Week to Dec 24th

Christmas 4-day week, Santa brings new SPX ATH

MY CALL THIS WEEK : SELL AUDNZD

THIS WEEK

In this shortened Christmas week, markets dropped hard on Monday on Omicron fears and tighter restrictions including a lockdown in the Netherlands. However, news that omicron, whereas more transmissible is less serious, plus a lack of any bad news and of course the Santa effect drove markets up, with SPX making a closing ATH. Oil was up in line with equities, whereas DXY (and EURUSD) and Gold consolidated with inside weeks. Yields recovered most of last week's drop. Happy Christmas to all my readers.

WEEKLY PRICE MOVEMENT

The biggest index mover was NDX, up 3.21%, recovering last week's drop. The top forex mover was AUDJPY up 1.97%. Bitcoin and Ethereum were well up, and FANG outperformed NDX, except for AMZN.

Last week’s USDCAD short made 0.61%, taking my year to date profit to 6.44% and 34/51 wins. This week I will take the NZD catchup trade and short 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

The fact that the biggest releases in the final week of 2021 are housing stats and Chinese PMIs indicates how holidays are in full swing. US Markets are open all week, but volume is expected to be low. Germany is closed on Friday.

CALENDAR  (all times are GMT)

Monday December 27

23:30 Japan Jobs/Unemployment

23:50 Japan Industrial Production

Tuesday December 28

14:00 US Housing/Home Price Indices

Wednesday December 29

15:00 US Pending Home Sales

Thursday December 30

13:30 US Jobless Claims

14:45 Chicago PMI

Friday December 31

01:00 NBS Manufacturing PMI

01:00 Non-Manufacturing PMI

Week to Dec 17th

Fed confirms taper acceleration, dollar up, equities down

MY CALL THIS WEEK : SELL USDCAD

THIS WEEK

As expected, the Fed doubled the pace of taper this week in response to runaway infation (worse this week), and forecast three rate hikes in 2021, the first in January. The BoE delivered a surprise rate rise of 0.15% which made GBP the second strongest currency after the dollar this week.

Markets sold into the Fed, and after a brief spike on the announcement, fell again, with rate-sensitive NDX underperforming. The dollar did the reverse, rallying into Wednesday, spiking down then rallying again. Gold was back up over $1,800 for the first time in three weeks, and Oil had relatively low volatility, despite the weak CAD move. Yields were down, in an inside week that partially reversed last week.

WEEKLY PRICE MOVEMENT

The biggest index mover was NDX, down 3.25%, in what was still an inside week. The top forex mover was USDCAD up 1.31%. Bitcoin and Ethereum were flat after last week's drop, and FANG performed even worse than NDX, except for FB.

Last week’s AUDNZD short made 0.23%, taking my year to date profit to 5.83% and 33/49 wins. This week I will take the reversal of the top mover and short USDCAD.

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

The four-day week will be quiet as traders wind down for the Christmas holiday. The US, Europe and the UK (half day) will be closed on Friday. On the calendar is the relatively unimportant final GDP reading from the UGK, US and Canada, which are estimated to be in line with preliminary readings. Even PCE (Fed's preferred method of inflation) of low interest after Fed have already spoken on taper acceleration. Other than this, the week is traditionally bullish.

CALENDAR  (all times are GMT)

Monday December 20

01:30 PBoC Interest Rate Decision (e3.85% hold)

Tuesday December 21

00:30 RBA Meeting Minutes

07:00 Germany Gfk Consumer Confidence

13:30 Canada Retail Sales (MoM e1.2% p-0.6%)

15:00 Eurozone Consumer Confidence

23:30 Aus Westpac Leading Index

23:50 BoJ MPC Minutes

Wednesday December 22

07:00 UK Q3 Final GDP (e1.3% p1.3%)

13:30 Chicago Fed National Activity Index

13:30 US PCE QoQ

13:30 US Final Q3 GDP Annualised (e2.1% p2.1%)

15:00 US Consumer Confidence

Thursday December 23

13:30 US PCE MoM & YoY

13:30 US Durable/ND Capital Goods (Nov Durable e1.5% p-0.4%)

