Week to Jun 28th

Powell tempers rate cut enthusiasm, G20 hopes, V-shaped week

Mon Jun 24

Markets were slightly down today after new Iran sanctions were announced, and Gold hit a new 5-year high of $1419. Only FTSE posted a green candle on Brexit-based GBP weakness. The dollar was only very slightly off (DXY -0.09%), but nevertheless touched a three-month low of 96.00, with moves up from all except GBP and JPY, which were more or less flat, as was Oil. Yields were down 4bp in line with the risk-off and dollar.

Tuesday June 25

Fed Chair Powell defended his independence today saying the Fed is “insulated from short-term political pressures”. Coupled with noted Fed dove James Bullard saying a 50bp cut (still 25% priced in) would be “overdone”, this was enough to add 0.18% to DXY and push SPX down 0.9%. Other indices followed suit, and of course all currencies fell. GBP suffered worst, resulting in another green day for FTSE. Oil had a second flat day, and yields (risk off only not USD this time) fell another 3bp to dip below 2%. Gold came off the highs.

Wednesday June 26

President Trump’s retort to Powell today was typical. He said he was doing a “bad job” and suggested (not seriously) that ECB President Draghi should take the role! Also TreasSec Mnuchin told CNBC the China deal was 90% complete, and the Capital Goods print beat at 1230 beat comfortably. This caused a short-lived rally which was enough to put Europe (which closes at 1530) in the green, but it faded in the US afternoon session to post another red day on Wall Street.

Surprisingly the dollar ended completely flat today, as a JPY fade was matched by a small advance in EUR and a bigger one in CAD following Oil which was sharply up on the very strong beats from both the API (Tuesday night) and EIA Oil reports. Like last week, the 2% level on 10-year yields appears to be support, and they rose 7bp to 2.06%. NZD (not part of DXY) was particularly strong after the RBNZ held rates at 0200. Gold was down again, back to last Friday’s level.

Thursday June 27

Equity markets were up today on hopes of a G20 Trump/Xi breakthrough, after a report in the South China Post that the two sides were near to a truce. Also the 1230 GDP print of 3.1% was in line with estimates, but the simultaneous PCE (inflation proxy) print beat lifted the mood.

Another very quiet day on currencies, with a slight fade in GBP (again), and a further CAD advances leading to a miniscule 0.04% uptick in DXY. Gold was also flat, and Oil was only marginally up, but yields were surprising active, moving down all day to close 5bp lower.

Friday June 28

The end of the half-year (and obviously quarter, month, and week) brought some strong stats. For example SPX was up 0.6%, all of which was in the last 30 minutes of trading, closing the best June since 1955, and the best half-year since 1997. The timing of the price/action suggests this was definitely date-related, as there was no specific G-20 news in the last hours. The table shows the 2019 ‘half time scores’ for various asset classes.

DXY continued to hover around 96, and was down 0.09% on the day, largely due to a small recovery in GBP. Other currencies and even the newly volatile Gold ended flat. The Canadian GDP beat at 1230 had surprisingly little effect on CAD, but of course it had been rallying all week. Bond yields rallied briefly but ended the day 1bp down. Oil had been flat all day, but futures suddenly dropped 2% in an hour after the close of open outcry at 1830. This may well have been a mixture of G20 and OPEC uncertainty, added to period end balancing.

WEEKLY PRICE MOVEMENT

Unusual to see all the US indices down and the non-US ones up. The weakest was NDX, a marker for risk. It’s a while since we’ve seen a move over 2.5% in a currency pair, but that’s what happened with NZDJPY (+2.51%) this week. Another strong rally in BTC saw it  add 22% on Wednesday alone, and even after pullback book another strong gain. We seem to be getting a pattern on FAANG where one stock has much more volatility than the rest. This week it was GOOGL’s turn.

Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on UUP. The equity and index prices are now based on the cash close each day.

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

• Independence Day short week
• Non-farm Payrolls
• AUD rate cut expected
• Possible Brexit machinations

Monday July 01

The new week, month, and quarter should open positively after encouraging tweets from Trump at the G20 Summit. He said although tariffs will not be reduced, they will not be increased whilst negotiations continue. The OPEC meeting is expected to confirm continuing oil cuts, and indeed weekend news suggests this will definitely happen. Markets are closed in Colombia, Hong Kong, Canada, Egypt, Botswana, Rwanda, Panama, Bangladesh and the Cayman Islands.

