Saturday, 29 August 2020

Week to Aug 29th

Fed dovishly redefines inflation, New SPX/NDX ATH, Japan PM Abe resigns

The week’s main event was the speech from Fed Chair Powell at the virtual Jackson Hole conference, stating that the rules for calculating inflation would be changed, which ultimately would lead to more stimulus or easing. This was more dovish than expected, and stocks rose and the dollar fell. Indeed that was the pattern all week, as the move had been anticipated, although the dollar fade accelerated after the announcement. Otherwise positive vaccine news from MRNA and AZ, and a continued decline of second wave cases and deaths produced straight line gains and new highs in SPX and NDX, with strong FANG outperformance agains.

Non-US indices did not follow the trend, being pushed back by currency gains. Japan came to the fore on Friday with the shock news of Premier Abe’s resignation on health grounds. The popular leader has widely been seen as the architect of recent Japanese growth (anaemic by US standards, but still an improvement on a decade ago). NKY dropped 3% instantly on the news, wiping out the week’s gains.

Next week’s main event, as always for a new month is the Non-farm Payrolls report, with another bumper estimate as furloughed workers return. The report leads into the long Labor Day weekend. Also of interest are the Trade Balance and ISM PMIs, although the week is richer in non-US news. A small sideshow is the DJIA recomposition, now headed by UNH, and with AAPL moving from nearly 12% to under 3% weight. This can only increase future DJIA/NDX divergence. The UK is closed on Monday, which will dampen forex volatility.

Monday August 24
With positive news on the vaccine from AstraZeneca, and the COVID-19 second wave continuing to recede, lockdown affected stocks (airlines, retail etc.) surged powering SPX to a new closing high, with breadth, over 400 of the index components rose. NDX underperformed. Bonds and Gold fell, and Oil rose in line with equity move. The dollar had flat day (but JPY fell), the calm before the Jackson Hole storm. As expected the RNC confirmed the Trump/Pence second term ticket. A classic risk-on day.

Tuesday August 25
With mixed economic data, but some positive China news (the ‘Phase 1 deal’ was confirmed), the market took a rotation breather, with DJIA down, and NDX outperforming SPX, but both of these edging up to new highs. Other assets were directionless, with Gold and Bonds up, but JPY down. Oil was also noticeably up (+1.88%). FTSE was down, mostly on currency moves, as USD rose against the yen, but faded against other currencies, driven by strong German sentiment data which lifted EUR.

Today the new composition of the DJIA was announced, following AAPL’s 4:1 split. RTX (formerly UTX), XOM, and PFE leave the index, and are replaced by CRM, AMGN and HON. The removal of XOM was reminiscent of the fate of GE in 2018. Like GE, XOM was once the largest company in the index, and indeed for many years the largest by market cap in the world. Founded as Standard Oil by John D Rockefeller in 1870, it has been in the index since 1928. HON was previously in DJIA, leaving in Feb 2008. All three stocks were sharply up (although CRM +26% was on earnings), although the other entrants have more weight, and thus are more important in the new composition.

Wednesday August 26
MRNA gave another promising vaccine report today and rose 6.42%, and the Durable Goods report was a strong beat, and notably today, the FTSE All World Index set a new all-time high. Note this index is still heavily American, with AAPL, MSFT and AMZN the largest components. This led to new SPX and NDX records. Oil was up in line. However bonds were flat, and Gold and JPY advanced following a weaker dollar, falling in anticipation of the Jackson Hole speeches.

Thursday August 27
Today’s main news was of course Fed Chair Powell’s speech at Jackson Hole, where he announced plans to redefine the Fed’s measure of inflation, averaging out the releases, which would ultimately mean stimulation could last longer. The latest GDP print also beat estimates, as did Pending Home Sales. Also today it was confirmed that Hurricane Laura will bypass the important oil installations in Louisiana and Texas, which depressed Oil, a rare fundamental response. Markets rose, but not in Europe (despite, for the day, a strong dollar). Gold, Bonds and JPY were all quite sharply down in line with the US equity gains.

