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.

WEEKLY PRICE MOVEMENT

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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