00:00 WTI OPEC Meeting (all day)

01:45 CNY China Caixin Manufacturing PMI (e50.0 p50.2)

06:45 EUR ECB De Guindos speech

07:55 EUR Germany Unemployment

07:55 EUR Germany Markit Manufacturing PMI

08:30 GBP UK Markit Manufacturing PMI

09:00 EUR Eurozone Unemployment Rate

10:15 EUR ECB Lane speech

13:45 USD US Markit Manufacturing PMI

14:00 USD ISM Manufacturing PMI (e51.0 p52.1)

Tuesday July 02

The RBA did not cut rates last month, but is expected to do so today. This 30-day future vs spot rate calculation gives a 70% probability. (This formula can be used for any currency).

The Estimates Day debates in the UK parliament are significant, as they may give British MPs a procedural mechanism to stop a no-deal Brexit. Final comments are due to the USTR today on the tariffs on $300Bn Chinese imports. This schedules a final decision for about July 14th.

04:30 AUD RBA Rate Decision/Statement (e1.00% p1.25%)

06:00 EUR Germany Retail Sales (MoM)

08:30 GBP UK Markit Construction PMI

09:30 AUD RBA Governor Lowe speech

13:30 CAD Canada Markit Manufacturing PMI

14:00 NZD NZ GDT Milk Index

20:30 WTI API Oil Stock

Wednesday July 03

US Markets close at 1700 for the pre-holiday half day, so the ADP report will be the only chance traders get to position theirselves for the NFP report on Friday, which will be important as it is the penultimate major data release (the last in CPI on Jul 11) before the Fed rate decision on Jul 31.

Also keep an eye open for any talk on Mario Draghi’s replacement. The ECB President’s term ends in October, and his successor will be announced imminently. There are rate decisions on SEK and PLN.

01:30 AUD Aus Imports/Exports/TB

01:45 CNY China Caixin Services PMI

08:00 EUR Eurozone Markit PMI Composite

08:30 GBP UK Markit Services PMI

12:15 USD US ADP Employment Change (e150k p27k)

12:30 USD US Trade Balance

12:30 USD US Jobless Claims

12:30 CAD Canada International Merchandise Trade

13:15 GBP BoE Broadbent speech

13:45 USD US Markit Composite/Services PMI

14:00 USD US ISM Non-Manufacturing PMI (e56.0 p56.9)

Thursday July 04

Markets are closed for Independence Day in the US, and so equity volatility should be very low. Index futures are of course still traded on Globex. There is a rate decision on RON. Rwanda is closed.

01:30 AUD Aus Retail Sales s.a. (MoM)

07:00 EUR ECB Lane speech

09:00 EUR Eurozone Retail Sales (YoY)

09:10 EUR ECB De Guindos speech

23:30 JPY Japan Overall Household Spending (YoY)

Friday July 05

The NFP estimate is well down on the usual 190-200k, after last month’s very low print, and in line with the ADP figure. The AHE estimate is 3.2%. As usual, with a simultaneous Canadian report, expect USDCAD volatility. Markets are closed in Indonesia, Czech Republic, Slovakia and Venezuela. There is a general election in Greece on Sunday.

05:00 JPY Japan Leading Economic Index

06:00 EUR Germany Factory Orders s.a. (MoM)

12:30 USD US NFP/AHE/Unemp. (NFP e158k p75k) 

12:30 CAD Canada NFP/AHE/Unemp. (NFP e8.0k p27.7k)

14:00 CAD Canada Ivey PMI

This report is published every week as an email by MatrixTrade.com - you can sign up to receive it here. This blog is supported solely by advertising, so if any of the ads interest you, please click on them. If you want notification when the blog is updated, please follow me on Twitter, Facebook, Stocktwits, TradingView or Linkedin (all open in separate windows). Details of how I compile the report are here.

Week to Jun 21st

Fed sees case for cuts, Dollar tumbles, Gold at 5yr high, SPX new ATH

Mon Jun 17

Equities continued last week’s lacklustre movement today, with trade concerns balanced by expectations of dovishness from central banks in the US, UK and Japan. Indices rallied a little in the cash period but ended largely flat. USD for once had an absolutely flat day, with only AUD (not a DXY component) moving slightly down. Gold was also flat, but Oil faded a little, as did 10-year bond yields.

Tuesday June 18

The first confirmation of the dovishness anticipated came in a speech from ECB President Draghi at 1400, and this was enough to lift markets substantially, particularly of course DAX, up over 2%, and its best day since Jan 2. This is despite a horrible miss on the German ZEW Sentiment print at 0900 (-21.1 vs 0.5 est). President Trump also said he had a “very good meeting” with President Xi, but for once, the White House spin was not needed.