Friday August 28
The day started just after 0500 with the shock resignation of highly-regarded Japanese Prime Minister Shinzo Abe, where NKY immediately dropped 3%, and USDJPY dropped 0.57%, and eventually 1.42% on the day. The effect continued into Europe, where indices were notably down on the day, more so than NKY which had been well 1.4% up prior to the news.

The mood changed after the PCE and Michigan CSI beats in the US session, and all US markets closed green, with DJIA going into positive territory for the year (although not a new all-time high). Of course part of the effect was the Fed announcement on Thursday. Oil was up in line.

The dollar came off sharply today after the Fed announcement, down against all currencies. EURUSD made a two-year high. Yields followed the dollar down, which also drove Gold back up.

NDX was the top mover in this bullish week, up 3.81%. The largest forex move was NZDUSD, up 3.06%. Cryptos went back to sleep. BTC is now routinely less volatile than stocks. FANGs of course outperformed NDX, specially FB, up nearly 10%.

A very bad week for me. My choice to short NZDJPY cost me 2.67%, moving running gains back to 5.91%, 14 wins out of 30. I’m going to try again through, this time selling NZDCAD

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
  • New month
  • DJIA component change
  • RBA Rate Decision

Monday August 31
The last day of the month is also a market holiday in the UK. The main news is German inflation. There is a rate decision in Colombia. It is also the first day of the AAPL split and DJIA component change. TSLA is also splitting its share 5:1 to a price of $442.68. Amazing the this was the pre-split price only five months. Note that previous AAPL splits showed no particular advantage.

23:50 Japan Retail Sales (Sun)
01:00 China PMIs (Mfr e48.7 p51.1)
01:00 Aus TD Securities Inflation
12:00 Germany CPI (e0.4% p0.0%)
13:00 Fed Clarida speech
23:00 Aus Commonwealth Bank Mfr PMI
23:30 Japan Jobs/Unemp

Tuesday September 1
The new month sees an Australian rate decision and European inflation print. There is a rate decision in Chile, and markets are closed in Slovakia.

01:45 China Caixin Mfr PMI
04:30 RBA Rate Decision
07:55 Germany Unemployment
07:55 Germany Markit Mfr PMI
08:30 UK Markit Mfr PMI
09:00 Eurozone CPI (YoY e1%)
09:00 Eurozone Unemployment
13:30 Canada Markit Mfr PMI
13:45 US Markit Mfr PMI
14:00 ISM Mfr PMI (e54.0 p54.2)
17:00 Fed Brainard speech

Wednesday September 2
In the wildly variable jobs report days, the ADP print may be significant. Otherwise a thin day for US news.

01:30 Australia Q2 Final GDP (e-0.3% p-0.3%)
06:00 Germany Retail Sales (YoY e3.0% p5.9%)
12:15 US ADP Employment Change
14:00 US Factory Orders
14:30 BoE Haldane speech
14:30 BoE Broadbent speech
18:00 Fed Beige Book
23:00 Aus Commonwealth Bank Svcs PMI

Thursday September 3
The busiest US news day is not that busy, with the ISM Services PMI the most important, and probably the Trade Balance after that.

01:30 Aus Imports/Exports/TB (TB e8.8B, p8.2B)
01:45 China Caixin Svcs PMI
07:55 Germany Markit PMI Composite
08:00 Eurozone Markit PMI Composite
09:00 Eurozone Retail Sales (YoY e-0.5% p1.3%)
12:30 US Trade Balance
12:30 US Jobless Claims
13:45 US Markit PMIs
14:00 US ISM Services PMI (e57.1 p58.1)
14:00 BoE Governor Bailey speech

Friday September 4
The jobs report is the key takeaway for today as we go into the long Labor Day weekend.

