Sunday 27 June 2021

Week to Jun 25th

Biden Infrastructure Bill, New ATHs, Dollar falls again


Markets rebounded immediately on Monday after last week’s sell off, and fairly strong PMI data, a dovish tone from Chair Powell in his House testimony, and bipartisan backing for Biden’s infrastructure plan. New all-time highs were made in the strongest week since February. After rising last week, the dollar fell again, although not against the yen. After a bounce on Monday, yields, Gold and Oil were unusually flat for the rest of the week.


The biggest mover again this week was DJIA, down 3.45%, almost exactly the same percentage of last week’s down move. The top forex mover was NZDJPY up 2.51%. Crypto fell sharply again. FANGs were as usual a little more volatile but in line with NDX.
Even though the dollar fell, yen fell more, and thus my USDJPY buy made 0.49%, taking my year to date profit to 3.00% and 18/24 wins. This week I will again take the biggest mover and rely on it reversing, I will 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)

Next week is a new month, quarter and half-year, and is of course NFP week, reporting for June. The estimate is 600k, close to last month’s actual, and well above the ADP estimate of 450k. The Fed have already indicated a hawkish their long-term strategy, but are waiting for “substantial progress” on the economy. For several months now, the print has had a short-term counterintuitive effect, with markets dropping and yields and dollar rising on a beat, and vice-versa on a miss. OPEC meet on Thursday, where a gentle increase of 500k bpd is expected. Failure to increase would be hawkish, and probably push Oil past $76 to a new seven-year high. Otherwise, German and Eurozone CPI and Retail Sales give pointers to European inflation.

Monday June 28
23:30 Japan Jobs/Unemployment (Sunday)
23:50 Japan Retail Trade (Sunday)

Tuesday June 29
09:00 Eurozone Consumer Confidence/Business Climate
12:00 Germany CPI (p2.4%)
13:00 US Housing/Home Price Indices
14:00 US Consumer Confidence
23:15 RBA Governor Lowe Speech
23:50 Japan Industrial Production

Wednesday June 30
01:00 China PMIs (Mfr p51.0)
06:00 UK Q1 GDP
07:55 Germany Unemployment
09:00 Eurozone CPI
12:15 US ADP Employment Change (e450k p978k)
12:30 Canada MoM GDP
13:45 Chicago PMI
14:00 US Pending Home Sales
22:30 Aus AiG Mfg Index
23:50 Japan Tankan Large Mfr Index (e15 p5)

Thursday July 1
01:30 Aus Imports/Exports/TB
01:45 China Caixin Mfr PMI
07:55 Germany Markit Mfr PMI
08:30 UK Markit Mfr PMI
09:00 Eurozone Unemployment
12:30 US Jobless Claims
13:30 Canada Markit Mfr PMI
13:45 US Markit Mfr PMI
14:00 US ISM Mfr PMI (e61.0 p61.2)

Friday July 2
06:00 Germany Retail Sales (e10.1% p4.4%)
12:30 US NFP/AHE/UnEmp (NFP e600k p559k)
12:30 US Trade Balance
12:30 Canada Trade Balance
14:00 US Factory Orders

Saturday 19 June 2021

Week to Jun 18th

Hawkish Fed Surprises, best week for USD in 15 months, Oil & NDX up


The big event this week was the FOMC meeting, who were much more hawkish than expected. The Fed dot plot suggested rates would be increased in 2023, a year earlier than previously thought. There was an immediate 9bp rise in the US 10-year rate, and even larger moves in the shorter dated paper. Equity markets, which had briefly touched new highs earlier in the week, fell immediately, and fell much further on Friday. The exception was DJI where further rotation back into tech pushed the industrial index to touch May lows, its worst week since October. The dollar, of course, shot up, with currencies and Gold falling. Gold and most currencies had their worst week since March 2020, with NZD touching a 2021 low. Many other commodities continued to unravel blow off uptrends and lumber is now 50% down from its highs while copper is down 15%. Oil was an exception, rising to levels not seen since Oct 2018.


The biggest mover this week was DJIA, down 3.45%. Every currency was sharply down against the dollar, with the strongest move being AUD down 2.95%. Crypto was relatively quiet, and FANG outperformed NDX overall.

Any dollar buy would have done last week. My NZDUSD short made 2.73%, moving me at last into positive territory, profit year to date 2.51% and 17/23 wins. I think USD will continue to rise, I will buy USDJPY.