USD generally had a down day against all currencies except EUR, with AUD and NZD notably up. However the DXY basket finished slightly up (+0.11%) because of course EUR fell on the Draghi statement. Gold and Bonds (inverse to yields) were up in line with the weaker dollar, and Oil was up substantially (over 2%) in line with equities, and rumblings about Iran.

Wednesday June 19

Today’s FOMC was probably the most important one since December. Although the Fed held the rate for now, Chair Powell said that they saw “a stronger case for rate cuts”. That’s about as dovish as you can get, and the CME Fedwatch tool for the relatively near July decision moved to 100% likelihood of a cut, and (at the time of writing) a 28% possibility of a 50bp cut, not seen for over 10 years. The chart shows how a hold (2.5%) has moved from 75% a month ago, to 15% a week ago, to nil now.

There was an instant reaction in bonds (yields fell 7bp in an hour), JPY and Gold. Other currencies had been moving up all day, expecting this, and DXY finished down 0.42%. US equities had been flat or fading but rallied on the statement. European markets were down because of the currency moves, in particular GBP, which was up a whole cent. Oil was surprisingly only slightly up despite multiple reasons (Iran, the EIA beat at 1430, the weaker dollar and the equity rally). CAD was particularly ahead after the strong CPI beat (2.1% v 1.2% best) at 1230.

Thursday June 20

The rate cut expectation rally continued today, and SPX topped its Apr 30 level to hit a new all-time high, as did DJIA, although NDX is still 1.4% away. Other markets were much flatter, due, as yesterday to currency moves. Oil was up sharply for the reasons stated yesterday.

Currencies often react the day after a Fed move, given that London, the world’s primary forex centre is closed when the FOMC release is issued. Today DXY fell 0.56%, its largest one-day drop since Jan 25. All currencies were substantially up (JPY the most, reacting to both dovishness and risk-on). However, the BoE and BoJ rate holds got lost in the FOMC noise.

Gold had its best day since Brexit day three years ago, and added 2% to briefly push through $1,390, a level not seen for over five years. A rare example today of a Gold/JPY rally when markets are up, and possibly unique for Gold to rise 2% on a day that SPX hits an ATH. Bond yields ended flat after the big move the night before, however, they briefly dipped below 2%, a level not seen since the Trump election.

Friday June 21

Markets took a breather today on the longest day of the year, and were slightly down, but still recorded impressive gains for the week. President Trumps’ cancellation of an Iran air strike (in response to Iran downing a US drone) did not really move markets. SPX nevertheless briefly inched out a new intraday high. DAX and FTSE fared worse as their denominated currencies rose again. Oil stalled its gains and closed flat.

The Fed-inspired dollar rout continued, with DXY down another 0.54%, the sharpest 2-day drop, and worst week since Jan 2018. This was mainly driven by EUR, up 0.89%. JPY and CAD were down, the latter after the Canadian Retail Sales miss at 1230. Gold’s momentum continued, pushing through $1,400 for the first time in five years, and posting its best week since Feb 16. Yields recovered slightly, adding 3.8bp but still down on the week.

WEEKLY PRICE MOVEMENT

A very strange week. I can’t think when we have ever seen simultaneous highs in SPX and Gold (up 4.29%). Risk-on, for sure, so the strongest index was NDX as you might expect, with NFLX the top FANG. After being last week’s biggest loser, NZDUSD was this week’s top gainer. And crypto surged hugely again, with BTC topping $10,000 for the first time since March 2018.

Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on UUP. The equity and index prices are now based on the cash close each day.

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

Monday June 24

The beginning of Summer (in the Northern Hemisphere) has quiet start to the week as is often the case on Mondays. Markets are closed in Colombia and Latvia.

23:30 AUD RBA Governor Lowe speech (Sunday)

05:00 JPY Japan Leading Economic Index

08:00 EUR Germany IFO Sentiment Reports

12:00 EUR ECB Lautenschläger speech

12:30 USD Chicago Fed National Activity Index 

22:45 NZD NZ Imports/Exports/TB

23:50 JPY BoJ MPC Minutes

Tuesday June 25

Fed Chair Powell speaks today, but it is more likely to be a ‘big picture’ talk, rather than anything that will move markets. Markets are closed in Slovenia and Croatia. There is a rate decision on HUF.