00:30 Aus Retail Sales (e3.3% p3.3%)
06:00 Germany Factory Orders
12:30 US NFP/AHE/UnEmp (NFP e1.55M p1.76M)
12:30 Canada NFP/AHE/UnEmp (NFP e400k p418.5k)
14:00 Canada Ivey PMI

Saturday, 22 August 2020

Week to Aug 21st

SPX full COVID recovery, Inside week for Gold, yields, DJIA, Brexit hits GBP, EUR

A consolidating week where SPX just about pushed through the all-time high, but without much conviction, when the gloomy Fed minutes did not offer anything new, and on Friday, the recently forgotten Brexit disputes came to the fore. Gold, yields, and DJIA all posted the first inside week for months. All this against the continuing COVID-19 crisis, where there was no good (ie vaccine) news this week, although the second wave in the US has been receding for about a month, and we are starting to see deaths receding. Joe Biden and Kamala Harris were confirmed on the Democratic ticket for the White House, although there were no surprises.

Next week it is the turn of Trump/Pence, so we can expect the campaign to begin in earnest as we enter the final week of August. The major event of the week is the Jackson-Hole conference, where we get all the world’s central bank governors in one place. We have seen recently that central bank speeches and actions seem to have more effect on the market than the usual macro data, and in any event it is another quiet week on that front. Other than that, Congress may of course finalise the next COVID support bill, but it is unlikely. Rotation is expected to continue, the charts suggest it should be industrials turn next week. Earnings season continues, but all heavyweights have now reported.

Mon Aug 17SPX wavered around, but could not quite reach the 3393 the all-time high today, and DJIA fell 1%, whereas tech outperformed, on a quiet day where the only news was more rhetoric from Trump about Chinese companies, this time BABA (not an index component, and still up on the day), although the Phase 1 China deal remains intact. The dollar continued its downward trend, falling across the board. The haven trio (Gold, Bonds, JPY) were up in line, but surprisingly Oil was up.

Tuesday August 18
More of the same today in equities. SPX finally made a new intraday and closing ATH, although only by a couple of points, and once again, DJIA was down, NDX outperformed, the dollar was down. The havens were up in line with DJIA. The dollar broke through support to post a new 2-year low intraday and closing low for DXY touching 92.12 at the low of day. The only difference was Oil giving back half of yesterday’s gains. WMT beat on earnings, but after a brief spike, ended the day slightly down, as did HD, casting a slight pall on the retail earnings phase.

Wednesday August 19 
Today the Fed minutes reiterated their gloomy outlook, saying “he ongoing public health crisis would weigh heavily on economic activity, employment, and inflation in the near term and was posing considerable risks to the economic outlook over the medium term.” but failed to offer anything further in terms of fiscal support such as explicit guidance on the future path of the federal funds rate, or further monetary easing. Despite AAPL briefly entering the $2 trillion market cap club today (only two years after hitting $1 trillion), we saw a clear reversal at the time of the release.

Equities moved sharply down, and DXY moved sharply up across the board. The haven assets clearly followed the dollar, not equities. All three noticeably down on the release. European equities had closed earlier in the green, but futures were inevitably dragged down, although obviously by less as they are not denominated in dollars.

Thursday August 20 
Stocks pulled back quickly today from the Fed-inspired drop, although the timing left European stocks in the red at their 1530 close. SPX and DJIA only managed modest gains and the former closed shy of the Tuesday high, but once again NDX outperformed, and within NDX, the FANG group (or FAAMNG to be more precise) outperformed the index. AAPL managed to close with a $2T valuation. Nearly all the NDX rally is being powered by this group. TSLA was up 7% and for many is considered to be now in this golden ‘tech cult’ group.

Similarly, the DXY rally was short-lived, with all currencies positive against the dollar, and the haven trio up again in line with the dollar, not stocks. Oil continued its tight consolidation, it has traded in a range of less than 2% this week, and only 3.4% since Aug 5th. Today it was 0.46% down, which is as good as flat, as it slips gently above its 200 day moving average.

Friday August 21 
In the European morning, news of a lack of progress in Brexit talks led to a sharp fall in European indices, EUR and GBP.  A deal “will not be easy to achieve”, and  “time is short for both sides”, said UK chief negotiator David Frost after the seventh round of talks. This spread to US index futures, although SPX and the others had largely recovered by the cash open. European index losses (notably FTSE -0.51%) were trimmed by the currency moves.

