Sunday 27 September 2020

Week to Sep 25th

Powell calls for more stimulus, Whipsaw equity week, Dollar strong recovery


In another week where the downward pressure of COVID and election uncertainty were matched by this week’s tranche of existing QE billions, we saw whipsaw consolidation in the US, and a steady downturn in Europe, who are not beneficiaries of the Fed’s largesse. The European downturn would have been worse had not EUR and GBP faded all week against a resurgent dollar, bouncing back strongly from double bottom support last week. Gold and Oil reacted negatively to the stronger dollar.

Next week does not really promise anything different, despite the wealth of macroeconomic data. The NFP recovery is tapering, with the September estimate only two-thirds of that in August. Of possible note is the Chinese week-long mid-autumn festival around National Day which starts on Tuesday.

Mon Sep 21
Concerns about a second coronavirus lockdown, the deadlock on more stimulus caused a further sharp fall in markets today (NDX managed to stay flat).

The dollar was sharply up having bottomed last week, with DXY posting its best day since July.

Gold and bonds were up and Oil down in line with equities, and JPY fell much less than other currencies.

Tuesday September 22

Fed Chair Jay Powell told Congress today that businesses hit by COVID may require further direct support. This prompted a Turnaround Tuesday today, where equity markets bounced back from the sharp sell-off, although the recovery was less effective in Europe despite weaker currencies (GBP hit a two-month low)

The dollar had a second strong day. Gold fell in line, although Oil failed to join the recovery and was slightly down. Bonds were flat on the day.

Wednesday September 23

The whipsaw consolidation continued with equities once again down, pushing through but ultimately failing to break Monday’s support low, as various Fed speakers called for additional stimulus. Oil followed them down. Dollar strength continued for a third day, with Gold reacting negatively to the dollar, not equities today. Once again, after a lively session, bonds closed flat.

Thursday September 24

A statement by Democratic leader Nancy Pelosi about being “Ready for negotiation” prompted yet another direction change as equity markets (and Oil) recovered slightly in the US, although as recovery by GBP prevented FTSE from joining the party. USD took a breather after its 3-day run, and was slightly down on the day. Despite the positive turn, Gold and Bonds were still up on the day, perhaps reflecting the dollar pause.

Friday September 25

A final rally today did not prevent stocks from closing a fourth red week, reflecting the fact that COVID is far from over. The dollar rallied again (reflected in bonds), but Gold was down in line. Oil was up on the day.


Whereas the US consolidated, we saw a collapse in Europe with DAX down 4.93%. The strongest forex move was AUDUSD down 3.63%. Yet another flat week for Bitcoin, but a notable pullback for ETH. FANGs outperformed NDX in strong week for tech, with AAPL the top performer.

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)

Monday September 28

As is often the case, today has no significant releases as go into the end of September and the US Presidential election campaign begins in earnest.

23:30 Tokyo CPI

Tuesday September 29

A thin day on news, but three Fed speakers.

09:00 Eurozone Consumer Confidence/Business Climate

12:00 Germany CPI (YoY e-0.2% p-0.1%)

13:00 US S&P/Case-Shiller Home Price Indices

13:15 Fed Williams speech

14:00 US Consumer Confidence

15:40 Fed Clarida speech

17:00 Fed Williams speech

23:50 Japan Retail Sales

Wednesday September 30

The final day of September sees the first Trump/Biden Presidential debate, and is also packed with macro news. Also it is the first day of China’s week-long National Day and Mid-Autumn Festival when markets are closed.

