Week to Nov 24th

Monday Nov 19

The week opened with reports from the APEC Summit in Papua New Guinea that tensions were still strong between the US and China. Coupled with reports that Apple is cutting production orders for iPhones, the markets all went red in a big way. SPX was down 1.61%, NDX was down 3.23% and AAPL was down 3.96%. NKY and the European indices followed suit. Car maker EPA:RNO fell 8.4% on news of the chairman’s arrest. Currency moves were milder, with DXY giving up 0.26% with all currencies except AUD and NZD advancing. Gold was up in line with the weaker dollar. Oil and US 10-year bond yields were flat.

Tuesday November 20

The carnage continued on Tuesday, with SPX giving up another 1.8%., After gapping down 2.5%, and briefly erasing the whole year’s gains, NDX finished 1.75% down on the day. VIX made a new November high but then retreated. This was partly a continuation of Monday, but also a reaction to the huge 7% fall in the price of Oil as it broke through December 2017 resistance, and made a new 12-month low, on reports of a glut ahead from both the IEA and OPEC. The dollar had a strong day in this risk-ff mood, adding 0.68% with all currencies firmly down, although as you would expect, JPY and Gold moved the least. Yields were slightly down as money flowed from stocks to bonds.

Wednesday November 21

There was a small dead cat bounce on Wednesday, with SPX up 0.3% and NDX up 0.9%. Other indices also rose, notably FTSE which added 1.78% on yesterday’s sharp fall in GBP and a 1.9% recovery in Oil. This was attributed to a withdrawal of Peter Navarro, a China hawk, from Trump’s team meeting President Xi at the G20 Summit next weekend, or the 14bp drop in BTP yields (despite Italy’s refusal to change their budget). However, it was probably just a natural pause after the sharp two-day drop. The dollar basket dropped a mild 0.11% today, on vague reports that the Fed may pause its rate cycle next year. All currencies were up except JPY, which faded in line with the equity recovery, although Gold did not, adding $4 on the day. US yields were up 1bp, for the same reason as yesterday but in reverse.

Thursday November 22

US Markets were closed for the Thanksgiving holiday, and as you would expect, volumes and thus volatility was sharply down. US futures and non-US markets resumed their downward trend, with notable sell-offs at the open in both London and Frankfurt, despite a further fall in BTP yields. NKY was down in the cash session, but managed to close flat at the end of futures trading. For once, the currency markets were more interesting, as sterling soared after thE UK and EU agreed a draft deal. GBPUSD was up 147 pips (1.15%) in the hour after the announcement at 0930. Also notable was ZAR, up 1.5% after the 25bp hike we predicted (against a hold consensus) last week. The GBP rise contributed to a 0.23% in DXY, but Gold and all other currencies (except, again, AUD and NZD) rose. Oil erased Wednesday’s small gain. The bond market was closed.

Friday November 23

The short trading day in the US (markets closed at 1pm EST) still resulted in a further 0.7% fall in SPX, and similar moves in other indices. Some reports are notable by their absence. AMZN reported that Black Friday sales were ‘already on pace’ to exceed last year ‘in terms of items ordered’, which is not saying more revenue (although later reports said that the day as a whole had beaten last year). The stock softened continually throughout the day, to close 0.97% lower. As Oil lost another 6.5% today to a 13-month low of $50.37 on continued oversupply (or under demand) worries, and Gold was also down, it was inevitable that many commentators said there was a Black Friday sale on all assets.

USD had a good day out of all this, with DXY up 0.45%, as sterling gave up most of the previous day’s gains on concerns that the Brexit deal agreed with Brussels will not be passed by the UK parliament. EUR was also down for the same reason. In any event, all currencies (and Gold) moved south, except for JPY which did its usual thing, rising when stocks fall. Yields were down 2bp in line with the softer dollar.

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

It was a solid week for USD with gains across the board, with NZDUSD the weakest pair. US indices were much weaker than elsewhere, with SPX, DJIA and NDX each giving up over 4%. But the real stories were Oil, which had its worst week since August 2014, and cryptos, which collapsed through support and plunged down.

AUDUSD 0.7237 (-1.38%)

EURGBP 0.8846 (-0.55%)

EURUSD 1.1343 (-0.68%)

GBPUSD 1.2822 (-0.14%)

NZDUSD 0.6785 (-1.37%)

USDCAD 1.3240 (+0.69%)

USDJPY 112.95 (+0.10%)

DAX     11181 (-1.77%)

FTSE     6954 (-1.29%)

NIFTY   10526 (-1.46%)

NKY     21515 (-1.32%)

SPX    2627.8 (-4.09%)

GOLD  1221.39 (+0.01%)

OIL     50.37 (-11.51%)

BTCUSD   4423 (-21.79%)

ETHUSD 125.20 (-29.26%)

FB     131.73 (-5.59%)

AAPL   172.29 (-10.98%)

AMZN  1502.06 (-5.73%)

NFLX   258.82 (-9.57%)

GOOGL 1030.10 (-3.57%)

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

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold). 