00:00 USD OPEC Meeting (all day)

07:05 AUD RBA Bullock speech

08:15 EUR ECB De Guindos speech

13:00 USD US Home Price Indices

14:00 USD US Consumer Confidence/New Home Sales

16:00 USD Fed Bostic speech

17:00 USD Fed Chair Powell speech

20:30 WTI API Oil Stock

18:15 EUR ECB Coeuré speech

Wednesday June 26

The RBNZ follows the other major central banks this month with an expected hold, but all eyes will be on Governor Orr to see if he echoes the strong dovishness shown around the world. There are also rate decisions on ISK and CZK.

02:00 NZD RBNZ Rate Decision/Statement (e1.5% hold)

03:00 NZD RBNZ Press Conference

06:00 EUR Germany Gfk Consumer Confidence Survey

10:00 EUR ECB Mersch speech

12:30 USD US ND Capital Goods (May) (e0.1% p-1.0%)

14:30 WTI EIA Oil Stock

23:50 JPY Japan Retail Sales

Thursday June 27

The final US GDP print is due today, but as two preliminaries have already been released, the effect is not expected to be great. There is a rate decision on MXN.

09:00 EUR Eurozone Business Climate

12:00 EUR Germany CPI (e1.4% p1.3%)

12:30 USD US Jobless Claims

12:30 USD US 19Q1 GDP (final) (e3.1% p3.1%)

12:30 USD US PCE QoQ

14:00 USD US Pending Home Sales (MoM)

23:01 GBP UK GfK Consumer Confidence

23:30 JPY Japan Jobs/Unemp

23:50 JPY Tokyo CPI (e0.9% p1.1%)

Friday June 28

The G20 Summit opens in Japan, where Presidents Trump and Xi may well meet, although substantive news is more likely over the weekend. Today is the last day of the week, month and quarter, so expect additional volatility for rebalancing. There is a rate decision of COP. Markets are closed in Ukraine.

00:00 EUR G20 Meeting (all day)

08:30 GBP UK 19Q1 GDP QoQ (final) (e0.2% p0.5%)

09:00 EUR Eurozone CPI (prelim) (Core YoY e1.0% p0.8%)

12:30 USD Personal Spending/PCE MoM & YoY

12:30 CAD Canada GDP (MoM)

13:45 USD Chicago PMI

14:00 USD Michigan CSI

14:30 CAD BoC Business Outlook Survey

This report is published every week as an email by MatrixTrade.com - you can sign up to receive it here. This blog is supported solely by advertising, so if any of the ads interest you, please click on them. If you want notification when the blog is updated, please follow me on Twitter, Facebook, Stocktwits, TradingView or Linkedin (all open in separate windows). Details of how I compile the report are here.

Week to June 14th

Mexico boost fades for a flat week, US CPI miss reduces rate cut likelihood

Mon Jun 10

As we said last weekend, markets were bound to rise on the cancellation, or at least postponement of Mexican tariffs. SPX and FTSE were up, although NKY faded after the cash close to end flat. DAX was not open and also was flat. The dollar was also up (DXY +0.22%) against all currencies except JPY. Gold and Oil were down in line, as were bonds (inverse to yields) as money flowed into equities.

Tuesday June 11

Tuesday’s price/action was similar to Monday, a ramp during Asia and Europe that was sold off in the US session. SPX was slightly down whereas non-US indices (which close earlier) were up. This is a common pattern, the index future trading being less than the cash stocks volume. DXY hardly moved with losses in JPY and CAD balancing an advance in GBP after the AHE beat at 0830. Oil, Gold and yields were also flat.

Wednesday June 12

Markets were down slightly today after the US CPI slight miss at 1230, falling to 1.8% (e1.9%), below the Fed ideal rate of 2%, and so reducing the chance of a rate cut next week, which in turn rallied USD. DXY was up 0.25% against all currencies except JPY which was flat (the risk off and stronger dollar balancing each other). Bonds were up in a reverse of Monday. Oil fell on the stronger dollar and the EIA miss at 1530. So every asset reacted as you would expect.

Thursday June 13

After the tanker incident in Oman, Oil shot up today, adding 0.7% in 10 minutes on the news. Markets were up, led by energy reacting to the Oil price, and otherwise defensives such as Consumer Staples (XLP) and Utilities (XLU). World markets followed suit. The dollar did not react, another flat day with DXY moving 0.08% up. A slight move up in CAD (on Oil) balanced fades elsewhere. Gold and Bonds continued to rise.

