Week to Sep 21st

Monday Sep 17

Trade war concerns started the week on a pessimistic note and all equity markets were down. Tech stocks were hit particularly hard, on fears, not previously expressed, that protectionist policies could hit the sector. NDX fell 1.4% against SPX’s 0.6%. The dollar had a bad day, with DXY giving up 0.45%, all currencies gained except CAD which was slightly down in line with the 0.5% fade in Oil. Gold was up in line with the weaker dollar and risk off. US 10-year yields briefly broke the 3% barrier again, before settling flat at 2.99%. The only news of the day, Eurozone CPI which was in line with estimates had no effect, as we said last week.

Tuesday September 18

Turnaround Tuesday today for equities and Oil, which rose in line, as did bond yields, back over 3% as money rotated from bonds to stocks. This was the day that China retaliated on trade tariffs, but the market had clearly priced that in, although the markets did not recover all of Monday’s pullback. Also the  The USD picture was mixed, with DXY flat on the day. However, this masked some movement where commodity currency CAD (and AUD and NZD not part of DXY) were up, and JPY and Gold were down, all in line with the risk-on sentiment, as were Brexit-troubled EUR and GBP were down  Yields were up sharply by 5bp, to 3.05%, in line with the equities move.

Wednesday September 19

Stocks were still positive today, although the rally flattened out, as positive news about Chinese economy plans came from the World Economic Forum in Tianjin, China. Oil rallied on the China news. Chinese goods require a lot more oil to transport them that US goods. The higher the technology, the higher the value/weight ratio, and vice versa. There is a lot more transportation (ie Oil) cost in the price of a piece of garden furniture than that of a mobile phone.

NKY pulled back a little on a rare positive day for the yen. NDX slipped slightly driven by MSFT dividend dissatisfaction. DAX and FTSE outperformed the US. Although the EU and China also have free trade issues, it seems that sometimes my enemy’s enemy is my friend. 

There was little forex volatility today. A slight advance in EUR was balanced by a JPY retreat, and despite a 117 pip range, rallying on the inflation print beat at 08:30, then pulling back on bad Brexit news, GBP closed only 2 pips down. Also AUD was strong, up 0.61%, following the Chinese news and the third green day for Gold.

Thursday September 20

Following the positive WEF sentiment of Wednesday, with optimism for Chinese growth, and the Philly Fed Manufacturing survey beat at 12:30, SPX and DJIA resumed their strong rally, and both hit all-time highs. Non-US indices also showed strong advances. Oil however gave up some of the previous day’s gains.

The dollar carried on downwards (DXY -0.69%) with a particularly strong showing from EUR, and GBP after the retail sales beat at 08:30. Even a warning from Austria than UK PM May’s Brexit plan “would not work” only caused a temporary small pullback. NZD advanced 1.07%, its best day since Feb 14 this year. All currencies (even JPY) were up, as was Gold. Notably EUR was up 0.8% against NOK after the Norwegian rate decision. Bond yields were down in line with the weaker dollar, but only by 1bp.

Friday September 21

Friday was OpEx day, and the markets were very strong in the Asian and European sessions, with ES (SPX futures) hitting a new intraday ATH. However, equities pulled back during the US cash session, and SPX was slightly down (-0.28%) by the close. The Chinese news was still positive, so this may have been due to calls expiring. FTSE was particularly strong due to a sharp fall in GBP. Cable plummeted 1.43% (to end the week flat) after what was viewed as an unhelpful speech by PM May to EUR leaders, which was reported as combative and adversarial. Oil was up very slightly, 

The dollar was up anyway, against all other currencies, although the move in other currencies was less pronounced (EUR was only down 0.26%, resulting in an overall advance in DXY of 0.34%). Canadian CPI came in at 12:30 in line with the estimated, and the loonie hardly moved. Gold was down in line, at one point (like GBP) giving up all the week’s gains, but then recovering slightly to close down 0.62%, a fourth weekly close under $1,200. Yields were also up in line, with the 10-year note registering its first ever weekly close above 3%.

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 dollar fade continued in earnest this week, with DXY down 0.75%. It would have been more except for the sharp GBP pullback on Friday. Only JPY retreated, so the best buy of the week was NZDJPY, which ironically was the best sell two weeks ago. Foreign indices outperformed the US this week, with NKY winning for a second week, helped by JPY weakness. Cryptos finally had a good week, whereas the FAANG stocks were slightly negative for once.