Monday November 26

The EU Brexit Summit, which started on Sunday could be very important for GBP, which had wild swings last week. Remember that BoE Governor Carney has linked rate hikes to an orderly Brexit, so each achievement or setback has even more effect on the currency. It is also Cyber Monday, so expect noises from the likes of AMZN and WMT. Plenty of ECB speakers today, as well as Nowotny and Coeuré, we have Nouy on at 1500 in Lisbon. There is a rate decision on GHS

21:45 NZD Retail Sales (Sunday)

22:15 AUD RBA Governor Lowe Speech (Sunday)

00:00 EUR EU Brexit Summit (all day)

03:00 AUD RBA Assistant Governor Kent Speech

05:00 JPY Japan Coincident/Leading Economic Index

09:00 EUR ECB Praet Speech

09:00 EUR Germany IFO Expectations/Business Climate/Current Assessment

12:00 EUR ECB Nowotny Speech

12:30 EUR ECB Coeuré Speech

13:30 USD Chicago Fed National Activity Index 

14:00 EUR ECB President Draghi's Speech

18:30 GBP BOE Governor Carney speech

22:45 NZD NZ Imports/Exports/Trade Balance

Tuesday November 27

Yesterday was ECB, today is Fed. As well as new Fed vice-chair Clarida (2018/9 voter, centrist), we also have Bostic (dovish, 2018 voter), Evans (dove, 2019 voter), and George (hawk, 2019 voter) at 1930. There is a rate decision on KES. Data is relatively light.

13:30 USD FOMC Member Clarida speech

14:00 USD US S&P/Case-Shiller Home Price Indices

14:00 USD US Housing Price Index (MoM)

16:00 EUR ECB Mersch speech

20:00 NZD RBNZ Financial Stability Report

21:30 WTI API Stock

Wednesday November 28

US GDP is probably the most important economic release of the week, along with the quarterly PCE, and inflation proxy. Both estimates are unchanged from last time. However, this data is too late to affect the Fed minutes out on Thursday. Of more interest is Fed Chair Powell’s speech on the Fed’s Framework for Monitoring Financial Stability at the Economic Club of New York.

08:30 GBP UK Financial Stability Report (time approx)

09:00 GBP UK Bank Stress Test Results (time approx)

10:00 EUR Germany 10-y Bond Auction (time approx)

12:00 EUR Germany Gfk Consumer Confidence Survey

13:30 USD US GDP YoY (est 3.5% prev 3.5%)

13:30 USD US PCE QoQ (est 1.6% prev 1.6%)

15:00 USD US New Home Sales (MoM)

17:00 USD Fed Chair Powell Speech

15:30 WTI EIA Stock

23:50 JPY Japan Retail Sales

Thursday November 29

Today is FOMC minutes day (not a rate set meeting) and traders will be looking for confirmation that the December rate hike is still on, given the softening in economic data and of course the strong market pullback over the last couple of months. There is a clear gap between the Fed’s January 2020 rate projection (3.125%) and 2.75%, the rate implied by the Fed funds futures contract of that date. Other than that, a raft of data from Europe and the US should keep markets lively.

00:00 AUD Australia HIA New Home Sales (MoM)

01:30 JPY BoJ Board Member Masai Speech

08:55 EUR Germany Unemployment Change/Rate

09:30 GBP UK Mortgage Approvals

10:00 EUR Eurozone Business Climate

13:00 EUR Germany CPI

13:30 USD US Personal Spending/Income/PCE (YoY and MoM)

13:30 CAD Canada Current Account

13:30 USD US Jobless Claims

15:00 USD US Pending Home Sales (MoM)

19:00 USD FOMC Minutes

21:45 NZD NZ Building Permits s.a. (MoM)

23:30 JPY Tokyo CPI (est 1% prev 1%)

23:30 JPY Japan Unemployment/Jobs-applicants ratio

Friday November 30

The G20 Summit starts in Buenos Aires today and all eyes will be on the meeting between Presidents Trump and Xi, hoping that something positive on trade wars will emerge. Also Eurozone inflation if poor may further delay ECB tightening. It’s the final trading day of the month, so also expect additional volatility due to rotation.

00:01 GBP UK Gfk Consumer Confidence

01:00 CNY China PMIs

07:00 EUR Germany Retail Sales (MoM)

10:00 EUR Eurozone Unemployment Rate

10:00 EUR Eurozone CPI (YoY est 2.1% prev 2.2%)

13:30 CAD Canada GDP

14:45 USD Chicago Purchasing Managers' Index

18:00 WTI Baker Hughes Rig Count