13:30 US Jobless Claims

13:30 Canada Q3 GDP

15:00 Michigan CSI

15:00 US New Home Sales

23:30 Japan National CPI

Friday December 24 

No releases

Week to Dec 10th

Omicron fears subside on Fauci comments, CPI as expected

MY CALL THIS WEEK : SELL AUDNZD

THIS WEEK

The market rallied this week after Fauci comments that Omicron ‘almost certainly’ not more severe than Delta boosted optimism over the variant’s impact. Markets recovered last week's drop, with DJIA posting its best week since March. SPX came within 1% of its ATH. US 10Y climbed in line with stocks but trading an inside week. The DXY basket also traded an inside week, despite the importance of the CPI print, which was in line with estimates at 4.6%. Traders were glad it was not worse, and bought equities and sold the dollar. Oil rallied, and commodity currencies AUD and CAD were strong, in line with the risk-on mood. Gold continued to confuse, ending flat after also trading an inside week.

WEEKLY PRICE MOVEMENT

The biggest index mover was DJIA, up 4.02%. The top forex mover was AUDJPY for a second week, recovering last weeks loss and up 2,.92%. Bitcoin and Ethereum fell hard, and FANG refected NDX, with AAPL the strongest again.

Last week’s NZDJPY long made 1.25%, taking my year to date profit to 5.60% and 32/48 wins. This week I think NZD will catch up with AUD, so I am shorting 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

The key event for next week is the FOMC meeting on Wednesday, where it is strongly expected that they will announce a firm accelerated timetable for QE taper, ending earlier than June 2022. Commentators are talking about doubling the speed. The CME Fedwatch has even priced in (admittedly a 3% chance) a rate hike at this meeting. So the hawkish bar is high, anything less than this would be very bearish for USD.

Also on the packed agenda for this holiday time of year are rate decisions from the UK (a possible rate hike) and Japan. Added to that we have UK and Australian unemployment, Canadian and Eurozone inflation, and various PMIs.

CALENDAR  (all times are GMT)

Monday December 13

23:50 Japan Tankan Large Mfr Index (Sun) (e25 p18)

17:00 UK Financial Stability Report

Tuesday December 14

04:30 Japan Ind Production

07:00 UK Claimant Count/AHE/UnEmp (UnEmp p4.3%)

10:00 Eurozone Ind Production

13:30 US PPI

23:30 Aus Westpac Consumer Confidence

Wednesday December 15

02:00 China Retail Sales (p4.9%)

07:00 UK CPI (p4.2%)

13:30 US Retail Sales (e1.0% p1.7%)

13:30 Canada BoC CPI (p3.8%)

19:00 Fed Rate Decision/Statement (e0.25% hold)

19:30 FOMC Powell Presser

22:00 Aus Commonwealth Bank PMIs

23:30 RBA Governor Lowe speech

23:30 Aus Westpac Leading Index

23:50 Japan Imports/Exports/TB

Thursday December 16

00:00 Aus Consumer Inflation Expectations

00:30 Aus NFP/UnEmp (UnEmp p5.2%)

08:30 Germany Markit PMIs (Mfr p57.4)

09:00 Eurozone Markit PMIs (Comp p55.4)

09:30 UK Markit PMIs (Svcs p58.5)

10:00 Eurozone Labor Cost

12:00 BoE Rate Decision/Statement (e0.1% hold)

12:45 ECB Rate Decision/Statement (e0.0% hold)

13:30 US Building Permits/Housing Starts

13:30 US Jobless Claims

13:30 Philly Fed Mfr Survey

13:30 ECB Lagarde Presser

Friday December 17

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

06:00 BoJ Presser

07:00 UK Retail Sales

07:00 Germany PPI

10:00 Eurozone CPI

Week to Dec 3rd

Fed hint of taper acceleration adds to omicron misery.

MY CALL THIS WEEK : BUY NZDJPY

THIS WEEK

This week, the Omicron variant continued to spread, albeit slowly, but a warning from MRNA that their vaccine may be less effective weighed on the market, and indeed on their own stock which, unlike fellow vaccine producer PFE, was also down. Of more concern to markets was Fed Chair Powell's testimony to the Senate where he explicitly confirmed that inflation is no longer 'transitory', and indicated that the rate of taper may be accelerated (ie to finish before June 2022). If the DJI had not already had three down weeks, at one point 7% off its last high, the drop might have been worse. All indices were down except FTSE which rose on sterling weakness.