01:00 China PMIs

01:45 China Caixin Manufacturing PMI(Sep)

06:00 UK GDP (QoQ e-20.4% p-20.4%)

06:00 Germany Retail Sales (YoY e3.4% p4.2%)

06:00 Retail Sales (MoM)(Aug)

08:30 BoE's Haldane speech

08:55 Germany Unemployment Rate/Change

09:00 Eurozone CPI (Core YoY e0.7% p0.4%)

12:15 US ADP Employment Change (e650k p428k)

12:30 US GDP Annualised (e-31.7% p-31.7%)

12:30 US PCE

13:45 Chicago Purchasing Managers' Index(Sep)

14:00 US Pending Home Sales (MoM)(Aug)

22:30 AiG Performance of Mfg Index(Sep)

Thursday October 1

The start of a new month, with the ISM print the most important news. There are rate decisions in India and Romania today.

07:55 Germany Markit Manuf PMI(Sep)

08:30 UK Markit Manuf PMI(Sep)

09:00 Eurozone Unemployment Rate(Aug)

12:30 US PCE (MoM and YoY)

12:30 US Jobless Claims

13:30 Canada Markit Manuf PMI

13:45 US Markit Manuf PMI

14:00 US ISM Manuf PMI (e56 p56)

15:00 Fed's Williams speech

23:30 Japan Jobs/Unemployment

Friday October 2

Non-farm payrolls, as always dominates the news, as job recovery continues but at a slower pace.

01:30 Aus Retail Sales (p-4.2%)

12:30 US NFP/AHE/UnEmp (NFP e875k p1371k)

14:00 Michigan CSI

14:00 US Factory Orders (MoM)(Aug)

Sunday 20 September 2020

Week to Sep 18th

Fed seen as not dovish enough, DXY inside week, Equities, Gold and bonds consolidate

This week, the Fed’s statement confirmed what would in normal times be seen as dovish, confirmation of the new averaging of inflation and no rate increases until 2023, or inflation is “on-track to moderately exceed 2% for some time.” However, there was no new easing hints at, and thus the report was considered slightly hawkish, or at least, as we have seen recently ‘not as dovish as expected’.

Early equity gains on vaccine hopes were capped to produce a lambda-shaped (inverted V) week, with a slight risk-off bias, seen in tech underperformance (vs DJI), and a rising yen. The dollar had a short-lived spike up immediately after Fed, primarily against the euro, but DXY posted its first inside week since early August, and Gold and Bonds continued in low-volatility consolidation. Ignoring EUR, the dollar was slightly up.

Next week is light on scheduled macro news, with little other than PMIs, and will probably be dominated y the preponderance of CB speakers, topped of course by Fed Chair Powell’s marathon three-day testimony to Congress on the Coronavirus Act, where traders will looking for amplification of detail on the current Fed position. Also of note is TreasSec Mnuchin’s testimony. The week also sees a huge tranche of corporate bond issues, taking advantage of rock-bottom rates.

Mon Sep 14

Markets rose today, reversing Friday’s fall, on news that Oxford University and AZ were recommencing vaccine trials, and PFE said a vaccine by year-end was likely. European indices were flat after currency gains. The dollar fell again across the board. Gold was up on the weaker dollar, whereas bonds and JPY fell in line with market, the yen being the largest mover in the DXY basket. Oil was more or less flat.

Tuesday September 15

Strong economic data in the morning from both China and Europe produced a risk-on day, with NDX and SPX outperforming a flat DJIA. Oil was up in line, and Gold and bonds were down. The dollar was more of less flat overall, with a weak euro contrasting strength elsewhere. JPY continued upwards, against the haven trend.

Wednesday September 16

After fading pre-market, US stocks attempted a small rally, but fell again after the Fed statement was seen as ‘not dovish enough’. The Fed upgraded their long-term economic forecast and said that there would be no rate hikes until inflation reaches 2% under the new averaging rules. The dollar spiked up on the news and ended up against all currencies except EUR (which meant DXY was slightly down). Gold was up in line with the equity pullback. Bonds were flat. Oil rose after the strong EIA stock beat.

