Week to May 21st

Crypto Crash, Equities Inside Week, Gold and CAD highs

MY CALL THIS WEEK : SELL CADJPY

LAST WEEK

After last week’s drop, stocks continued downwards in the early part of the week. Inflation concerns continued. Also a crackdown from China, and another tweet from the mercurial Elon Musk, caused a sharp collapse in the price of cryptocurrency, with BTC and ETH down 50% from recent highs at one point. Nevertheless, encouraging Jobless Claims and PMIs were enough to create a v-shaped week where no index moved more than 1%.

SPX, NDX and yields had full inside weeks, as did AAPL and GOOGL, and DJI, the other FANGs, Oil and the dollar all closed inside last week’s range, although DXY briefly touched a 13-week low (and within 0.5% of the four-year low). There were some exceptions. Gold had its highest close this year, and CAD, boosted by hawkish BoC policy from weeks ago touched a new 6-year high. But overall, the result was consolidation with a slight risk-off May bias.

WEEKLY PRICE MOVEMENT

Indices overall ended near-flat with NKY the biggest mover. The top forex mover was NZDJPY as both currencies countered their current trend. Cryptos fell massively, in particular ETH. FANGs were much flatter than usual, in line with NDX.

With CAD’s unstoppable momentum, it was a good job I chose to sell it into JPY, the only CAD pair that fell. However a gain of 0.06% did little to help my running total, still underwater at -0.59% despite 14/19 wins. The pair is still overbought, so I will go with it again for 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)

• Final week of May
• Light on key news
• Subdued Sentiment
• CB and TreasSec speeches

The final week of May brings a steady flow of data, but none of it likely to shock markets. The Fed’s preferred inflation method, PCE is reported, but the figures are likely to be in line with CPI already reported this month. There are only minor retail reports as earnings season closes. It seems therefore that the prevailing subdued trend associated with this month will play out until the end. 

CALENDAR

Monday May 24

11:05 BoJ Governor Kuroda speech

12:30 Chicago Fed National Activity Index

13:00 Fed Brainard speech

Tuesday May 25

06:00 Germany Q1 final GDP (e-3.0% p-3.0%)

08:00 Germany IFO Business Sentiment

13:00 US Housing/Home Price Indices/New Home Sales

14:00 US Consumer Confidence

16:00 BoE Tenreyro speech

Wednesday May 26

00:30 Aus Westpac Leading Index (MoM)(Apr)

02:00 RBNZ Rate Decision/Statement

03:00 RBNZ Press Conference

05:00 Japan Leading Economic Index(Mar)

14:00 Fed Quarles speech

17:00 BoC Lane speech

19:00 Fed Quarles speech

Thursday May 27

06:00 Germany Gfk Consumer Confidence

12:30 US Durable/ND Capital Orders (NDCO Apr e1.5% p1.0%)

12:30 US Q1 Prelim GDP Annualised (e6.5% p6.4%)

12:30 US PCE QoQ

12:30 US Jobless Claims

14:00 US Pending Home Sales

15:00 TreasSec Yellen speech

23:30 Tokyo CPI

23:30 Japan Jobs/Unemployment Rate

Friday May 28

09:00 Eurozone Consumer Confidence/Business Climate

12:30 US PCE MoM and YoY (MoM e0.7% p0.4%)

12:30 US Personal Income/Spending

13:45 Chicago PMI

14:00 Michigan CSI