An orderly vaccine rollout, the Brexit deal, the passing of the next stimulus package and the general seasonal ‘Santa Rally’ sentiment sent indices to new all-time highs, and the safe haven dollar to a new 30-month low. Gold, Oil and bonds were not in focus, and had inside weeks.
Next week is the new calendar and US fiscal year and a full week. We have a clean sheet as the main issues of late 2020 appear to have been resolved. The Georgia run-off elections are the highlight of the week, followed of course by NFP.
Monday December 28
Tuesday December 29
The Santa Rally continued, and indices hit new all-time highs today, and then pulled back slightly today, although NDX managed to remain flat. Oil was up in line. The safe haven dollar continued its downward path, with all currencies and Gold rising, and the yen up less than the others confirming risk-on. Bonds were flat again day.
Wednesday December 30
US indices rose again today but with less vigor, and surprisingly there was a slight rotation out of NDX which only managed to stay flat. Oil rose in line. The British Parliament formally agreed the Brexit ‘deal’. This was expected, but nevertheless, gave a boost to EUR and GBP which in turn depressed DAX and FTSE into the red. The dollar was down across the board, leading to Gold rising. Bonds were very slightly up, with a 1.5bp drop in yields.
Thursday December 31 *
After early sliding, there was a strong year-end equity rally in the last 20m of the US session, with NDX slightly outperforming, to close the day, month and year up. Clearly an institutional window dressing move, seen also in DAX futures (Europe had closed) but not FTSE or NKY. After rising all week, EUR came off sharply probably more to do with year-end positioning than Brexit. No other currency showed this move, and it resulted in a closing rally in DXY also. After collapsing in the Asian session, Gold was notably up, as was Oil. Bonds yields dropped another 1.5bp.
Friday January 1
All markets globally were closed today for New Year’s Day, however OTC forex showed a slight recovery in EUR in very thin trading. Otherwise the mood was flat. Bitcoin closed the wee another 22.3% up at an all-time high of $27,444, and was the best performing asset of 2020.
WEEKLY PRICE MOVEMENT
Indices were up this short week of the Santa Rally, with NKY outperforming, up 2.91% The strongest currency move was EURAUD down 1.55%. Cryptos soared, with BTC posting a new all-time high. FANGs did well, outperforming NDX as whole.
Selling EURCAD this week netted me 1.14%, a running total of 9.81% with 25/42 (59.5%) wins for 2020. We will reset for 2021, and in the New Year, I might branch out from just currencies, and I will start the profit count again. This week I’ll buy the dip and go long EURUSD.
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)
- New calendar and fiscal year
- New Congress
- Georgia run-offs
- Non-Farm Payrolls
Monday January 4
The first trading day of 2021 may well see heightened volatility as fund reposition again for the new quarter and year. News is exclusively manufacturing PMIs, all comfortably above 50. The 117th US Congress opened on Sunday. We have an agreed stimulus package, Brexit is behind us, so the year starts with a clean sweep so to speak.
01:45 China Caixin Mfr PMI
08:55 Germany Markit Mfr PMI
09:30 UK Markit Mfr PMI
10:00 OPEC Meeting
14:30 Canada Markit Mfr PMI
14:45 US Markit Mfr PMI
Tuesday January 5
The ISM print is the most important news today, but all eyes will be on today’s Georgia run-off elections.
07:00 Germany Retail Sales (YoY e3.9% p8.2%)
08:55 Germany Unemployment Rate/Change
15:00 US ISM Mfr PMI (e56.5 p57.5)
20:45 Fed Williams speech
22:00 Aus Commonwealth Bank Svcs PMI
Wednesday January 6
The big news today will be the result of the Georgia run-off elections, which in turn determine the color of the Senate for the next two years. Dems need to win both seats to prevail, which is very unlikely. Otherwise the FOMC Minutes will be watched closely.
01:45 China Caixin Svcs PMI(Dec)
08:55 Germany Markit Comp PMI
09:00 Eurozone Markit Comp PMI
10:00 DE10Y Bond Auction (time approx.)
13:00 Germany CPI (YoY Prelim e-0.6% p-0.7%)
13:15 US ADP Jobs (e159k p307k)
14:45 US Markit Svcs/Comp PMI
15:00 US Factory Orders (MoM)(Nov)
19:00 FOMC Minutes
Thursday January 7
Attention turns to Europe today, with inflation and retail sales prints at 1000.
00:30 Aus Imports/Exports/TB
07:00 Germany Factory Orders
10:00 Eurozone CPI (YoY Dec e-0.2% p-0.3%, Core e0.2% unch)
10:00 Eurozone Retail Sales (YoY Nov e1.2% p4.3%)
13:30 US Trade Balance
13:30 US Jobless Claims
15:00 US ISM Svcs PMI (Dec e 54.5 p55.9)
15:00 Canada Ivey PMI
23:30 Japan Overall Household Spending
Friday January 8
The first week ends, as always with NFP. The estimates are very modest. Canada publishes simultaneously assuring volatility in USDCAD.
07:00 Germany TB/Ind.Production
10:00 Eurozone Unemployment
13:30 US NFP/AHE/UnEmp (NFP e100k p245k)
13:30 Canada NFP/AHE/UnEmp (NFP e-5k p62k)
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