Friday June 14

Markets retreated on Friday as the mood was sourced by the Michigan CSI miss at 1500 and also AVGO cutting guidance (a profit warning) blaming the trade war. Their stock fell 5.6%, but cast a shadow over the sector (SOXX down 2.4%), index (NDX down 0.8%), and market (SPX down 0.2%). A textbook exercise in sentiment contagion.

We have seen over the last year how the trade war is bad for stocks, but good for the dollar (or if you like, bad for non-US economies), and today saw a sharp move up in DXY of 0.43%, evenly across all currencies. Gold fell in line, and for once yields followed the dollar rather than bonds taking equity money, although to be fair they had been falling since Tuesday. Oil had an inside day, but was slightly up.

WEEKLY PRICE MOVEMENT

A flat week after last week’s rally saw only NKY break the 1% barrier to make it the strongest index of the week. The dollar advanced everywhere, with NZDUSD, down 2.61%, the biggest mover. NFLX bucked the FANG trend and fell on concerns that DIS will eat into their market. Cryptos resumed their upward climb.

Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on UUP. The equity and index prices are now based on the cash close each day.

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

• Will the Fed cut rates
• UK and Japan rate decisions
• USTR hearings on tariffs
• UK and Canadian inflation

Monday June 17

The USTR public hearings on China tariffs are scheduled for today. Markets are closed in Greece, Cyprus, Romania, Ukraine, Iceland, South Africa, and Argentina.

09:00 EUR Eurozone Labour Cost Q1

18:30 CAD BoC Schembri speech

21:00 NZD NZ Westpac Consumer Survey

Tuesday June 18

The economic sentiment part of the three ZEW surveys in Germany will be watched closely for some recovery in the beleaguered Eurozone leader, otherwise one of the quieter days this week.

01:30 AUD Aus House Price Index (QoQ)

01:30 AUD RBA Meeting Minutes

06:00 EUR Germany PPI (MoM)

09:00 EUR Eurozone CPI (Core MoM e0.4% p0.0%)

09:00 EUR Germany ZEW Economic Sentiment (e0.5, p-2.1) 

12:30 USD US Building Permits/Housing Starts (MoM)

14:00 NZD GDT Milk Index

20:30 WTI API Oil Stock

23:50 JPY Japan Imports/Exports/TB

Wednesday June 19

The CME Fedwatch predicts a surprisingly high 23% likelihood of a cut, which means a hold may boost the dollar. This is after important inflation prints from the UK and Canada. President Trump launches his re-election campaign in Florida today. Markets are closed in Hungary.

08:30 GBP UK RPI/PPI/CPI (CPI YoY e2.2% p2.1%)

12:30 CAD Canada CPI (BoC Core YoY e1.2% p1.5%)

14:30 WTI EIA Oil Stock

18:00 USD FOMC Rate Decision/Statement (e2.5% hold)

18:30 USD FOMC Press Conference

22:45 NZD NZ 19Q1 GDP (QoQ e0.7% p0.6%)

Thursday June 20

Two more major rate set meetings today, although of more importance will be any Brexit remarks from BoE Gov Carney. There are also rate decisions on NOK (25bp hike expected) and IDR. Markets are closed in Brazil, Austria, Poland, Croatia, Portugal and Argentina.

01:15 AUD RBA Governor Lowe speech

01:30 AUD RBA Bulletin

02:00 JPY BoJ Rate Decision/Statement

04:30 JPY BoJ Press Conference

08:00 EUR Eurozone Economic Bulletin

08:30 GBP UK Retail Sales (ex-Fuel MoM e-0.5% p-0.2%)

11:00 GBP BoE Rate Decision/Statement (e0.75% hold)

12:30 USD US Jobless Claims

12:30 USD Philly Fed Manufacturing Survey

23:50 JPY Japan National CPI 

Friday June 21

The longest day of the Northern Hemisphere year and start of summer is also OpEx day. Expect heightened volatility. Fed Daly (non-voter) speaks today. Markets are closed in Sweden and Finland.

07:30 EUR Germany Markit PMIs (Manuf e44.5 p44.3)

08:00 EUR Eurozone Markit PMIs (Composite e51.7 p51.8)

08:30 GBP UK PSBR

12:30 CAD Canada Retail Sales (MoM e1.0% p1.1%)

13:45 USD US Markit PMIs

14:00 USD US Existing Home Sales (MoM)

This report is published every week as an email by MatrixTrade.com - you can sign up to receive it here. This blog is supported solely by advertising, so if any of the ads interest you, please click on them. If you want notification when the blog is updated, please follow me on Twitter, Facebook, Stocktwits, TradingView or Linkedin (all open in separate windows). Details of how I compile the report are here.