This was a good example of a positive dollar day being driven externally. The DXY basket only rose 0.50%, less than the downward move in either EUR and GBP. Gold followed the dollar again, yields were more or less flat. Both closed an inside week, as did DJIA which ended only one point away from last Friday’s close. Oil was dipped today to close flat on the week. Commodities have the same issue as Europe, where trading closes earlier than the NY equity bell.

Another week of consolidation still saw NDX outperformance, up 3.5%. The fragility of the equity rally is shown by EURJPY being the top mover, down 1.13%. Bitcoin continues to sleep, whereas ETH pulled back sharply to give back last week’s gains. FANGs once again outperformed.

My call to sell GBPCAD paid off nicely after the Brexit news. The pair was down 0.67%, moving my running total to 8.58%, and a second winning week gives me 14 wins out of 29. This week, after being flat, I think NZD will fade again. I also think equities will pull back helping JPY, so my choice this week is to short NZDJPY.

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)

  • Virtual ‘Jackson Hole’
  • Trump/Pence at RNC
  • US and Canada GDP
  • Light on macro news

Monday August 24
Today is the first day of the Republican National Convention, which of course is also affected by the pandemic. There will be some meetings in Charlotte, NC, with socially distanced seating, and apparently no press, but it is expected that the event will be largely online. The confirmation of the Trump/Pence ticket is assured, and this marks the start of the campaign proper, so expect plenty of speeches from President Trump. There is no schedule macro news to speak of.

12:30 Chicago Fed National Activity Index (Jul)

Tuesday August 25
The RNC continues as the only important news comes from Germany. 

06:00 Germany GDP
08:00 Germany IFO Sentiment indicators
13:00 US Housing Price Indices
14:00 US New Home Sales
14:00 US Consumer Confidence
17:30 BoC Schembri speech

Wednesday August 26
Another quiet day in this vacation month, with only the Durable Goods/Capital Goods print of note.

12:30 US ND Capital Goods Orders ex Aircraft (e2.3% p3.4%)
14:00 BoC Wilkins speech
16:00 BoE Haldane speech

Thursday August 27
At the end of August, we have the traditional Kansas Fed annual symposium at Jackson Hole, Wyoming. This year it will be held digitally due to the pandemic, which means we will actually get some action today, which is normally to the ‘travel to’ day, with Chair Powell to start followed by the new BoC Governor Macklem. As it happens this is also one of the busiest days in this quiet news week.

12:30 US Prelim PCE (QoQ)
12:30 US Prelim Q2 GDP (Annualised e-32.5% p-32.9%)
12:30 US Jobless Claims
12:30 US Q2 Current Account
14:10 Fed Chair Powell speech
14:00 US Pending Home Sales
15:15 BoC Governor Macklem speech
23:30 Tokyo CPI

Friday August 28
Day 2 of Virtual Jackson Hole sees BoE Governor Bailey, like Tiff Macklem, make his conference debut. News sees German inflation and Canadian (final) GDP, and of course the important Michigan Consumer Sentiment reading.

06:00 Germany Gfk Consumer Confidence Survey
09:00 Eurozone Consumer Confidence/Business Climate
12:00 Germany CPI (p0%)
12:30 US PCE (MoM and YoY)/Personal Income & Spending
12:30 Canada Q2 GDP (Annualised p-8.2%)
13:05 BoE Governor Bailey speech
13:45 Chicago PMI
14:00 Michigan CSI

Saturday, 15 August 2020

Week to Aug 14th

Bond yields rise all week, SPX misses ATH, Gold Rally reverses

We have been saying for weeks that the action at the moment is not in equities and so it was proven this week, with indices consolidating, with the exception of NKY which followed the move down in JPY, and perhaps was attractive as a growth market, as SPX came close to new highs, fully erasing the COVID crash. Indeed the historically weaker DJIA was the best performer. The main news was a reversal in bonds, with yields rising all week, but particularly on Tuesday when a 6bp spike caused a notable fade in Gold (-5.4%) and Bitcoin (-4.23%). As we have also said before, the effect cannot be seen so easily in DXY itself, as the problems affecting the dollar are affecting other currencies as well. 

