to reverse any big moves following Wednesday’s rate decision, as there will be no simultaneous US and Canada jobs report this month. The EIA Oil stock print is a day late due to Monday’s holiday, and may have a noticeable effect given recent volatility in Oil.

Friday Jun 01
We have the earliest possible NFP date today, without the Canadian print which is the following Friday. Also, importantly, the Canadian, Mexican and EU tariff exemptions expire today in the absence of any new agreement. Amongst a raft of Markit PMIs today, the one to watch is the UK, as some good news is needed after the CPI miss last week for any possible rate hike in June.

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

Mon May 28
23:30 JPY Japan Jobs/applicants and Unemployment Rate

Tue May 29
04:40 USD Fed's Bullard speech
13:00 USD US S&P/Case-Shiller Home Price Indices (YoY)
21:00 NZD RBNZ Financial Stability Report
22:45 NZD NZ Building Permits s.a. (MoM)
23:50 JPY Japan Retail Sales

Wed May 30
00:00 JPY BoJ Governor Kuroda Speech
01:30 AUD Australia Building Permits (MoM)
06:00 EUR Germany Retail Sales (MoM)
07:00 EUR Germany CPI
08:00 EUR Germany Unemployment
09:00 EUR Eurozone Business Climate
12:15 USD US ADP Employment Change
12:30 CAD Canada Current Account
12:30 USD US GDP (YoY) (est 2.4% prev 2.3%)
12:30 USD US PCE (QoQ) (est 2.3% prev 2.5%)
14:00 CAD BoC Rate Decision/Statement (1.25% hold est)
18:00 USD Fed's Beige Book
20:30 WTI API Stock

Thu May 31
00:00 EUR G7 Meeting (all day)
00:01 GBP UK Gfk Consumer Confidence
01:00 CNY NBS PMIs
08:30 GBP UK Mortgage Approvals
09:00 EUR Eurozone Unemployment Rate
09:00 EUR Eurozone CPI (est 1.6% prev 1.2%)
12:30 USD US PCE (YoY) (est 2.0% prev 1.9%)
12:30 USD US Jobless Claims
12:30 CAD Canada GDP (est 1.7% prev 1.7%)
13:45 USD Chicago Purchasing Managers' Index
14:00 USD US Pending Home Sales (MoM)
14:30 WTI EIA Stock
16:45 USD FOMC Member Bostic speech
22:30 AUD AiG Performance of Mfg Index

Fri Jun 01
00:00 EUR G7 Meeting (all day and Saturday)
00:00 AUD HIA New Home Sales (MoM)
01:45 CNY China Caixin Manufacturing PMI
07:55 EUR Germany Markit Manufacturing PMI
08:00 EUR Eurozone Markit Manufacturing PMI
08:30 GBP UK Markit Manufacturing PMI
12:30 USD US NFP/AHE/UE/Participation (est 185k prev 164k)
13:30 CAD Canada Markit Manufacturing/Prices Paid
14:00 USD US ISM Manuf PMI/Prices Paid
17:00 WTI Baker Hughes US Oil Rig Count

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Saturday 19 May 2018

Week to May 18th

Monday May 14
After finishing on a high on Friday, SPX pulled back today, as did FTSE, although NKY and DAX were fairly flat, as their denominated currencies moved down, and The Italian MIB stopped falling. Of more interest was the currency market, where, after being flat last week, the dollar resumed its upward climb, advancing against Gold and all currencies except GBP, which pushed briefly back above its 200-day moving average. US 10-year Treasury yields poked briefly above 3%, and closed pretty much on the line at 2.9951%. Oil was up on the day.

Tuesday May 15
There has been much talk of the 3% bond yield psychological roundpoint being a severe damper on equity prices, and so it was today, when the yield shot up by 8bp (the biggest one-day rise since Sep 11, 2017) and touched a six-year intraday high of of 3.095%. US Markets fell sharply, with SPX down 0.7% (not helped by the Retail Sales miss at 12:30) and Gold dropping below $1,300 to a 2018 low. Inevitably, this move helped USD. DXY added 0.69% to make a 2018 high, and all currencies were down, which in turn helped DAX and FTSE post small gains.