Week to Jun 7th

‘Sell in May’ sentiment evaporates, Powell confirms rate cuts on the table.

Mon Jun 03

Almost like clockwork, the ‘Sell in May’ sentiment turned on a dime for the new month, but was spoiled by a report that the tech giants may be subject to anti-trust scrutiny. The market liked the Chinese PMI beat at 0145, and shrugged off the various US misses. As you know FB, GOOGL etc. have ‘natural monopolies’ but so did Standard Oil in 1911 (which ultimately became XOM and CVX). AMZN joined these two in tumbling, shaving over 2% off NDX, whereas DJIA was slightly up. Other world indices were comfortably ahead.

The dollar turned on Friday, and continued down (DXY -0.40%) today on Fed Bullard’s comments that a rate cut “may be warranted soon”.  Bullard is, of course the most dovish 2019 FOMC voter, but the remark was enough to send yields down and all other currencies (and Gold) up against US. Oil was up in line with industrials and the weaker dollar.

Tuesday June 04

Bullard is a dove, but Chair Powell by definition is centrist, and when he confirmed the potential cut theme today stocks soared (in all countries), with tech stocks recovering as well, as a rumor of antitrust was trumped by a certainty of fiscal easing (if needed).

USD was flatter today, with the dollar basket only down 0.1%, as JPY (and Gold) faded in line with the risk-on mood. EUR failed to benefit (ending flat) after the key Eurozone CPI miss at 0900, but the other currencies advanced. Oil was up slightly in line with stocks, and yields moved back up as bond money rotated into stocks. The AUD rate cut to 1.25% was widely expected and priced in, and AUDUSD joined the other currencies in advancing.

Wednesday June 05

Equities advanced again today, but more slowly. Positive comments from the Senate Finance committee about the Mexico tariff issues were overshadowed by a very weak ADP jobs report (27k vs 180k best), a nine-year low. The dollar was up slightly (DXY +0.18%) after the ISM PMI beat at 1400, evenly advancing across the board, although Gold and Bonds finished up after both spiking on the ADP report. Oil fell sharply on the EIA miss, and finished 2.31% on the day. It did however fall as low as 50.58, 4.37% down, a four month low, and crucially, a technical bear market (over 20% down from the Apr 23 high). 

Thursday June 06

Further reports on Mexican tariff delays gave US markets some more risk appetite, which was repeated elsewhere, the only laggard being DAX, held back by a sharp EUR increase, as ECB President Draghi, speaking at 1330, was dovish, but not as dovish as expected. DXY fell 0.32%, the only loser being JPY as you would expect. Gold rose in line. Oil bounced back, recovering Wednesday’s losses. Yields closed flat after dipping throughout the day.

Friday June 07

We have had a willingness to cut rates and a poor ADP report this week. It therefore followed that a poor NFP (which it was, 75k versus 185k estimated) would be seen as ‘bad news is good news’, ie, the poor report suggested a rate cut. The evidence was clear, a sharp and instant move down in yields and DXY (down 0.44% on the day), and an even move up in currencies and Gold. The standout was CAD, whose NFP figure beat. Equities in this situation always rise, and so it was seen today. Oil and Gold were both up on the weaker dollar.

WEEKLY PRICE MOVEMENT

‘Sell in May’ is over and markets rallied, with DJIA the overall winner. NZDUSD was the strongest currency. Cryptos had a pullback after several weeks of gains. A huge variation in the FANGS, with the ‘monopolies’ well down, but AAPL and NFLX well up.

Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on UUP. The equity and index prices are now based on the cash close each day.

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

• Four-day week for the DAX
• Key US, China and Germany inflation reports
• Fed blackout period starts
• Low estimate for Michigan Sentiment

Monday June 10

The main news over the weekend was the suspension of Mexican tariffs, which should lift equities. The JOLTS jobs report is due at 1400. Markets are closed in Australia, Germany and much of Europe (although not the UK) for Whit Monday.

23:50 JPY Japan 19Q1 GDP (Sunday) (QoQ e0.4% p0.5%)

02:00 CNY China Imports/Exports/TB

08:30 GBP UK Industrial/Manuf Production (MoM)

08:30 GBP UK GDP (MoM)

17:00 GBP BoE Saunders speech

Tuesday June 11

The US PPI figure comes ahead of CPI this week and may give some indication. The most important news is the UK jobs report. The Average Hourly Earnings is expected to remain unchanged at 3.3%.