AUDUSD 0.7296 (+2.03%)

EURGBP 0.9003 (+1.13%)

EURUSD 1.1769 (+1.15%)

GBPUSD 1.3073 (+0.02%)

NZDUSD 0.6685 (+2.06%)

USDCAD 1.2931 (-0.89%)

USDJPY 112.57 (+0.46%)

DAX     12409 (+2.35%)

FTSE     7478 (+2.30%)

NIFTY   11143 (-3.23%)

NKY     23866 (+2.68%)

SPX    2927.4 (+0.73%)

GOLD  1199.66 (+0.51%)

OIL     70.69 (+2.51%)

BTCUSD   6755 (+4.29%)

ETHUSD 247.78 (+18.85%)

FB     162.93 (+0.38%)

AAPL   217.66 (-2.76%)

AMZN  1915.01 (-2.80%)

NFLX   361.19 (-0.92%)

GOOGL 1172.12 (-0.50%)

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

NEXT WEEK (High volatility items are in bold)

Monday September 24

US and Chinese retaliatory trade tariffs come into effect today. The next spat, which may happen this week is the USTR view on the remaining $267Bn of Chinese imports. The UK Labour Party (opposition) Annual Conference runs Sunday thru Wednesday. There was an OPEC meeting in  Algeria on Sunday. News is light, with only the Chicago Fed report from the US. There are market holidays in Australia, China and Japan, so expect a very quiet Asian session.

08:00 EUR Germany IFO Business Sentiment

12:30 USD Chicago Fed National Activity Index 

23:50 JPY BoJ MPC Minutes

Tuesday September 25

It is possible that the US and Canada will reach an agreement today on NAFTA, prior to the Sep 30 deadline. At some point this week, President Trump is expected to discuss Iran sanctions. There is a rate decision in Nigeria. Another light economic news day.

05:30 JPY BoJ Governor Kuroda Speech

08:40 GBP BoE MPC Member Vlieghe speech

13:00 USD S&P/Case-Shiller US Home Price Indices (YoY)

13:00 USD US Housing Price Index (MoM)

20:30 WTI API Stock

22:45 NZD Imports/Exports/Trade Balance

Wednesday September 26

Today is the Fed interest rate decision, and over the weekend, CME Fedwatch rated the chance of a hike to 2.25% at 93.8%, actually a little lower than their usual predictions, so close to the event. The projections (dot-plot) are less certain and therefore more closely studied. There are public hearings today on Turkish tariffs, following the combative President Erdogan’s prompt retaliation to the doubling of the steel/aluminum tariffs a few weeks ago. Of less importance is the NZ rate decision late in the day.

07:00 EUR ECB Non-MPC Minutes

14:00 USD US New Home Sales (MoM)

18:00 USD Fed Rate Decision/Statement (est 2.25% prev 2%)

21:00 NZD RBNZ Rate Decision/Statement (est 1.75% hold)

22:00 NZD RBNZ Press Conference

Thursday September 27

A packed calendar of releases includes inflation from Germany, Eurozone and Japan (Tokyo), as well as inflation proxy PCE in the US. The most important print, however, is the US GDP at 12:30. New public finance targets are expected from Italy. There are rate decisions in EM countries Indonesia, Phillippines and Egypt.

06:00 EUR Germany Gfk Consumer Confidence Survey

06:35 JPY BoJ Governor Kuroda Speech

08:00 EUR Eurozone Economic Bulletin

09:00 EUR Eurozone Business Climate

11:45 GBP BoE MPC Member Haldane Speech

12:00 EUR Germany CPI (est 1.9% prev 1.9%)

12:30 USD US Jobless Claims

12:30 USD US GDP (est 4.2% prev 4.2%)

12:30 USD PCE QoQ (est 2.2% prev 2.0%)

12:30 USD US Durable Goods

14:00 USD US Pending Home Sales (MoM)

14:30 WTI EIA Stock

16:30 USD FOMC Member Kaplan Speech

21:45 CAD BoC Governor Poloz Speech

22:45 NZD NZ Building Permits s.a. (MoM)

23:01 GBP UK Gfk Consumer Confidence

23:30 JPY Tokyo CPI (est 0.8% prev 0.9%)

23:30 JPY Japan Jobs/Unemployment

23:50 JPY Japan Retail Sales

Friday September 28

The final trading day of the week, month and quarter should see some portfolio rebalancing volatility, often meaning that weak stocks are sold and strong stocks are bought. This benefits DJIA most of all, which is price weighted. We saw some of this last week, when DJIA outperformed SPX.  The US PCE YoY and MoM figures are important, but of course the QoQ figure has been released the day before. There is a rate decision in Colombia.

01:45 CNY China Caixin Manufacturing PMI

07:55 EUR Germany Unemployment

08:30 GBP UK GDP

09:00 EUR Eurozone CPI (Core est 1% prev 1%)

12:30 USD US PCE (Core est 2% prev 2%)

12:30 CAD Canada GDP (MoM)

13:20 GBP BoE Ramsden Speech

13:45 USD Chicago PMI

17:00 WTI Baker Hughes US Oil Rig Count

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