Next week’s scheduled news is routine again, but the earnings pause is over, and the retail sector reports this week, starting with WMT on Tuesday. The FOMC minutes are published on Wednesday, and all eyes will be on yields and Gold to determine whether the reversals are confirmed. Also, the Democratic National Convention starts on Monday, the official start of the campaign. (The GOP are next week). Joe Biden’s speeches will clearly be scrutinised both in style and substance.

Mon Aug 10
Today saw good news in that the President signed an executive order expanding COVID relief, but China tensions rose as Beijing sanctions 11 US senators and officials. The net result was a weak rally, with the rotation out of tech into industrials that we have seen recently. DJIA was up 1.3% whereas NDX was down 0.49%. Oil was up slightly, in line. The haven trio (Gold, Bonds and JPY) dipped very slightly, although this may have been driven by an uptick in DXY (+0.23%) continuing Friday’s reversal. It was all weak, with GBP and CAD outperforming.

Tuesday August 11
Sentiment was positive to open today, on news of a possible Russian vaccine. However later skepticism, and announcement from the Senate that there had been no progress on the latest COVID package prevented SPX from making a new all-time high (it reached 3380, 0.38% away) as markets tumbled sharply into the close. Again we saw industrial outperformance with NDX falling 1.3% more than DJIA. Oil fell in line. European markets closed earlier and were therefore up

The earlier rally finally broke the inexorable rise in Gold which tumbled 5.7%, its worst day for 7 years (Silver fell 15%, its worst day since the 2008 crisis), as yields rose 6%. The dollar was only slightly up, but JPY was the strongest currency of the day. NZD was particularly weak as coronavirus was detected after several weeks of no new cases.

Wednesday August 12
The mood was reversed today after the US CPI strong beat (double the figures expected). In a clear risk-on day, helped by dip buyers, NDX outperformed, up 2.1%, and SPX exceeded the Feb 19 closing all-time high, and came within 5.63 points (0.17%) of the intraday high of the same day. Oil was up 2.48%, and only JPY was down against a notably weaker dollar. Despite risk-on, yields advanced again and Gold was up, a bounce from Tuesday’s sharp sub-$2000 fall.

Thursday August 13
News today was a beat on Jobless Claims, but another day of stimulus deadlock. Another day of NDX outperformance saw the tech index slightly up and SPX and DJIA slightly down (so no new high) on what was generally a flat day, although European indices fell, notably FTSE on GBP performance following Wednesday’s GDP beat. Oil slipped slightly, and the dollar was directionless, with AUD, NZD, and JPY down, but EUR, GBP and CAD up. Gold continued its bounce back and yields continued to climb. This week, these assets are being driven by a longer-term trend as the dollar flattens.

Friday August 14
Poor Chinese Industrial Production and Retail Sales figures triggered a sell-off in the European morning, although this recovered in the US session, to produce the oft-seen pattern of recovery after the European close. FTSE was down sharply on another GBP rally (which came off, when London closed!). So US markets were flat overall, and closed another consolidating weekk. All US and European indices had larger daily moves than their total for the week. The dollar faded again, this time across the board, as the yields rally stalled, and Bonds were flat on the day. Gold also came off slightly, as did Oil.

WEEKLY PRICE MOVEMENTEuropean and US indices consolidated this week, but the picture was completely different on NKY which was our largest index mover, up 4.29%. The weakest currency was NZD and the strongest was CAD. Selling NZDCAD would have made 1.98%. Yet another week where ETH advanced but BTC was flatter than forex, and a very mixed performance from FANGs.

Selling NZDUSD for a second week paid off, making 1.05% and my running total 7.91% (28 weeks, 13 wins). I think GBP is probably overextended and CAD’s recent strength looks like it will go another week, so I will sell GBPCAD 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 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)

  • DNC due to confirm Biden/Harris
  • Retail earnings phase
  • OpEx on Friday
  • UK, EU and Canada inflation

Monday August 17 
The Democratic National Convention starts today, where Joe Biden and Kamala Harris will be confirmed as candidates. Traders will be watching all week for signs of policy given that Biden is the front runner in the polls.