The rising US yields have of course had a knock-on effect on the equivalent German and UK bonds, up 3bp and 5bp respectively, so although EUR and GBP fell 0.6% and 0.3% respectively (note the lesser fall/higher yield rise in GBP, helped by the Claimant Count beat at 08:30), AUD and NZD fell further, down 0.7% and 0.74% respectively, the latter despite an upturn in the GDT Milk Index. Oil see-sawed throughout the day on Venezuela and Iran worries, and ended marginally up. TRY hit a record intraday low after President Erdogan spoke on Bloomberg TV.

Wednesday May 16
Equity markets were consistently up today, with the exception of the MIB which fell 2.3% on continued Lega/M5S ‘coalition from hell’ concerns. Italian 10-year yields had their largest single-day advance (16bp) since November 2016. Notably RUT, the US small-cap index closed at an all-time high.

Italy was responsible for EUR being the only currency to fall, hitting a new 2018 low, whereas all others rose sharply against USD (resulting in a near-flat DXY overall). EURJPY was down 0.3%. Gold was also flat on the day in line with DXY. Despite the pause in USD, and German and British yields pulling back, the US 10-year yield put on 1.6bp to hit another six year high. Oil was up sharply after the EIA print beat at 14:30 (with the previous evening’s API print missing), touching a new four-year high.

Thursday May 17
Today was the day the currency movements materially caught up with equities. It was another good day for USD, up across the board, and notably so against JPY and GBP.  SPX was flat on the day, but NKY, DAX and FTSE soared, the latter making an intraday (7799) and closing (7783) all-time high.

This was aided of course by the falling pound, and the surge in the price of Oil (Oil & Gas is 16.4% of FTSE, higher than any other except TSX (19.4%)). Even MIB recovered slightly. Oil itself was flat today, but not before touching an intraday of $72.28.

Gold was down in line with the stronger dollar, and yields were up another 2bp, both instruments making new 2018 records. 

This Bloomberg table shows the USD state of play for the week on Thursday evening.

Friday May 18
Equities pulled back slightly on Friday, with NKY moving more than the others as JPY (and Gold) being the only gainers against USD, as GBP came close to touching its 50-week moving average. Whether this provides support remains to be seen, but it is notable that the 200-week moving average was resistance both at Brexit and last month.

MIB fell sharply again (1.96%) as the Italian crisis rumbled on. Yields also took a breather, so technically it was a risk-off day with JPY, USD, Gold and Bond prices all up. Nevertheless, RUT posted another ATH. Oil was down in line with the generally stronger dollar, as DXY made another 2018 closing high of $93.66. CAD was down 0.59% after the Canadian CPI miss.

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


USD resumed its upward path against all currencies, with DXY putting on 1.2%. The best currency to sell would have been EUR, although selling Gold would have been even better. Further EM weakness meant that shorting NIFTY would have been the best index trade.

After last week’s fall, cryptocurrencies were virtually flat this week, as volatility continues to reduce in the sector, as you can see in this chart.

AUDUSD 0.7507 (-0.46%)
EURGBP 0.8737 (-0.86%)
EURUSD 1.1768 (-1.42%)
GBPUSD 1.3457 (-0.60%)
NZDUSD 0.6919 (-0.62%)
USDCAD 1.2880 (+0.70%)
USDJPY 110.74 (+1.26%)
DAX     13071 (+0.65%)
FTSE     7773 (+0.84%)
NIFTY   10596 (-1.94%)
NKY     22834 (+0.59%)
SPX   2711.88 (-0.62%)
GOLD  1292.30 (-2.01%)
OIL     71.36 (+1.31%)
BTCUSD   8213 (-2.48%)
ETHUSD 689.63 (+1.63%)

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

NEXT WEEK (all times are GMT)

Monday May 21
The OPEC Clean Energy conference held in Copenhagen and Malmö starts today, and it is the second day of the G20 conference in Buenos Aires. A US Treasury report on Chinese trade [unfairness] is due. A Trump tweet is possible. SecState Pompeo speaks on Iran. A Mexican NAFTA team arrive in Washington. CB speakers today are Fed Bostic (centrist, voter) at 16:15, Harker (centrist, non-voter) and (Kashkari (dove, non-voter) at 21:30, and ECB Nowotny (hawk, voter) at 07:00. Today is the first day of the options month.

Tuesday May 22
In Europe, the deadline expires to elect the Catalonian President, and the UK begins the next round of Brexit negotiations. BoE Gov Carney appears before Parliament, for the Inflation Report hearings at 09:00. President Moon of South Korea visits Trump in Washington, expect a comment of some kind about North Korea. Otherwise a quiet day on data.

