Week to Nov 29th

Thanksgiving 3.5 day week, China move sparks three-day rally, Election whipsaw GBP

Mon Nov 25

The Friday recovery continued into Monday, helped by a booming HSI index after Beijing strengthened intellectual property rights in China (also a key point in the trade talks). Equities rallied everywhere. Sterling was also up on a new poll which gave the incumbent Conservative party a stronger lead. Markets don’t like PM Johnson’s Brexit, but they dislike left-winger Corbyn’s agenda a lot more. Otherwise USD was up elsewhere against currencies and Gold. Only NZD outperformed (slightly). Oil was up in line with equities. Yields however were down despite the stronger USD and SPX.

Tuesday November 26

President Trump again said both sides are close on the deal today, and together with some good retail earnings and the Home Prices beat, markets carried on upwards (except DAX, which was flat, despite the German confidence survey beat). The dollar had a Turnaround Tuesday and pulled back generally against currencies and Gold. However GBP also turned round as yet another poll showed the Labour Party had improved, and JPY was of course down, along with Gold and Bonds (and Oil was up) in line with the risk-on mood.

Wednesday November 27

Beats on the GDP, Durable/Capital Goods and Jobless Claims at 1330 gave the market a third straight day of gains. The reports also pushed the dollar up against all currencies and Gold, except sterling, which was back up sharply on yet another poll. Oil fell slightly as did Bonds.

Thursday, November 28*

US Markets were closed today for Thanksgiving. Other markets (and US futures) took a small breather today and pulled back slightly, led by DAX which came off after the German CPI miss at 1300. The dollar was similar quiet, generally flat across the board, with only JPY moving more than 0.1%. Oil and Gold were also flat, and the bond market was closed.

Friday, November 29

US Markets were only open for a half-day and again trading was quiet although the general trend was down, overshadowed by the new Trump Hong Kong monitoring bill. It was a bit livelier in Europe with DAX initially falling, then climbing sharply on the German Unemployment (0855) and European inflation (1000) beats, only to collapse again in the US session, along with FTSE which was weakened by more GBP strength, as markets became confident about a Conservative victory on Dec 12. Oil was sharply down at the end in line with the markets, but possibly end-of-month rebalancing.

In currencies, the chart above appears to show a sudden (probably end of month) spike down for the dollar at the end of the day, but this is within the context of very small moves. Again only JPY managed more than 0.1%. Notably, EURUSD had the flattest week ever since its inception in 1999, moving only 0.38% in the whole week.

WEEKLY PRICE MOVEMENT
All indices were up this week, with risk-on NDX winning. Last week’s best short was this week’s best long, GBPJPY put on 1.50%. Cryptos recovered slightly after last week’s big losses, and FANG shares outperformed NDX as they do in risk-on markets. 

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)

• Non-Farm Payrolls
• Aus and Canada rate decisions
• Lots of PMI data
• New month

Monday December 2

The new month, and the Santa Rally season opens with no less than six manufacturing PMIs, the US ISM one being the most likely to move markets.

01:45 CNY China Caixin Manuf PMI (Nov) (e51.4 p51.7)

08:55 EUR Germany Markit Manuf PMI (Nov)

09:30 GBP UK Markit Manuf PMI (Nov)

14:00 EUR ECB President Lagarde speech

14:30 CAD Canada Markit Manuf PMI (Nov)

14:45 USD US Markit Manuf PMI (Nov)

15:00 USD US ISM Manuf PMI (e49.4 p48.3)

Tuesday December 3

No significant news today in the US or Europe, so unless we get a breakthrough in the trade talks, expect little change to the trend. The consensus on the RBA is that rhetoric will remain dovish, so risks are to the upside on AUD which has been falling for weeks.

03:30 AUD RBA Rate Decision/Statement (0.75% hold)

14:30 NZD NZ GDT Milk Index

17:30 EUR ECB De Guindos speech

Wednesday December 4

Today is the turn of Services/Composite PMIs, with six reports. The ‘sneak preview’ ADP jobs report estimate is only 138k, considerably lower than the NFP estimate, which is unusual. Like AUD, the loonie has also been falling since the beginning of November, and anything hawkish from the BoC may result in a move to the upside. There is also a rate decision in Poland today.

00:30 AUD Australia 19Q3 Final GDP (QOQ e0.5% p0.5%)

01:45 CNY China Caixin Services PMI (Nov)

08:55 EUR Germany Markit Composite PMI (Nov)

09:00 EUR Eurozone Markit Composite PMI (Nov)

09:30 GBP UK Markit Services PMI (Nov)

13:15 USD US ADP Employment Change (Nov)

14:45 USD US Markit Services/Composite PMI (Nov)

15:00 USD US ISM Non-Manufacturing PMI (Nov) (e54.5 p54.7)

15:00 USD Fed Quarles speech

15:00 CAD BoC Rate Decision/Statement (e1.75% hold)

16:15 CAD BoC Press Conference

Thursday December 5

Attention turns to the Oil market today with the OPEC meeting. An extension of existing production cuts is expected, however some commentators are expecting more, especially in light of the Saudi Aramco float, which has underwhelmed so far. Markets are closed in Spain for Constitution Day.

00:30 AUD Aus Imports/Exports/Trade Balance

00:30 AUD Aus Retail Sales

07:00 EUR Germany Factory Orders

10:00 WTI OPEC Meeting

10:00 EUR Eurozone Retail Sales (YoY) (Oct)

10:00 EUR Eurozone 19Q3 GDP (YoY e1.2% p1.2%)

13:00 CAD BoC Lane Speech

13:30 USD US Trade Balance (Oct)

13:30 USD US Jobless Claims

13:30 CAD Canada International Merchandise Trade

15:00 USD Fed Quarles speech

15:00 CAD Canada Ivey PMI

Friday December 6

The November jobs report will, as always been keenly watched. This month the Canadian report is simultaneous so expect USDCAD volatility, especially if CAD has moved sharply after the rate decision on Wednesday.

05:00 JPY Leading Economic Index (Oct) Prel

07:00 EUR Germany Industrial Production

09:00 WTI OPEC Meeting

13:30 USD US NFP/AHE/UnEmp (NFP e183k p128k)

13:30 CAD Canada NFP/AHE/UnEmp (NFP e15.9k p-1.8k)

15:00 USD US Michigan CSI (e96.5 p96.8)

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