The dollar was strong against commodity/risk currencies AUD, NZD and CAD, and indeed GBP, although a flat Euro and safe haven yen appreciation led to a perfectly flat week for the DXY basket. Gold was down slightly, and Oil fell to below $63/bbl, a four-month low. The 2-year US bond hit highs not seen since the pandemic collapse in Mar 2020, and given the sharp dip in 10-year paper, the yield curve (US10Y-US02Y) had its worst week for a decade.

The material NFP miss (210k vs 550k) caused the logical reaction, a decline from the open until the last 15 minutes when a few shorts took profit. There was a momentary 'bad delays taper' spike to the upside on the print, so it is hard to say whether Friday's decline was driven by the miss, or the general downward taper acceleration and omicron pressure. The severe underperformance of NDX on Friday suggests the former.

WEEKLY PRICE MOVEMENT

The biggest index mover was NKY, down 2.51%. The top forex mover was AUDJPY this week, down 2.16%. Bitcoin and Ethereum were flat,, and FANGs, except AAPL were particularly weak.

Last week’s NZDJPY short lost 1.55%, taking my year to date profit to 4.35% and 31/47 wins. This week I am convinced it will recover and thus buying NZDJPY 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

There is only really one important print next week, the US inflation print on Friday. The core estimate of 4.9% is the highest for years and the Fed have said that acceleration of taper program will follow. A much lower figure would move markets strongly, ahead of the FOMC meeting on Dec 15. Chinese and German inflation are also reported. Otherwise Omicron news is likely to dominate, although of course, with markets already over 5% off highs, a lot of both these factors has already been priced in, given the normally buoyant time of year. 

CALENDAR  (all times are GMT)

Monday December 6

00:00 Aus TD Securities Inflation

07:00 Germany Factory Orders

11:30 BoE Broadbent speech

23:30 Japan Overall Household Spending

Tuesday December 7

00:30 Aus House Price Index

02:00 China Imports/Exports/TB

03:30 RBA Rate Decision/Statement (e0.1% hold)

05:00 Japan Leading Economic Index

07:00 Germany Industrial Production

10:00 Eurozone Q3 GDP (QoQ e2.2% p2.2%)

10:00 Germany ZEW Sentiment

13:30 US Trade Balance

13:30 US Productivity/Labor Costs

13:30 Canada Trade Balance

15:00 Canada Ivey PMI

23:50 Japan Q3 GDP (e0.4% p-0.8%)

Wednesday December 8

10:30 DE10Y Bond Auction (time approx.)

15:00 BoC Rate Decision/Statement (e0.25% hold)

22:00 RBA Governor Lowe speech

Thursday December 9

01:30 China CPI (YoY e2.5% p1.5%)

07:00 Germany Trade Balance

13:30 US Jobless Claims

19:00 BoC Gravelle speech

Friday December 10

07:00 UK GDP

07:00 UK Ind/Mfr Production

07:00 Germany CPI (YoY e6.0% p6.0%)

13:30 US CPI (Core YoY e4.9% p4.6%)

15:00 Michigan CSI (e67 p67.4)

19:00 US Monthly Budget Statement

Week to Nov 26th

Omicron scare means worst day of year on Black Friday for equities and Oil

MY CALL THIS WEEK : BUY NZDJPY

LAST WEEK

After a quiet three days in the run-up to Thanksgiving, market, markets showed how extended they were by a strong collapse on Friday, the worst one day drop of 2021 for equities and Oil. Gold once again showed its unreliability as a safe haven. A flat week for copper showed how the NDX drop (more than DJI) may have been more to do with their relative overbought conditions than the COVID news. The dollar had a flat week, although JPY and bonds rallied on the equity drop. 

WEEKLY PRICE MOVEMENT

The biggest index mover was DAX, down 5.59%. The top forex mover was NZDJPY this week, down 3.37%. Bitcoin and Ethereum were down again, and FANGs reflected general NDX movement.

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

As markets were still depressed on Friday, the COVID omicron variant is likely to depress markets as long it stays in the news. However, it is a new month and therefore NFP week. The mid-range estimate of 550k is close to the ADP figure which may change the mood, depending on course on further Omicron information. The week is heavy with Central Bank speeches including Fed Chair Powell's testimony to the Senate COVID committee on Tuesday.