Wednesday May 23
Today is the biggest day of the week. At 08:30 we have UK CPI. This is the first, and most important of the three key UK releases this week which will influence the BoE’s next rate decision on June 21st. Then we have the all-important FOMC minutes later in the day. As ever, forward guidance is the key. SecState Pompeo appears before the House Foreign Affairs Committee. South Africa inflation is reported.

Thursday May 24
Two reports from the ECB today, the Financial Stability Review at 08:00, and the MPC minutes at 11:30. Also ECB Praet (dove, voter) speaks. BoE Gov Carney speaks twice, alongside Fed Dudley (centrist, voter) at 07:00 (Dudley speaks at 08:15) and again at 17:00. Fed Harker (centrist, non-voter) speaks at 18:00. South Africa makes a rate decision. Commentators have, unusually marked the Tokyo inflation figure as important this month. The second important GBP print, Retail Sales, is at 08:30.

Friday May 25
The final important UK print for the week is GDP, which should be taken in the context of the previous two releases. Today’s ECB speakers include Villeroy (centrist, voter) at 07:00, and Coeuré (hawkish, voter) at 13:15. Fed Chair Powell is in Sweden at the Riksbank (the world’s oldest CB) conference, where we may hear other important CB speakers. Bostic and Kaplan (hawkish, non-voter) also speak today. Note that US markets are closed Monday 28th for Memorial Day.

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

Sun May 20
22:45 NZD NZ Retail Sales (QoQ)
23:50 JPY Japan Trade Balance/Imports/Exports

Mon May 21
08:00 EUR EU Financial Stability Review
09:00 WTI OPEC meeting (all day)
12:30 USD Chicago Fed National Activity Index 

Tue May 22
08:30 GBP UK Public Sector Net Borrowing
20:30 WTI API Stock

Wed May 23
04:30 JPY Japan All Industry Activity Index (MoM)
06:00 EUR Germany GDP
07:30 EUR Germany Markit PMIs
08:00 AUD RBA's Governor Philip Lowe Speech
08:00 EUR Eurozone Markit PMIs
13:45 USD US Markit Services/Composite PMIs
14:00 USD US New Home Sales (MoM)
14:30 WTI EIA Stock
18:00 USD FOMC Minutes
22:45 NZD Trade Balance/Imports/Exports

Thu May 24
00:00 EUR Eurogroup meeting (all day)
05:00 JPY Japan Leading Economic Index
06:00 EUR Germany Gfk Consumer Confidence Survey
08:15 USD Fed's William Dudley speech
08:30 GBP UK Retail Sales
11:30 EUR ECB MPC Minutes
12:30 USD US Jobless Claims
13:00 USD US Housing Price Index (MoM)
14:00 USD US Existing Home Sales (MoM)
18:00 USD FOMC Member Harker Speech
23:30 JPY Tokyo CPI

Fri May 25
00:00 EUR EcoFin Meeting
08:00 EUR Germany IFO - Business Climate/Current Assessment/Expectations
08:30 GBP UK GDP
12:30 USD US Durable Goods Orders
13:00 USD Fed Chair Powell Speech
15:45 USD FOMC Member Kaplan Speech
15:45 USD FOMC Member Bostic speech
17:00 WTI Baker Hughes US Oil Rig Count

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Saturday 12 May 2018

Week to May 11th

Monday May 07
The week opened quietly, with SPX making modest gains. After dropping 200 points in the Asian session, NKY ended the entire day flat, and DAX and FTSE advanced as their denominated currencies declined. USD continued up, with DXY adding 0.21% to close at a new 2018 high, and all currencies and Gold were down against it. Oil was up in line, also benefiting from US-Iran sanctions talk, and breaking through the $70 level. US 10-year Treasury Bond yields were flat at 2.95%. TRY fell again, down 0.9%

Tuesday May 08
An even flatter day in US, Japanese and UK equities belied stirrings in Europe where the Italian MIB was down 2.4% at one point due to the failure of Italian coalition talks, and the  possibility of another election. DAX managed a slight (0.1%) gain on the back of further Euro losses. USD had another good day, advancing against all currencies except JPY, as President Trump confirmed the reimposition of Iran sanctions, and the yen benefited from its safe haven status. Gold was also flat, probably for a similar reason. Yields followed the dollar upwards, and EM currencies fell again. DIS beat on earnings and revenue after the bell and briefly spiked $2 before falling back.