Thursday September 17

Equity markets were disappointed with the Fed’s failure to offer anything new, and fell again today, not helped by the continuing Congress deadlock on the next COVID relief bill. The brief ‘hawkish’ dollar rise faded fully today as well. The move was strong (all currencies were up), and completely overshadowed a three-hour 0.86% dip in GBP after the Bank of England mentioned that they had been studying negative rates. Oil was up in line. Gold was down slightly, and bonds were flat.

Friday September 18

Equity markets and Oil fell again today following the trend since the Fed, and Gold and JPY were up in line, the latter only 0.14% up but this was otherwise on a stronger dollar day, particularly against GBP and CAD. Yields were slightly up on the stronger dollar.

Largely a consolidating week when the strongest index move (NDX) is only 1.36% down, although notably FANG considerably underperformed the index, with most of the giants down 5%. Only a slight move in crypto, and the largest forex mover, also slight was CADJPY down 1.69%.

I was right about EURGBP pulling back. The 1% gain puts our running total to 8.12% (17 wins out of 31 and 3 in row).  There’s an almost textbook cup and handle on EURCAD, to take the pair up 367 points from the current 1.533 to 1.6. This is my trade this week, although it probably won’t get there in a 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)

  • Powell three-day testimony with Mnuchin
  • Nine Fed speeches plus two from the BoE
  • Full set of PMIs Wednesday
  • Six weeks to the election

Monday September 21

A new weeks opens, with only six weeks to go to the election which will be increasingly important. Fed Gov Brainard speaks on the Community Reinvestment Act in Washington.

12:30 Chicago Fed National Activity Index

14:00 Fed Chair Powell speech

16:00 Fed Brainard speech

22:00 Fed Williams speech

Tuesday September 22

Fed Chair Powell begins the first of three days testimony to the House on the Coronavirus Aid, Relief, and Economic Security Act. TreasSec Mnuchin appears with him. BoE Governor Bailey speaks to the British Chambers of Commerce.

00:30 RBA Debelle speech

07:30 BoE Governor Bailey speech

10:00 UK CBI Industrial Trends Survey – Orders

14:00 US Existing Home Sales

14:30 Fed Chair Powell testifies

14:00 Eurozone Consumer Confidence

23:00 Aus Commonwealth Bank PMIs

Wednesday September 23

Fed Chair Powell testifies for the second day to the House, and we have a rash of PMIs (all three categories) today. The most important ones are highlighted.

01:30 Australia Retail Sales

02:00 RBNZ Rate Decision/Statement (e0.25% hold)

06:00 Germany Gfk Consumer Confidence Survey

07:30 Germany Markit Mfr Prelim PMI (e52.5 p52.2)

08:00 Eurozone Markit Composite Prelim PMI (e51.7 p51.9)

08:30 UK Markit Services Prelim PMI (e56.0 p58.8)

13:00 Fed Mester speech

13:00 US Housing Price Index

13:45 US Markit Prelim PMIs

14:00 Fed Chair Powell testifies

18:00 Fed Quarles speech

23:50 BoJ Monetary Policy Meeting Minutes

Thursday September 24

Today Fed Chair Powell testifies to the Senate on the Coronavirus Act, again with Mnuchin alongside him. BoE Gov Bailey speaks again to the Chamber of Commerce. 

08:00 Germany IFO Sentiment Indicators

12:30 US Jobless

14:00 Fed Chair Powell testifies

14:00 Treasury Sec Mnuchin speech

14:00 US New Home Sales (MoM)(Aug)

14:00 BoE Governor Bailey speech

18:00 Fed Williams speech

Friday September 25

The only significant US macro prints today with the dual Durable Goods and inelegantly named Non-Defence Capital Goods ex Aircraft. Fed Williams gives the ninth Fed speech of the week.