23:50 Japan Prelim Q2 GDP (e-7.6% p-0.6%) (Sun)
04:30 Japan Industrial Production (YoY)(Jun)

Tuesday August 18 
Retail earnings season opens today with DJIA components WMT and HD reporting before the bell. Like yesterday, macro news is thin.

01:30 RBA Meeting Minutes
08:00 Fed Brainard speech
12:30 US Housing Starts/Building Permits
23:50 Japan Imports/Exports/TB

Wednesday August 19 
A raft of inflation data today, and earnings from many SPX component retailers. Tech giant NVDA reports after the bell. Also important are the FOMC minutes from the last meeting.

06:00 UK CPI (YoY Jul e0.7% p0.6%)
06:30 UK CPI MoM
09:00 Eurozone CPI
12:30 Canada BoC CPI
18:00 FOMC Minutes

Thursday August 20 
A lot of low-level economic releases today, with Jobless Claims being the most important. Chinese giant BABA reports before the bell.

06:00 Germany PPI
06:00 Germany Gfk Consumer Confidence Survey
10:00 UK CBI Industrial Trends Survey – Orders
11:30 ECB MPC Minutes
12:30 US Jobless Claims
12:30 Philly Fed Mfr Survey (Aug)
16:00 BoC Beaudry speech
23:00 Aus Commonwealth Bank Prelim PMIs (Aug)
23:30 Japan National CPI

Friday August 21 
Today is August option expiration date, so additional volatility may be seen. European PMIs dominate the early day. Agricultural proxy DE reports before the bell.

06:00 UK Retail Sales
07:30 Germany Prelim Markit Mfr PMI (Aug e52.5 p51.0)
08:00 Eurozone Prelim Markit Composite PMI (Aug e54.7 p54.9))
08:30 UK Prelim Markit Svcs PMI (Aug e57.0 p56.5)
12:30 Canada Retail Sales (MoM Jun p24.5%)
13:45 US Markit Prelim PMIs (Aug)
14:00 US Existing Home Sales
14:00 Eurozone Prelim Consumer Confidence

Sunday, 9 August 2020

Week to Aug 7th

Strong NFP after weak ADP, Dollar slides slows down, Gold over $2,000

In a quiet vacation season week which saw Microsoft agree to buy TikTok, some progress on the next COVID-19 stimulus package and a strong NFP beat despite a poor ADP print, equities rose gently, with a new NDX high, the dollar decline slowed down, bonds consolidated, and the only notable move was to a new all-time for Gold.

Next week does not suggest any big moves either. Earnings season is still paused until the retail phase next week. We have inflation reports from China, Germany and the US, and jobs reports from the UK and Australia, but there is nothing on the calendar to suggest anything other than consolidation. SPX is only 1.26% from its all-time high (whereas DJIA is 7.78% away),and it may well get there. Of more interest is USD which is no longer oversold. Will it resume its journey down—the 10-year yield may give us the answer.

Mon Aug 3
Friday’s late rally continued into the new month after the important ISM Manuf PMI beat. The mood had been set earlier in Europe where the German PMI also beat and DAX outperformed the US indices. Microsoft’s TikTok deal helped NDX advance 1.47% to a new ATH. Oil moved up in line The dollar and Gold were both almost flat today, despite an early rally in the latter producing a new ATH of $1984.66.

Tuesday August 4
The House of Representatives reported “productive discussions” on the latest coronavirus stimulation package and market continued to rise. Yesterday NDX led, but today it was DJIA, although gains were more modest overall. Oil was up in line. Gold broke through the $2,000 barrier for the first time, and yields fell to a new low as the dollar fell again across the board. Bonds and Gold are reacting to the dollar much more than to the equity risk mood.