Wednesday May 09
After the Iran decision, a rally in energy stocks pushed SPX up 1% today, and the energy-heavy FTSE 1.6%. DAX followed suit to an extent, up 0.31%, but energy importer Japan’s NKY only managed to end flat on the day. The dollar took a breather, with a flat DXY. This represented a flat EUR, gains on GBP, AUD and CAD, but a 70 pip move down for JPY as risk-on returned. Gold fell in line with JPY.

Oil was further up in line with the energy rally ending 3% higher at $71.16. There was a 10-year Treasury bill auction today, and although the auction only made a maximum of 2.995%, trading did push through the 3% barrier to end at 3.01% on the day. 

Thursday May 10
Despite mixed Jobless Claims results, and a miss on the important US CPI print at 12:30, US markets still had a strong day, as SPX put on 20 handles (0.76%), and NDX did even better, up 0.92%, with AAPL making a new ATH. DAX, FTSE and NKY were up in line, despite their denominated currencies rising.

The CPI print inevitably had an effect on the dollar, and DXY was down 0.39%, and most currencies and Gold were up. The exceptions were the two rate decisions, both holds. NZD dropped 77 points (1.11%) after the RBNZ decision, and GBP gave up 84 points (0.63%) after no change at the BoE. Although both currencies recovered somewhat, they still posted red candles for the day. Yields fell in line with USD, and ended back under 3%. Oil had a fairly quiet day, but held onto earlier gains in the week, and closed 0.4% up at $71.41. BKNG fell over 6%. Although the Q1 EPS was a beat, the forward guidance disappointed.

Friday May 11
The SPX energy-led rally continued on Friday, as did NKY, and the oil-rich FTSE. Healthcare stocks also rallied on Trump’s drug pricing proposals.The energy-free DAX did not join in and fell 0.2%. USD pulled back again, although the move was not uniform. USDCAD was up after the Canadian jobs miss at 12:30, and Gold was down in line with the equities rally. Oil also gave up some of its recent gains, but still closed above $70, the first weekly close at this level since November 2014. Yields were flat on the day despite the weaker dollar, at 2.97%

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


The upward movement of the dollar we have seen recently was stalled this week. DXY was virtually flat (actually down 0.02%) with some currencies advancing and some receding. The best forex trade would have been to sell NZDCAD which moved down by 1.28%. SPX was the best-performing index.

The crypto-recovery of the last two weeks stalled, with substantial drops in Bitcoin and Ethereum, mainly on Thursday and Friday.

AUDUSD 0.7542 (+0.04%)
EURGBP 0.8813 (-0.29%)
EURUSD 1.1938 (-0.18%)
GBPUSD 1.3538 (+0.09%)
NZDUSD 0.6962 (-0.84%)
USDCAD 1.2791 (-0.44%)
USDJPY 109.36 (+0.28%)
DAX     12986 (+1.29%)
FTSE     7708 (+1.66%)
NIFTY   10806 (+1.77%)
NKY     22699 (+1.01%)
SPX    2728.9 (+2.44%)
GOLD  1318.83 (+0.31%)
OIL     70.44 (+1.00%)
BTCUSD   8422 (-13.69%)

ETHUSD 678.58 (-14.46%)

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

NEXT WEEK (all times are GMT)

Monday May 14
An huge roster of ECB speeches today: Mersch (10:00), Lautenschläger (10:15 and 15:00), Praet (11:45 and 17:15) and Coeure (17:45), added to the two Fed speakers Mester (06:45) and Bullard (13:40). Trade is back in focus with NAFTA talks continuing and Chinese Vice-Premier Liu visiting Washington. The Indian inflation print is at 12:00.

Tuesday May 15
A busy economic calendar today, especially for EUR. The British employment figures (the nearest the UK comes to an NFP) is the first major release since the rate hold decision, and average earnings growth is the key figure. US Retail Sales are less exciting as they are a CPI proxy, and we had that report last week. Fed speakers are Kaplan (12:00), and Williams (18:00), but of more interest are the Fed nominees Clarida and Bowman’s testimony at 14:00, particularly the latter, as we don’t know where she sits on the hawk-dove scale yet.