12:30 US Durable Goods (Aug e1.5% p11.4%)

12:30 US ND Capital Goods (Aug e1.9% p1.9%)

19:10 Fed Williams speech

Sunday 13 September 2020

Week to Sep 11th

Labor day short week, US Correction continues with risk-off trading, GBP down on Brexit

In a week where negative news (COVID relief, jobs print) was not balanced by anything positive, it was no surprise to see a risk-off second week of retreat in equities, and reversal back up in Gold. The dollar continued to recover from its two-year low last week, and would have probably gone further were it not for a strong showing from EUR after a hawkish ECB press conference.

Next week is the Fed rate decision meeting, which invariably moves both the dollar and markets. Also of heightened interest is the BoE decision, coming during a renewed interest by the markets in Brexit, as the Dec 31 deadline to do a deal approaches with little progress in sight. 

Mon Sep 7

Markets were closed in the US for Labor Day, but European markets rose, mainly in defensives. The dollar was up across the board, but the notable move was GBP, down sharply on fears than PM Johnson plans to override part of the existing agreement.

Gold fell slightly, and Oil was flat. The US bond market was closed.

Tue Sep 8

Last week’s rout continued today with sharp falls across the board, but particularly in tech stocks. TSLA plunged 21% its worst day ever, and FANG stocks underperformed NDX overall. Oil fell over 6% in line. This was a reaction to tech overvaluations, rather than any specific news, and was probably triggered by TSLA. USD was firmly up, except, as you would expect, against JPY, which along with Gold and Bonds were up. All assets in line for a classic risk-off day.

Wednesday September 9

There was a rebound today from yesterday’s drop and all indices were up. Notably tech and industrial stocks recovered in about equal proportions, typically 2/3 of the Tuesday drop. Oil and yields were up in line. The dollar was down, dipping as EUR bounced off August support lines, and Gold rose on the weaker dollar.

Thursday September 10

A disappointing Initial Jobless Claims figure, and a blockage by the Dems of the latest COVD recovery package put a damper on the market, which fell again today. Once again, tech fell further. The ECB left everything unchanged, and did not express any concern about appreciation, which was consider hawkish, and EUR shot up, but then faded. Together with a further decline in GBP, this left USD up for the day. Oil was down, and Bonds and JPY were up, both in line with equities, and Gold was down in line with the stronger dollar. An interesting comparison to Tuesday, a similar equity move, but an opposite direction for USD.

Friday September 11

The week ended quietly, with SPX flat, DJI slightly up, and NDX down. Similarly the dollar was flat today with little volatility, as was Gold, and Oil. Bonds were slightly up. The week closed with notable divergence, with US indices down, but foreign (particularly FTSE) up.


Unusually we had an index over 4% down (NDX) and one over 4% up (FTSE) this week, the latter due to the large fall in GBP, which was reflected in the largest forex move, EURGBP up 3.85%. Cryptos went back to sleep, and FANGs underperformed NDX, particularly AAPL down 7.41%.

I played safe buying AUDNZD, and safety only gets you small rewards, up 0.80% (7.12% running today 16 wins out of 31). I am backing reversion this week, selling EURGBP, which is overbought on the daily chart for the first time since March.

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 Decision week
  • UK and Japan rate decisions
  • Expect Brexit volatility
  • UK, EU and Canadian inflation

Monday September 14

There is a vote scheduled today on Boris Johnson's new 'internal market' bill which is at odds with the current agreement on Northern Ireland. EU leaders have said that if this passes, it will make a deal impossible. Otherwise, there is very little in scheduled news today.

09:00 Eurozone Industrial Production

Tuesday September 15

News from China and Europe, but nothing important from the US today. There is a rate decision in Poland.

01:30 RBA Meeting Minutes

02:00 China NBS Press Conference

02:00 China Industrial Production (YoY)(Aug)

02:00 China Retail Sales (YoY e-1.4% p-1.1%)

06:00 UK Unemployment (e3.9% p3.9%)

09:00 Eurozone ZEW Sentiment Survey

09:00 Germany ZEW Sentiment Survey

13:15 US Industrial Production (MoM)(Aug)

23:50 Japan Imports/Exports/TB

Wednesday September 16

The Fed rate decision today has a hold 100% priced, and it is unlikely that the current QE plan or dot plot will change. However, markets are always look for more. There is also a rate decision in Brazil. Markets are closed in Mexico.