Other than that, we have a raft of PMIs, including the most important ISM pair, German and European inflation, the latter's core still not exceeding 2%, and GDP from commodity pair Australian and Canada.

CALENDAR  (all times are GMT)

Monday November 29

23:50 Japan Retail Sales (Sun)

08:30 BoJ's Governor Kuroda speech

10:00 Eurozone Confidence Indicators

13:00 Germany CPI (e5.4% p4.6%)

13:30 Canada Current Account

15:00 US Pending Home Sales

19:00 BoC Governor Macklem speech

19:00 BoC Schembri speech

20:05 Fed Chair Powell speech

22:05 Fed Bowman speech

22:05 RBA Debelle speech

23:30 Japan Jobs/Unemployment

23:50 Japan Industrial Production

Tuesday November 30

00:30 Aus Building Permits (MoM)(Oct)

01:00 China PMIs (Mfr 49.6 p49.2)

08:55 Germany UnEmp Rate/Change

10:00 Eurozone CPI (Core YoY e1.9% p2.0%)

10:15 ECB Weidmann speech

13:30 Canada Q3 GDP (QoQ e2.5% p-1.1%)

14:00 US Housing/Home Price Indices

14:45 Chicago PMI

15:00 US Consumer Confidence

15:00 Fed Chair Powell testimony

18:00 Fed Clarida speech

21:30 Aus AiG Performance of Mfg Index

Wednesday December 1

00:30 Aus Q3 GDP (QoQ e-2.7% p0.7%)

01:45 China Caixin Mfr PMI

07:00 Germany Retail Sales (YoY e-2% p-0.9%)

08:55 Germany Markit Mfr PMI

09:30 UK Markit Mfr PMI

12:00 BoE Governor Bailey speech (time approx.)

13:15 US ADP (e525k p571k)

14:30 Canada Markit Mfr PMI

14:45 US Markit Mfr PMI

15:00 US ISM Mfr PMI (e61 p60.8)

19:00 Fed Beige Book

Thursday December 2

00:30 Aus Imports/Exports/TB (TB e11Bn,p12.2Bn)

10:00 Eurozone Unemployment Rate

13:30 US Jobless Claims

21:30 Aus AiG Performance of Construction

22:00 Aus Commonwealth Bank Svcs PMI

Friday December 3

01:45 China Caixin Services PMI

08:55 Germany Markit PMI Comp

09:00 Eurozone Markit PMI Comp

10:00 Eurozone Retail Sales (YoY e1.5% p2.5%)

13:30 US NFP/AHE/UnEmp (NFP e550k p531k)

13:30 Canada NFP/UnEmp (UnEmp p6.7%)

14:45 US Markit Svcs/Comp PMIs

15:00 US ISM Svcs PMI (e65.5 p66.7)

Week to Nov 19th

NDX ATH, Sterling rallies, Austria lockdown

MY CALL THIS WEEK : SELL EURAUD

THIS WEEK

This week saw beats (not necessarily good) on US Retail Sales and UK inflation. The latter buoyed sterling, the only currency to beat the dollar. This made FTSE the week's worst performing index. News of rising continental European COVID cases and a full lockdown in Austria made EURGBP the largest forex mover, hitting 2020 lows.

Increased volatility led to extremes in the NDX and the dollar. The tech index hit new all-time highs, and also the NDX/DJI ratio reached its highest level since 2000. At 0.465, the ratio is only 1% below the 0.47 spike on Mar 13, 2000, a level it only held for half a day. (The low was 0.11 on 24 Sep 2002). DXY had its strongest week for five months, and hit a 16 month high, with EUR recording the same periods for lows. Gold had its best week in two months, and made new 5-month high, before fading as the dollar rallied mid-week. Yields and Gold largely followed the dollar.


WEEKLY PRICE MOVEMENT

The biggest mover for a third week was FTSE, down 1.69% on a strong pound. The top forex mover was EURGBP this week, down 1.71%. Bitcoin and Ethereum were down sharply, whereas FANGs performed well, in line with NDX.

Last week’s EURGBP short made 1.71%, taking my year to date profit to 7.90% and 31/45 wins. This week I am selling EURAUD.

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

The week ahead is foreshortened to three and half days in the US, with Thanksgiving and the half-day on Black Friday which opens the holiday season. The minutes of the last FOMC meeting are published and there are interest rate decisions in China and New Zealand. Otherwise it is a fairly quiet week for important data.