08:30 GBP UK AHE/UnEmpl (UnEmp e3.9% p3.8%)

12:30 USD US PPI

22:45 NZD NZ Electronic Card Retail Sales

23:25 AUD RBA Kent speech

Wednesday June 12

Chinese and US inflation prints make this the most important news day of the week. There is a rate decision on TRY at 1100 (est hold 24%). Markets are closed in Russia, Nigeria and the Phillippines.

00:30 AUD Aus Westpac Consumer Confidence

01:30 CNY China CPI (YoY e2.7% p2.5%)

08:15 EUR ECB President Draghi speech

09:00 AUD RBA Ellis speech

09:00 EUR ECB De Guindos speech

12:30 USD US CPI (Core YoY e2.1% p2.1%)

18:00 USD US Monthly Budget Statement

Thursday June 13

There is a rate decision on CHF (est hold -0.75%) at 0730 with a press conference half an hour later. Otherwise German inflation is the key print of the day.

00:00 EUR Eurogroup Meeting (all day)

00:00 AUD Aus Consumer Inflation Expectations

01:30 AUD NFP/Unemp (NFP e17.5k p28.4k)

06:00 EUR Germany CPI YoY (e1.3% p1.3%)

09:00 EUR Eurozone Industrial Production (MoM)

12:30 USD US Jobless Claims

22:30 NZD Business NZ PMI

Friday June 14

The Michigan CSI estimate is surprisingly moderate, after the last two stellar releases. There is a rate decision on RUB (est 25bp cut to 7.50%). 

02:00 CNY China Retail Sales/Industrial Production

02:00 CNY China NBS Press Conference

12:30 USD US Retail Sales (Control Group p0.0%)

13:15 USD US Industrial Production (MoM)

14:00 USD Michigan CSI (prelim) (e98.1 p100.00)

This report is published every week as an email by MatrixTrade.com - you can sign up to receive it here. This blog is supported solely by advertising, so if any of the ads interest you, please click on them. If you want notification when the blog is updated, please follow me on Twitter, Facebook, Stocktwits, TradingView or Linkedin (all open in separate windows). Details of how I compile the report are here.

Week to May 31st

Markets give up four months gains, Oil eventually collapses, Mexico added to tariff list

Mon May 27

With the US and UK closed today, market movement (ie futures) was light, with SPX closing flat. The success of populist and right-wing parties in the European elections had little effect. Other indices rose gently, but only as their denominated currencies fell, on a slight dollar appreciation. Gold and Oil were flat.

Tuesday May 28

Markets resumed their trade-related slide today after President Trump in Japan said the US was not ready to make a deal with China. As you might expect bonds and JPY were up (10-year yields slid 6.2bp). DXY added a comfortable 0.21% as all other currencies (and, surprisingly, Gold) fell. JPY and bonds are a much more reliable measure of risk-off these days. Oil had a flat day.

Wednesday May 29

Today was very similar to yesterday, equities continued to slide and the dollar strengthened again by a similar amount, but this time, JPY gave up ground as well. The BoC rate hold came and went and made little different to CAD. The US Treasury released their forex report, and did not label China as a currency manipulator. This had no effect on CNY or any other currency. Oil, unusually, had a third flat day and was joined today by Gold.

Bond yields told a starker story. The 10-year yield briefly touched 2.2081%, its lowest since September 2017, and the 3 month/10 year inversion finished at levels not seen since August 2007.

Thursday May 30

Stocks managed a slight rebound today. European trading was thin because of the Ascension Day holiday. There was no particular good news, indeed PCE, Pending Home Sales and Jobless Claims all missed, so it was probably the usual technical adjustment, or in this case, a ‘dead cat bounce’. DXY was almost flat, with a slight move up in CAD balancing a further GBP fade. Oil however finally reacted to the equity sentiment, and fell 4.5% on the day. Yields continued to decline as risk money moved into bond safety.

Friday May 31

The new Trump tariff announcement of 5% on all Mexican imports, and the Michigan Consumer Sentiment miss at 1400 added further gloominess to equities, which fell again. The noticeable difference today was the dollar. DXY fell 0.57%, its worst day since January 25th, and all currencies rose. The uptick in risk-off Gold and JPY was particularly strong. Yields fell in line with the dollar weakness. Oil continued to plummet after the belated EIA miss, losing another 5%, its worst two-day run this year.