06:00 UK CPI (YoY e1.3% p1.0%)

12:30 US Retail Sales (MoM e1.1% p1.2%)

12:30 Canada BoC CPI (Core YoY e0.9% p0.7%)

18:00 Fed Rate Decision/Statement

18:30 Fed Chair Powell Presser

22:45 NZ Q2 Final GDP (QoQ e-1.0% p-1.6%)

Thursday September 17

The Bank of England leads today, especially as Brexit rears its head again. There are also a rate decisions in South Africa and Indonesia.

01:30 Australia Jobs/Unemployment (Jobs e40k p114.7k)

03:00 BoJ Rate Decision/Statement (e-0.1% hold)

06:00 BoJ Presser

09:00 Eurozone CPI

11:00 BoE Rate Decision/Statement (e0.1% hold)

12:30 US Building Permits/Housing Starts

12:30 US Jobless Claims

12:30 Philly Fed Mfr Survey

23:30 Japan National CPI

Friday September 18

The main US release is the Michigan Consumer Sentiment Indicator. There is a rate decision in Russia. Markets are closed in Chile.

06:00 UK Retail Sales

06:00 Germany PPI

12:30 Canada Retail Sales (MoM e24.5% p23.7%)

14:00 Michigan Prelim CSI (e76 p74.1)

Sunday 6 September 2020

Week to Sep 4th

Firm tech and general correction, Softbank ‘whale’ revealed, DJIA component change

This week saw the most significant market splits (AAPL and TSLA) for years, and the market close its best August since 1986, making new all time highs in SPX and NDX. On Wednesday, NDX broke 12400, a 24% gain in two months. The next day a bubble burst, with NDX shedding 650 points, its third-largest ever point drop (and in the top 30 worst days ever). This was later confirmed to be partly due to a ‘whale’ buyer SoftBank driving up particular stocks in the tech market to extreme levels.

The DJI/NDX ratio touched 2.317 this week, a level only seen once before in the second week of March 2000. Also VIX touched its highest level since June, and notably had been rising since August 26, a rare example of index/VIX positive correlation.

There was no particular news trigger on Thursday. It was a thin news week, with only the ISM PMI (beat) on Tuesday and the ADP (miss) on Wednesday. Friday’s NFP miss may have contributed to a further fall. At the lowest point on Friday, the index was 10.3% down in two days, but still only back to the level three weeks ago.

Next week is also very thin on US macro news, with Friday’s inflation report the only print of note. We can therefore expect sentiment-driven two-way enhanced volatility which invariably follows sharp drops.

Monday August 31
It was the first day of the newly constituted DJIA today. Markets took a breather today and pulled back slightly, although NDX advanced again, and all three US indices recorded their best August since the 1980s. TSLA ramped 13% after its 5:1 stock split. Non-US indices did not join the party, both DAX and FTSE were down on stronger currencies.
Oil was down in line with the pullback. The dollar continued down, except surprisingly against JPY. However the other two haven assets move up in line with the equity fade.

Tuesday September 1
Another up day, lead by tech. AAPL was up nearly 4% (over 7% in two days), adding 0.28 points to SPX on its own, which made a new ATH. Note AAPL’s weight in SPX, at 6.89% (a market cap weighted index) is now much more than it is in DJIA (an absolute share price weighed index). Lockdown darling ZM was up 40% on earnings. Oil was up in line. DAX was flat, and again FTSE on strong sterling, touching 1.3480 for the first time in 2020, 

However the RSI reading on SPX today of 83, and this fragility may be reflected in the fact that all three haven assets were up today. USD was up, after DXY touched a new 2-year low of 91.75 but this was mainly due to weak EUR after the German Manufacturing PMI miss. 