CALENDAR  (all times are GMT)

Monday November 22
01:30 PBoC Interest Rate Decision (e3.85% hold)
13:30 Chicago Fed National Activity Index
15:00 Eurozone Consumer Confidence
22:00 Aus Commonwealth Bank PMIs

Tuesday November 23
08:30 Germany Markit PMIs (Mfr e56.7 p57.8)
09:00 Eurozone Markit PMIs (Comp e53.1 p54.2)
09:30 UK Markit Mfr/Svcs PMIs (Svcs 58.5 p59.1)
11:00 BoE Haskel speech
14:45 US Markit PMIs
18:00 BoC Beaudry speech
22:15 RBA Bullock speech

Wednesday November 24
00:40 RBA Bullock speech
01:00 RBNZ Rate Decision/Statement (e0.75% p0.5%)
02:00 RBNZ Press Conference
09:00 Germany IFO Sentiment Indicators
12:45 UK Autumn Budget
13:30 US Durable/ND Capital Goods (NDC Oct e0.6% p0.8%)
13:30 US Jobless Claims
13:30 US Q3 GDP Annualized (e2.1% p2.0%)
15:00 US PCE QoQ
15:00 Michigan CSI
15:00 US New Home Sales (MoM)(Oct)
19:00 FOMC Minutes

Thursday November 25
07:00 Germany GDP
12:30 ECB MPC Accounts
23:30 Tokyo CPI

Friday November 26
00:30 Aus Retail Sales (MoM e2.5% p1.3%)

Week to Nov 12th

Inflation higher than expected, Strong Gold rally 

MY CALL THIS WEEK : SELL EURGBP

 

THIS WEEK

This week’s inevitable slide in equity markets was reversed after Wednesday’s strong inflation overshoot (core 4.6% vs est 4.3%, previously 4%), which created a V-shaped week, and sent Gold to five-month highs which were sustained.. The dollar and yields also rallied, pushing Oil down. All this showed the market thought rate hikes would come sooner, although surprisingly the Fed Futures rate did not move.

WEEKLY PRICE MOVEMENT

The biggest mover for a third week was NDX, down 0.97%. The top forex mover was NZDUSD this week, down 0.96%. Bitcoin and Ethereum were fairly flat, and FANGs were fairly flat except NFLX which reverted to mean.

Last week’s GBPNZD long made 0.42%, taking my year to date profit to 6.19% and 30/44 wins. This week I am selling EURGBP.

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

Next week sees the retail phase of earnings, and as inflation is the hot topic, with retail sales and CPI from the UK and Canada, and more importantly US retail sales. Overall, the proximity to Thanksgiving and Black Friday is more likely to influence markets.

CALENDAR  (all times are GMT)

Monday November 15
23:50 Japan Q3 Prelim GDP (Sunday) (QoQ e-0.2% p0.5%)
04:30 Japan Ind Production
09:30 BoE Haskel speech

Tuesday November 16
00:30 RBA Meeting Minutes
02:30 RBA Governor Lowe speech
07:00 UK Claimant Count/AHE/UnEmp (UnEmp e4.5% unch.)
10:00 Eurozone GDP (e2.2% unch.)
13:30 US Retail Sales (MoM e0.7% unch.)
23:30 Aus Westpac Leading Index

Wednesday November 17
00:30 Aus Wage Price Index
07:00 UK CPI (p3.1%)
08:00 EU Financial Stability Review
13:30 US Building Permits/Housing Starts
13:30 Canada BoC CPI (p3.7%)
14:10 Fed Williams speech
17:40 Fed Waller speech
21:05 Fed Evans speech

Thursday November 18
10:00 Eurozone CPI
13:30 Philly Fed Mfr Survey
13:30 US Jobless Claims
14:30 Fed Williams speech
19:00 Fed Evans speech
23:30 Japan National CPI
23:50 Japan Imports/Exports/TB

Friday November 19
07:00 UK Retail Sales
07:00 Germany PPI
08:00 ECB President Lagarde speech
13:00 ECB Weidmann speech
13:30 Canada Retail Sales (MoM e2.0% p2.1%)
15:45 Fed Waller speech
17:15 Fed Clarida speech