WEEKLY PRICE MOVEMENT
Equity losses were fairly consistent, with NKY the worst performer. Inevitably in the current climate it will always be a JPY pair that moves most, and this week CADJPY pipped our regular GBPJPY as the biggest mover (downwards). Cryptos advanced again, with BTC touching $9,000 mid-week, and last week’s lightest mover NFLX was the biggest loser in FANG this week.

Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on UUP. The equity and index prices are now based on the cash close each day.

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

• New month
• US and Canada NFP
• ECB and AUD rate decisions
• Trump visit to the UK

Monday June 03

President Trump starts a three day visit to the UK today. Fed Barkin and Bullard speak today. Markets are closed in Colombia, New Zealand and Ireland

22:30 AUD Aus AiG Performance of Mfg Index (Sunday)

01:45 CNY China Caixin Manufacturing PMI (e50.0 p50.2)

07:55 EUR Eurozone Markit Manufacturing PMI

08:30 GBP UK Markit Manufacturing PMI

13:30 CAD Canada Markit Manufacturing PMI

13:45 USD US Markit Manufacturing PMI

14:00 USD ISM Manufacturing PMI (e53.3 p52.8)

23:01 GBP BRC Like-For-Like Retail Sales (YoY)

Tuesday June 04

The RBA didn’t cut last month, to the surprise of some traders. A cut this month is priced in, and it is notably that the both the hold last month and the surprise Coalition election win did nothing to shore up AUD. Fed Williams speaks today, as well as Chair Powell. Markets are close in Turkey until Friday. Ramadan ends tonight.

01:30 AUD Aus Retail Sales s.a. (MoM)

04:30 AUD RBA Rate Decision/Statement (e1.25% p1.50%)

08:30 GBP UK Markit Construction PMI

09:00 EUR Eurozone Unemployment Rate

09:00 EUR Eurozone CPI (Core YoY e1.0% p1.3%)

09:30 AUD RBA Governor Lowe speech

12:00 NZD GDT Milk Index

13:45 USD Fed Chair Powell speech

14:00 USD Factory Orders (MoM)

Wednesday June 05

Fed Bostic and Vice-Chair Clarida speak today. Markets are closed in Turkey, Indonesia, India, Denmark and Singapore. There is a rate decision on PLN.

01:30 AUD Australia 19Q1 GDP (QoQ e0.3% p0.2%)

01:45 CNY China Caixin Services PMI

08:00 EUR Eurozone Markit PMI Composite

08:30 GBP UK Markit Services PMI

09:00 EUR Eurozone Retail Sales (YoY)

12:15 USD US ADP Employment Change

13:45 USD Markit Services/Composite PMIs

14:00 USD ISM Non-Manufacturing PMI (e55.5 p55.5)

Thursday June 06

The ECB rate meeting is the big news today. Traders will be watching for TLTRO 3 (aka QE 2) commentary. Markets are closed in Turkey, Indonesia, South Korea and Sweden. There is a rate decision on INR.

01:30 AUD Aus Imports/Exports/TB

06:00 EUR Germany Factory Orders s.a. (MoM)

09:00 EUR Eurozone 19Q1 GDP (final s.a.) (QoQ e0.2% p0.4%)

11:45 EUR ECB Rate Decision/Statement (0% hold est)

12:30 EUR ECB Draghi Presser

12:30 USD US Trade Balance

12:30 USD US Jobless Claims/Labor Costs/Productivity

12:30 CAD Canada International Merchandise Trade

14:00 CAD Canada Ivey PMI

22:30 AUD Aus AiG Performance of Construction Index

23:30 JPY Japan Overall Household Spending (YoY)

Friday June 07

First Friday, so it’s NFP on both sides of the 49th parallel, so USDCAD volatility is assured. Fed Williams is on again today. Markets are closed in China and Kong Kong for the Dragon Boat Festival. There is a rate decision on CLP. We go in to the weekend G20 Summit where the US/China conflict will be high on the agenda.

01:30 AUD Aus Home Loans

05:00 JPY Japan Leading Economic Index

06:00 EUR Germany Industrial Production/Trade Balance

12:30 USD US NFP/AHE/UnEmp/Participation (NFP e190k p263k)

12:30 CAD Canada NFP/AHE/UnEmp/Participation (UnEmp e5.8% p5.7%)

This report is published every week as an email by MatrixTrade.com - you can sign up to receive it here. This blog is supported solely by advertising, so if any of the ads interest you, please click on them. If you want notification when the blog is updated, please follow me on Twitter, Facebook, Stocktwits, TradingView or Linkedin (all open in separate windows). Details of how I compile the report are here.