Wednesday May 16
German and Eurozone inflation are rarely much outside estimates and in any event do not move the markets much—unless of course there are big upsets. ECB President Draghi speaks at 12:00, but only a welcome address. Couere (12:30) and Praet (14:30) follow later in the day. In the EM world, Brazil, Poland and Thailand all have central bank rate decisions. Finally, NDX veteran CSCO reports after the bell.

Thursday May 17
The biggest economic event of the day comes in Asia, with Australia’s version of NFP. The estimate of 20k is mid-range.  Today is the NAFTA negotiations deadline set by US Speaker Ryan., and Chinese tech star BABA and DJIA heavyweight WMT report before the bell. ECB Constancio speaks at 10:30 and 12:00, and BoE Haldane is on at 16:00. The only Fed speaker is dove Kashkari at 14:45. Markets are closed in Norway.

Friday May 18
Canadian CPI is important, and beat or miss (as appropriate) could cause a sharp move. USDCAD is known to do that, especially if correcting an earlier move caused by the NAFTA outcomes. Three Fed speakers today: Mester at 07:00, Kaplan and Brainard (the dove turned centrist) at 13:15.

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

Mon May 14
06:45 USD FOMC Member Mester speech
23:10 AUD RBA Assist Gov Debelle Speech

Tue May 15
01:30 AUD RBA Meeting's Minutes
02:00 CNY Retail Sales/Industrial Production (YoY)
06:00 EUR Germany GDP
08:30 GBP UK Unemp/Claimant Count/Average Earnings
09:00 EUR Eurozone GDP
09:00 EUR Eurozone Industrial Production
09:00 EUR Germany ZEW Economic Sentiment/Current Situation
12:30 USD US Retail Sales
14:00 NZD GDT Milk Price Index (time approx)
20:30 WTI API Stock

Wed May 16
00:00 EUR Eurozone EcoFin Meeting (all day)
01:30 AUD Wage Price Index (QoQ)
07:00 EUR Eurozone Non-monetary policy's ECB meeting
06:00 EUR Germany CPI
09:00 EUR Eurozone CPI
12:30 USD US Housing Starts/Building Permits (MoM)
13:15 USD US Industrial Production/Capacity Utilization
14:30 WTI EIA Stock
22:45 NZD PPI
23:50 JPY Machinery Orders

Thu May 17
01:00 AUD Australia Consumer Inflation Expectation
01:30 AUD Australian Emp/UnEmp/Participation (NFP)
12:30 USD US Jobless Claims
12:30 USD Philadelphia Fed Manufacturing Survey
14:30 CAD BoC Review
23:30 JPY Japan National CPI

Fri May 18
12:30 CAD Canada Retail Sales
12:30 CAD Canada CPI
17:00 WTI Baker Hughes US Oil Rig Count

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Sunday 6 May 2018

Week to May 4th

Monday April 30
Some people claim that the new moon has a negative effect on market. It certainly co-incided with a top, as last week’s rally was sent into reverse. All indices were down (including the futures on NKY which was closed), not helped by a series of economic print misses on German CPI (1200), US PCE (1230), the Chicago PMI (1345) and US Pending Home Sales (1400).  MCD beat earnings estimates 

The dollar on the other hand continued to rally, and all other currencies and Gold receded. The effect did not translate into bond yields, which remained flat on day at 2.95%. Oil rose on speculation that Israel’s “proof” that Iran had been developing nuclear weapons may lead to fresh US sanction.

Tuesday May 1
Equities were flat on the first day of the new month, with SPX 0.3% up and DJIA 0.3% down because PFE feel 3% on an a revenue miss. After the misses on UK Manufacturing PMI and Mortgage Approvals at 08:30, FTSE was slightly up but only because of a sharp (1%) fall in GBP, and DAX was closed.

Another strong day for the dollar pushed other currencies, Gold and Oil down further, the latter giving up the previous day’s gains. Yields were up in line, adding 4bp but still staying under 3%. AAPL beat earnings expectations and rose 5.2% in the after-hours market.

Wednesday May 2
Equity markets were again down across the board, perhaps the new moon or the ‘Sell in May’ effect coming into play. The exception was DAX, which broke through the 12650 resistance barrier, and shot up nearly 200 points, helped by the Eurozone Manufacturing PMI beat at 08:00, a 4.42% rise in IFX.DE (0.98% of DAX), and of course the continued decline in the Euro.

