Sunday 8 July 2018

Week to Jul 6th

Monday July 02
After tariff-driven weakness in the Asian session, which left NKY and European markets down, a recovery in the US session allowed SPX to finish 0.3% up. Some of this was timing. NKY closes first and lost the most, and Europe’s closing bell is four and a half hours earlier than New York. DAX edged into positive territory by the US close. The dollar had a good day against all the major currencies with DXY up 0.26%, and Gold was down in line. US 10-year yields fell after the ISM Prices Paid miss at 14:00, but recovered in line with SPX to end 2bp up on the day. Oil was up on the day.

Tuesday July 03
It was Turnaround Tuesday in the pre-holiday shortened day for pretty much everything except NKY which continued to fall. SPX and DAX were down, but FTSE was up, and USD was down across the board, with Gold up and yields down in line. The yield gap or curve (the difference between the two and ten year yields) hit a fresh 10-year low, below 30bp. Oil briefly topped the psychological $75 mark for the first time since 2014, before pulling back to end the day down. AUD rose after the rate hold at 04:30, but only to recover the previous day’s losses.

Wednesday July 04
With US markets closed for Independence Day, today was very quiet, with low volumes. Although US futures traded, all indices were flat on the day, with very little volatility. USD advanced very slightly against all currencies except GBP, which, as we indicated last week, benefited from the Markit Services PMI beat at 08:30, recording an eight month high, and resulting in a flat DXY. Oil and Gold advanced slightly. There was no bond trading.

Thursday July 05
Markets often rally after a holiday, and today was no exception. Although NKY had fallen 250 points in the Asian session and only managed to close flat, SPX (up 0.61%), FTSE (up 0.53%) and DAX (up 1.17%) all advanced firmly into and through the FOMC Minutes at 18:00. However, the sentiment was not reflected in the dollar, which was down across the board against other currencies and Gold, again with GBP being the exception. Oil was down sharply (1.6%) after the EIA Stock miss (+1.24M vs -3.54M est) at 15:00, one day late this week because of the holiday. Yields were flat on the day.

Friday July 06
Equity markets rallied into and out of the comfortable NFP beat (213k vs 195k est) at 12:30. The pattern was repeated in non-US indices. However the miss on AHE (2.7% vs 2.8%), which indicates a possible delay in rate hikes, meant USD was down across the board, DXY giving up 0.42%. All currencies gained ground, but surprisingly, Gold was slightly off. CAD was stronger after their NFP beat, despite a miss in Unemployment.  after Oil recovered some of Thursdays losses. Yields were down in line with the weaker dollar.

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


Last week was mixed, and this week was a clear dollar reversal, with DXY giving up 0.70%, its worst week since January. The strongest trade after two bad weeks was NZDUSD, up 0.90%. But overall, this was low volatility, also seen in indices, where DAX, FTSE and NIFTY had inside weeks (as did EURGBP). The the kiwi, DAX was the worst performer for two weeks, and this week was the strongest.

The reversal also applies to cryptos, up slightly, but still only showing a fraction of their previous volatility.

AUDUSD 0.7428 (+0.35%)
EURGBP 0.8836 (-0.10%)
EURUSD 1.1742 (+0.51%)
GBPUSD 1.3286 (+0.63%)
NZDUSD 0.6837 (+0.90%)
USDCAD 1.3089 (-0.34%)
USDJPY 110.45 (-0.20%)
DAX     12494 (+1.71%)
FTSE     7622 (+0.01%)
NIFTY   10722 (+0.07%)
NKY     21808 (-1.96%)
SPX    2759.9 (+1.49%)
GOLD  1254.52 (+0.13%)
OIL     73.87 (-0.53%)
BTCUSD   6602 (+6.42%)
ETHUSD 470.37 (+7.94%)

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

NEXT WEEK (High volatility items are in bold)

Monday July 09
The UK cabinet agreed to a soft Brexit plan late on Friday. There is a speech by ECB Coeuré (hawkish, voter) at 20:30 Sunday. Monday opens with two appearances by ECB President Draghi, at 12:00 to the European Parliament and 19:00 giving the opening address to the ECB Statistics Conference. Other speakers are listed below. There is little economic news.