Wednesday September 2
Yet another up day, but this time with DJIA outperforming NDX, with the markets shrugging off the ADP 50% jobs miss, but who can tell with jobs figures these days. DJIA stalwart KO was up 4%, whereas AAPL fell 2%. Surprisingly, Oil fell despite the EIA beat at 1530 and buoyant equities. The dollar turned up from its low, advancing across the board. Gold and JPY fell in line with equities, but yields followed the dollar.

Thursday September 3
After a quiet morning, markets fell very sharply, in a move reminiscent of Jun 11 (also a Thursday), with SPX down 3.5% and NDX nearly 5%. AAPL fell 8%. Global markets were also down, but by much less. Oil was down in line. There had been trade and PMI misses, but these were not really the trigger. In fact, nobody was surprised after the massive run up in tech stocks recently, and many commentators talked about a ‘healthy’ correction. Other asset classes were not correlated, showing this was not true risk-off. Gold and bonds were both down. The dollar was generally flat with CAD gains balancing GBP losses, and a flat EUR. Notably Bitcoin dropped 10%, its worst day since March.

Friday September 4
With very little regard to NFP (jobs slight miss but a strong beat on unemployment), the carnage momentum continued for a second day, although a late rally pared losses. For example, AAPL at one point was a further 6% down, although it managed to claw all that back and close green. TSLA was a similar story, dropping nearly 9% then recovering to close 2.8% up. Losses were still deeper in tech at the close, although the story for the week was more modest, with NDX underperforming SPX by less than 1%. Oil was down in line, more sharply in a delayed reaction (it closed at lows). This time Gold and Bonds were up in line. USD had another directionless day, closing slightly up, mainly on CAD weakness.

Today Japanese tech investor Softbank was revealed as the ‘whale’ behind the recent huge rises in tech stocks, an options strategy which is now complete.

NDX was the weakest index and biggest mover. AUDCAD made the largest move (1.38%) in forex. BTCUSD finally moved after weeks in the doldrums, although ETH was flat, and FANGS, in the end, roughly tracked the general NDX index.

My NZDCAD short paid off. The pair gapped down (not counted) and ended up 0.41% on the week. running total 6.32%, 15 wins out of 30. This week I am buying AUDNZD.

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)
  • Labor day short week
  • Will correction continue
  • ECB and BoC rate decisions
  • US, Germany, China inflation

Monday September 7
Today is Labor Day so US and Canadian markets are closed. A quiet day is expected.

03:00 China Imports/Exports/TB (time approx.)
06:00 Germany Industrial Production
23:50 Japan Q2 Final GDP (QoQ e-8.1% p-7.8%)

Tuesday September 8
A quiet news day in this quiet week. Keep watching election news.

06:00 Germany Imports/Exports/TB
09:00 Eurozone Q2 GDP (QoQ e-12.1% p-12.1%)

Wednesday September 9
A third day without significant US releases, so Canada becomes centre-stage. USDCAD is approaching 1.2950, its January low, so risk is to the upside.

00:30 Aus Westpac Consumer Confidence
01:30 China CPI (YoY e2.4% p2.7%)
14:00 BoC Rate Decision/Statement (e0.25% hold)

Thursday September 10
All eyes today on ECB President Lagarde, and the latest Eurozone stimulus plans.

01:00 Aus Consumer Inflation Expectations(Sep)
11:45 ECB Rate Decision/Statement (e0% hold)
12:30 US PPI/Jobless Claims
12:30 ECB Lagarde Presser
16:30 BoC Governor Macklem speech

Friday September 11
A portentous date, and in data, US and German inflation may be the most significant prints of the week.

06:00 UK Manuf/Industrial Production
06:00 UK GDP (MoM)(Jul)
06:00 Germany CPI (YoY e-0.1% p-0.1%)
12:30 US CPI (Core YoY e1.6% p1.6%)
18:00 Monthly Budget Statement