After continuing its upward trend earlier, USD fell slightly after the FOMC rate hold. Although the comments were upbeat, they weren’t hawkish enough. Nevertheless DXY still added 0.3% for the day to close at a 2018 high of 92.73. AUD and JPY were flat, as were yields, but the other currencies fell. (AUD had rallied in Asia, but gave it up in Europe). There were EM problems today, TRL and ARS fell sharply, despite a 3% emergency base rate rise in Argentina. Oil rose slightly after the previous day’s fall. TSLA fell 8% AH after poor results and a ‘car crash’ earnings teleconference.

Thursday May 3
Markets suffered an early upset today with SPX and DJIA both dropping sharply (around 1.5%) at the open and pushing below the 200-day simple moving average for the first time since July 2016. Other indices follow suit, although all quickly recovered. The drop was primarily a build-up of sentiment, but may have been fallout from the Fed announcement, as the economic prints for the day were fair, although the TSLA and AIG (also a miss) earnings results did not help.

The dovish Fed was probably also responsible for stalling the dollar’s rise. DXY was flat on the day, with Gold and all currencies except GBP advancing. Sterling continues to decline as traders now doubt that there will be rate rise next week. Oil also dipped with indices but ended the day up on the weaker dollar. TRY and ARS fell further. Yields were down two more basis points to 2.95%

Friday May 4
Maybe it was the bounce off the 200-day average, the first touch of that line in the Trump era, or maybe it was the further rise in AAPL (3.9%), after Warren Buffett announced that he had increased his stake. Despite a series of misses (China PMIs at 01:45, German and Eurozone PMIs at 07:55/08:00, and critically the NFP/AHE miss (164k vs 192k, despite the ADP beat), all equity markets rose sharply. SPX had its best day in nearly a month, putting on 1.3% on the day, DJIA and NDX did even better adding 1.4% and 1.7% respectively. DAX (1%) and FTSE (0.9%) also outperformed. Oil joined the party, adding 1.85% on the day, and coming within a whisker of the $70 roundpoint.

DXY made another 2018 high, making a weekly gain of 1.2%, and the best two-week performance since the election. This was mainly down to EUR and GBP continuing to fall (GBP is down 4.75% since BoE Governor Carney warned that rates may not increase in May), as JPY and CAD were flat, and AUD even managed a slight increase. ARS finally stopped falling, but only after Argentina’s central bank raised rates to 40%! (from 27.25% last week). Inflation in Argentina is “only” 25%. TRY continued to fall (down 10% in 2018). Note also that PLN and MXN have fallen more than 4% in the last four weeks. After a dip in early trading, yields were flat on the day. Note that the 10-year/2-year differential continues to close, finishing the week at a multi-year low of 4.5bp.

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


A third green weekly candle in DXY saw the basket break the 200-day simple moving average (SMA200) and briefly push through the 50-week average. All currencies receded, particularly GBP on (lack of) rate hike concerns, which closed under its SMA200. Shorting cable would been the best forex trade. CAD has been noticeably flat, staying in a 100 pip range now for two weeks.

The weak Euro boosted the DAX to top performing index, but, as is often the case, Oil was the overall best performer in the markets we trade.

Cryptos continued their recovery, with Ethereum outperforming Bitcoin for a second week.

AUDUSD 0.7539 (-0.54%)
EURGBP 0.8839 (+0.48%)
EURUSD 1.1960 (-1.37%)
GBPUSD 1.3526 (-1.81%)
NZDUSD 0.7021 (-0.90%)
USDCAD 1.2848 (+0.16%)
USDJPY 109.06 (+0.04%)
DAX     12820 (+1.83%)
FTSE     7582 (+0.97%)
NIFTY   10618 (-0.69%)
NKY     22473 (+0.03%)
SPX    2663.9 (-0.25%)
GOLD  1314.77 (-0.64%)
OIL     69.74 (+2.62%)
BTCUSD   9758 (+8.16%)
ETHUSD  793.3 (+21.30%)

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

NEXT WEEK (all times are GMT)

Monday May 07
As is often the case, Monday is quiet, and note that Australia, the UK, Thailand and South Korea are closed. Fed speakers are Quarles at 23:00 Sunday, Bostic  at 12:25, Barkin at 18:00, and finally Kaplan at 19:30. All are centrists, and all except Kaplan are voters. BoC Lane speaks at 19:00. NAFTA talks resume today. Although this week is still earnings season with 1,493 companies reporting, all the index-moving stocks have now filed.

