Sunday 27 October 2019

Week to Oct 25th

ECB Draghi leaves, Brexit quick exit frustrated, Trade war green shoots

Mon Oct 21
Hopes of US-China trade talk success pushed SPX up today, adding 0.7% to close above 3,000 for the first time in more than a month. Other indices were also green, although DJIA gains were lower due to weak BA shares, and FTSE was hampered by the rising pound. In general currencies were up, but a fading EUR meant that DXY was flat overall. Haven assets Gold, JPY and bonds all fell. Oil was more or less flat.

Tuesday October 22
The failure of the UK parliament to confirm an accelerated Brexit deal timetable late in the day had a negative effect not only on GBP but on equity markets worldwide, which fell sharply after what until then had been a good day, although a sharp fall in TRV did not help DJIA. The only exception was FTSE which was up on the weaker pound.

It was a Turnaround Tuesday in currency markets as well, with the haven trio up, but other currencies down, so DXY showed a small gain. Oil was up on concerns about Turkey and Syria. CAD spiked down on the Canadian Retail Sales miss and partly recovered by the close.

Wednesday October 23
Stocks recovered again today, although poor earnings reports from BA and CAT capped gains and SPX closed lower than Tuesday’s high. Also TXN fell 7.5% on earnings, and pushed other chipmakers lower. DXY was down again, as the market flipped around for a second day, with all currencies except JPY (and curiously AUD) up. The JPY move was quite strong, and yet Gold was up and bonds were flat. NDX giant MSFT beat on earnings, but the reaction was surprisingly muted, both after hours and the next day. Oil was up after the EIA beat at 1530.

Thursday October 24
Mario Draghi’s final ECB meeting did not tell us anything new, as expected and after a couple of brief spikes, the single currency continued on the downward path it has taken all week. Equity markets were quiet, with SPX and NKY more or less flat, but slight gains in DAX after the ECB presser. FTSE was more sharply up in response to a strong move down in GBP following the failure of PM Johnson to get his Withdrawal bill through. The dollar was up against all currencies except Gold and JPY, reflecting the muted mood. Bonds were flat on the day. Oil carried on rising.

Friday October 25
News that the US and China are close to finalising some parts of the trade deal gave stocks a further boost on Friday, with NDX touching its July record high. Currencies were mixed, with the commodity pair CAD and AUD, and unusually Gold, also up, but others down leading to a stronger DXY. Bonds and JPY were of course down, and Oil rose in line with stocks.

DAX just pipped NDX to take the top spot in indices this week. GBPJPY after several solid weeks up was the weakest pair this week. Cryptos rallied after weeks of falling. Other than AAPL, the FANGs were relatively quiet.

Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on DXY. 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)

  • Fed Rate Cut expected
  • AAPL and FB report
  • Plenty of GDP and inflation data
  • Non-farm payrolls

Monday October 28
The Draghi speech is at a farewell event for the departing ECB President. Markets in New Zealand are closed for Labour Day. GOOGL earnings are released after hours. Note this is the week every fall/autumn where the US and Europe DST change is a week apart, so the US appears to open and close 'early' to European traders.

12:30 USD Chicago Fed National Activity Index 
15:00 EUR ECB President Draghi speech
17:00 GBP BoE Tenreyro speech
23:30 JPY Tokyo CPI (Core YoY e0.7% p0.5%)

Tuesday October 29
Today is the calm before the storm as a low-level set of US data will be overshadowed by rate cut expectations.

06:45 AUD RBA Governor Lowe speech
13:00 USD US S&P/Case-Shiller Home Price Indices
14:00 USD US Consumer Confidence
14:00 USD US Pending Home Sales
23:50 JPY Japan Retail Sales

Wednesday October 30
Easily the most important day of the week, with the long-awaited third rate cut of the year, and before that a CAD rate decision and numerous high-importance economic releases. Also AAPL and FB report earnings after the bell. There is also a rate decision on BRL today.

00:30 AUD Australia CPI (QoQ e0.5% p0.6%)
08:55 EUR Germany Unemployment Rate/Change
10:00 EUR Eurozone Business Climate
11:00 EUR Germany CPI (e0.9% p0.9%)
12:15 USD ADP Employment Change
12:30 USD US 19Q3 Prelim GDP (e1.6% p2.0%)
12:30 USD US PCE
14:00 CAD BoC Rate Decision/Statement (e1.75% hold) 
15:15 CAD BoC Press Conference
17:30 EUR ECB's Lautenschläger speech
18:00 USD Fed Rate Decision/Statement (e1.75% p2.00%)
19:30 USD FOMC Press Conference

Thursday October 31
Today is the Brexit deadline, unless the UK has passed the Withdrawal Act (unlikely) or the EU grants a further extension (likely, France is currently holding out). The last day of the month is also data-rich again.

02:00 CNY China PMIs
02:30 JPY BoJ Rate Decision/Statement (e-0.1% hold)
06:00 JPY BoJ Press Conference
07:00 EUR Germany Retail Sales
08:00 EUR ECB De Guindos speech
10:00 EUR Eurozone 19Q3 Preliminary GDP (YoY e1.1% p1.2%)
10:00 EUR Eurozone Unemployment Rate
10:00 EUR Eurozone CPI (Core YoY e1.0% p1.0%)
12:30 USD US PCE
12:30 USD US Jobless Claims
12:30 CAD Canada GDP (MoM, Aug)
13:45 USD Chicago PMI
23:30 JPY Japan Jobs/Unemployment

Friday November 01
NFP is of course the big event, along with the ISM PMI which is expected to recover from last month’s low. FOMC vice-chair Clarida (centrist, voter) speaks today. Markets in France, Italy and Spain are closed for All Saints’ Day.

01:45 CNY China Caixin Manuf PMI (e51.0 p 51.4)
09:30 GBP UK Markit Manuf PMI
12:30 USD US NFP/AHE/Unemp (NFP e105k p136k, AHE e3.0% p2.9%)
13:30 CAD Canada Markit Manuf PMI
13:45 USD US Markit Manuf PMI
14:00 USD US ISM Manuf PMI (e48.4 p47.8)

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