06:00 EUR Germany Trade Balance s.a.
07:50 USD MPC Member Broadbent (centrist, voter) Speech
13:10 USD FOMC Member Kashkari (dove, non-voter) Speech
19:00 USD Consumer Credit Change

Tuesday July 10
Tuesday opens with a speech by BoJ Governor Kuroda at 00:30. The UK GDP print is a new statistic, a month-on-month estimate from the UK ONS. The normal QoQ figure is released on Jul 26th. The forward German ZEW confidence reports are likely to be balanced by relief over Italy, but concerns about the auto tariffs and CDU/CSU tensions.

00:01 GBP UK BRC Like-For-Like Retail Sales (YoY)
01:30 CNY China CPI/PPI
08:30 GBP UK Manufacturing/Industrial Production
08:30 GBP UK GDP estimate (MoM)
09:00 EUR Germany ZEW Economic Sentiment/Current Situation
12:15 CAD Canada Housing Starts s.a (YoY)
20:30 WTI API Stock
23:50 JPY Japan Machinery Orders

Wednesday July 11
A two-day NATO summit starts today. President Trump is likely to reiterate his complaints about underpaying members. The big story of the day is the Canadian rate decision, and the staggered release of the MPC report and press conference. A 25bp hike is expected, but commentators are expecting dovish rhetoric surrounding it, due to the ongoing trade wars. 

00:30 AUD Australia Westpac Consumer Confidence
01:30 AUD Australia Home Loans/Investment Lending
07:00 EUR ECB Non-MPC Minutes
09:40 EUR Germany 10-y Bond Auction (time approx.)
12:30 USD US Core PPI
14:00 CAD BoC Rate Decision/Statement (est 1.50% prev 1.25%)
14:30 WTI EIA Stock
15:00 CAD BoC MPC Report
15:15 CAD BoC Press Conference
15:35 GBP BoE's Governor Carney speech
20:30 USD FOMC Member Williams (hawk, voter) speech
23:50 JPY Japan Foreign stocks/bonds investment

Thursday July 12
A volatile day for EURUSD is expected with three important events. After German inflation, the ECB minutes will be examined closely. Following closely behind is the all-important US inflation figure, where an uptick is expected. The Eurogroup meeting will present its interim summer forecast/

00:00 EUR Eurogroup meeting (all day)
01:00 AUD Australian Consumer Inflation Expectation
02:15 CNY China FDI (time approx.)
06:00 EUR Germany CPI (est 2.1% prev 2.1%)
08:30 GBP BoE Credit Conditions Survey
09:00 EUR Eurozone Industrial Production s.a. (MoM)
11:30 EUR ECB MPC minutes
12:30 USD FOMC Member Kashkari (dove, non-voter) Speech
12:30 USD US Jobless Claims
12:30 USD US CPI (Core est 2.3% prev 2.2%)
16:15 USD FOMC Member Harker (centrist, non-voter) Speech
18:00 USD US Monthly Budget Statement
22:30 NZD Business NZ PMI
23:30 USD FOMC Member Kashkari Speech

Friday July 13
The week ends quietly. The European Economic and Financial Affairs council (EcoFin) is discussing VAT and the terms of reference for the G20 Finance Ministers meeting on July 21st. This is unlikely to affect EUR or equities. Other than the CB speakers, the main event of the day is the Michigan sentiment index. The estimate of 98.2 is unchanged from last month, although some commentators are expecting a miss on this figure.

00:00 EUR EcoFin Meeting (all day)
02:00 CNY China Imports/Exports/Trade Balance
11:00 GBP BoE MPC Member Cunliffe (dove, voter)Speech
14:00 USD Michigan Consumer Sentiment Index
15:00 USD Fed Monetary Policy Report
16:30 USD FOMC Member Bostic (centrist, voter) speech
17:00 WTI Baker Hughes US Oil Rig Count

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