Tuesday May 08
The only possible area for surprise is the Australian budget, in another quiet day. RBA Boge speaks at FX Week Australia at 23:00 Monday. No Fed speakers today, but ECB Lilanken (hawkish, non-voter) is on at 14:00. DJIA component DIS (2.87%) reports after the bell.

Wednesday May 09
One Fed speaker today, Bostic again at 17:15, and the first of two rate decisions, with the RBNZ decision at 21:00 after the US market closes. A hold at 1.75% is expected, and it will be interesting to see if the press conference, or Governor Orr’s speech three hours later arrests the slide of the kiwi, down 5% in the last three weeks. BKNG (formerly Priceline), which is 1.36% of NDX, reports after the bell.

Thursday May 10
Today is clearly the biggest day of the week with the all important BoE rate decision. Sterling is down 4.75%, below SMA200, and oversold, since Gov Carney warned that a rate hike was not a certainty, so if there is a rise, expect the currency to turn very sharply upwards. Alternatively, it remains to be seen whether a hold is fully priced in. Current sentiment from commentators is fairly evenly split.

Following 90 minutes later is the US CPI print. A lower core (ex Food and Energy) print is forecast, down to 1.9% from last month’s 2.1%. Remember the Fed’s target is 2%. Note there is also Chinese inflation today. Norway, Sweden and Switzerland are closed today. NVDA, maker of crypto mining chips, and 1.874% of NDX, reports after the bell.

Friday May 11
Today we have the Canadian jobs report, which, for once, is a week later than US NFP, so the volatility in the loonie will be there, but less pronounced. The estimate of 36.1k is higher than last month’s actual, and equivalent to 324k in the US, who have nine times the population. USDCAD actually had a weekly death cross last week (50wk MA crossing below 200wk MA), ie a golden cross for CAD. It remains to be seen whether the currency can continue to outperform its European counterparts. We then go into the weekend where the US makes the important decision on whether to continue the waiver on Iranian sanctions. As always the week closes with the Baker Hughes Rig Count, which as you can see, continue to rise as the price of Oil

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

Sun May 06
23:00 USD Fed's Quarles speech
23:30 AUD AiG Performance of Construction Index
23:50 JPY BoJ Monetary Policy Meeting Minutes

Mon May 07
12:25 USD FOMC Member Bostic speech
19:00 CAD BoC Gov Council Member Lane Speech
19:00 USD US Consumer Credit Change
19:30 USD FOMC Member Kaplan Speech
23:30 JPU Japan Overall Household Spending (YoY)

Tue May 08
01:30 AUD Australia Retail Sales s.a. (MoM)
02:00 CNY China Trade Balance/Imports/Exports
06:00 EUR Germany Industrial Production/Trade Balance
09:30 AUD Australia Budget Release
12:15 CAD Canada Housing Starts s.a (YoY)
20:30 WTI API Stock

Wed May 09
00:00 GBP UK BRC Like-For-Like Retail Sales (YoY)
00:30 AUD Westpac Consumer Confidence
05:00 JPY Japan Leading Economic Index
12:30 USD US Producer Price Index ex Food & Energy (YoY)
14:30 WTI EIA Stock
17:15 USD FOMC Member Bostic speech
21:00 NZD RBNZ Rate Decision/Statement (1.75% hold est)
22:00 NZD RBNZ Press Conference

Thu May 10
01:10 NZD RBNZ Governor Orr Speech
01:30 CNY China CPI/PPI
08:00 EUR Eurozone Economic Bulletin
08:30 GBP UK Manufacturing/Industrial Production
11:00 GBP BoE Rate Decision/Minutes/Vote (est 0.75%, prev 0.50%)
11:30 GBP BoE Governor Carney speech
12:30 USD Jobless Claims
12:30 USD US CPI (Ex Food/Energy 1.9% est 2.1% prev) 
14:30 CAD BoC Review
18:00 USD Monthly Budget Statement
22:30 NZD Business NZ PMI

Fri May 11
01:30 AUD Australia Home Loans/Investment Lending
12:30 CAD Canada NFP/Unemployment/Participation (est 36.1k prev 32.3k)
13:00 CAD BoC Wilkins Speech
14:00 USD Michigan Consumer Sentiment Index
17:00 WTI Baker Hughes US Oil Rig Count

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