Wednesday August 5
A third day up for stocks, again led by DJIA which rose 1.4%, over double the move of SPX and NDX, helps by DIS, up 8.8% on earnings, and made a ‘Golden Cross’ as the 50-day moving average moved ahead of the 200-day. Oil rose in line. The dollar fell for a third day after, after the big miss on ADP jobs, pushing Gold up to a new high of $2,040. Yields were back up 4bp today, possibly reacting to equities, but more likely just part of a normal zigzag pattern down. The VIX was down to 23, its lowest level since the COVID crisis began

Thursday August 6
A fourth day of gains, this time the focus moving back to tech stocks, with NDX outperforming and breaking 11,000 for the first time. The rally was late, leaving European indices in the red, in particular FTSE reacting to the previous day’s GBP move up. Oil pulled back slightly after three days of gains. Gold continued its amazing run hitting a new high of $2,070. Yields pulled back despite a generally flat dollar.

Friday August 7
A strong beat on the NFP print (1.76M vs 1.36M) had surprisingly little effect, although SPX and DJIA managed small gains whereas NDX pulled back slightly as did Oil. The effect of the NFP was seen more in USD, which added 0.7% to DXY, reducing the week’s slide to under 1%. DXY is, notably, no longer oversold on a daily basis. Yields followed the stronger dollar up. Gold took a breather, only its second red day in the last 16, and pulled back $27, to close just under 3% up for the week.

Smaller moves than we have seen recently, with DJIA at +3.8% the top index mover. A much flatter forex market than usual, with AUDNZD up 0.57% as the top mover. Bitcoin went back to sleep, whereas Ethereum keeps on climbing. FANGs were quite variable with only AMZN and FB outperforming.

My own call to sell NZDUSD wasn’t too bad. NZD was the weakest currency, and we made 0.32% making my running total 6.86% (27wks 12wins). I still think the dollar is going to reverse back up next week (It tried towards the end of the week) so I will repeat my position and sell NZDUSD again.

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)

  • US, China, Germany inflation
  • UK & Australia Unemployment
  • Earnings pause continues
  • Low volatility expected

Monday August 10
Another quiet Monday with no US or European significant releases. Markets are closed in Japan, Singapore and South Africa.

01:30 China CPI (YoY e2.6% p2.5%)
21:00 NZ House Price Index
23:01 UK BRC Like-For-Like Retail Sales

Tuesday August 11
The UK Unemployment and Claimant Count change is the only key news today. The UK furlough scheme, where people did not lose their jobs means the figure is much less severe than other countries.

08:30 UK Unemployment Rate (3M)(Jun) (e4.2% p3.9%)
09:00 Eurozone ZEW Survey – Economic Sentiment(Aug)
09:00 Germany ZEW Survey – Current Situation/Economic Sentiment(Aug)
12:30 US PPI

Wednesday August 12
The main news today in this quiet week is the US inflation print. Markets are closed in Thailand.

02:00 RBNZ Rate Decision/Statement
03:00 RBNZ Press Conference
06:00 UK Manufacturing/Industrial Production
06:00 UK Prelim Q2 GDP (QoQ e-20.2% p-2.2%)
09:00 Eurozone Industrial Production
10:00 Germany 10Y Bond Auction 
10:00 UK NIESR GDP Estimate (3M)(time approx.)
12:30 US Core CPI (YoY e1.2% p1.2%, MoM e0.2% p0.2%)
18:00 US Monthly Budget Statement (Jul)

Thursday August 13
Save any shocks in the US Jobless Claims, another quiet day for news. There are rate decisions in Mexico and Egypt.

01:30 Aus NFP/Unemp (NFP e40k p211k, Unemp e7.8% p7.4%)
06:00 Germany CPI (e0.0% p0.0%)
12:30 US Jobless Claims
22:30 Business NZ PMI(Jul)

Friday August 14
The quiet week closes with US and China Retail Sales. The Michigan Consumer Sentiment Index is still well down. Markets are closed in Pakistan.

02:00 China Retail Sales (YoY e0.3% p-1.8%)
09:00 Eurozone Prelim Q2 GDP (QoQ e-12.1% p-12.1%)
12:30 US Retail Sales (MoM e1.7% p7.5%)
13:15 US Industrial Production (MoM)(Jul)
14:00 US Prelim Michigan CSI (e71.5 p72.5)