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)

Summer officially starts on Monday, traditionally the lowest volume and therefore quietest period of the year. The key events are as follows. The BoE meeting has potential to the hawkish side. The UK has, like the US seen a surge in inflation, and money markets have already tightened this week. Talk of taper is possible which would be bullish for GBP. Staying with CBs, Chair Powell testifies on Tuesday to the House COVID committee, although a week after the official FOMC meeting, surprises are unlikely. The PCE figures (the Fed's preferred inflationary measure) will be important, especially if they surprise, of course, as will the Jobless Claims, ahead of the July NFP. Finally, it's the full Markit PMI week, a general measure of corporate health.

Monday June 21
01:30 PBoC Interest Rate Decision (e3.85% hold)
01:30 Aus Retail Sales (e0.7% p1.1%)
12:30 Chicago Fed National Activity Index
12:30 ECB President Lagarde Speech
19:00 Fed Williams speech

Tuesday June 22
14:00 Eurozone Consumer Confidence
18:00 Fed Chair Powell testifies
23:00 Aus Commonwealth Bank PMIs
23:50 BoJ MPC Minutes

Wednesday June 23
05:00 Japan Leading Economic Index
07:30 Germany Markit PMIs (Mfr e63.0 p64.4)
08:00 Eurozone Markit PMIs (Comp e58.7 p57.1)
08:30 UK Markit PMIs (Svcs e63.0 p62.9)
12:30 Canada Retail Sales (e-5.1% p3.6%)
13:45 US Markit PMIs
14:00 US New Home Sales
18:00 ECB President Lagarde Speech

Thursday June 24
06:45 BoJ Governor Kuroda speech
08:00 Eurozone Economic Bulletin
08:00 Germany IFO Sentiment Indicators
11:00 BoE Rate Decision/Statement
12:30 US Durable/ND Capital Goods (Durable e1.9% p-1.3%)
12:30 US PCE QoQ
12:30 US Jobless Claims
12:30 US Q1 GDP (Annualised e6.4% p6.4%)
20:30 US Bank Stress Test Report
23:30 Tokyo CPI

Friday June 25
06:00 Germany Gfk Consumer Confidence
12:30 US PCE MoM and YoY
14:00 Michigan CSI

Saturday 12 June 2021

Week to Jun 11th

Inflation Blowout, Dollar finally rises, SPX/NDX new highs


The US inflation print exceeded expectations to post a new 13-year high, and President Biden raised the issue of new tariffs on rare metals.

10-year bonds had their best week for a year. The dollar was also up, with Gold and currencies down, although overall the moves were not large.

DJI was down in line, although strong tech performance led SPX to new highs, and NDX was the strongest index, with the NDX/DJI ratio having its best week since March. The ECB offered nothing new and so EUR hardly moved.

Politics and Brexit came to the fore at the G7, with the US rebuking PM Johnson for not implementing the NI goods protocol.


In this consolidating week, moves were modest, with only NDX moving more than 1%. The biggest forex mover was NZDUSD down 1.19%. BTC held steady whereas ETC fell sharply.  FANGS were generally in line with NDX except AMZN which outperformed.

My USDJPY buy was at least positive but I only made 0.10%, bringing the running total to 16/22 wins but still negative at -0.22%. I am confident the dollar is turning up, so this week I will sell NZDUSD.

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 sees the first Fed meeting since two high inflation prints, and two strong NFPs, and the CME FedWatch tool is actually pricing in a 4% of a 25bp hike. This is extremely unlikely, but what is more likely is some hint of taper later in the year. Also we have inflation from the UK, Germany and Canada, where the trend is also upwards. There is a rate decision in Japan, and Friday is triple-witching day, where quarterly (including index futures), monthly and weekly options all expire.

  • Fed Rate Decision and Statement
  • Japan Rate Decision
  • UK, Germany, Canada inflation
  • OpEx on Friday

Monday June 14
04:30 Japan Ind Production (YoY)(Apr)
09:00 Eurozone Ind Production s.a. (MoM)(Apr)

Tuesday June 15
01:30 RBA Meeting Minutes
01:30 Aus House Price Index (QoQ)(Q1)
06:00 UK Claimant Count/AHE/UnEmp (UnEmp e4.7% p4.8%)
06:00 Germany CPI (e2.4% p2.4%)
12:30 US Retail Sales (Control Group e0.3% p-1.5%)

12:30 US PPI
23:50 Japan Imports/Exports/TB

Wednesday June 16
00:30 Aus Westpac Leading Index (MoM)(May)
02:00 China Retail Sales (YoY e14% p17.7%)
06:00 UK CPI (YoY e1.8% p1.5%)

09:00 Eurozone Labor Cost(Q1)
10:30 DE10Y Auction (time approx.)
12:30 Canada Building Permits/Housing Starts
12:30 BoC Core CPI (e1.9% p2.3%)
18:00 Fed Rate Decision/Statement (e0.25% hold)
18:30 FOMC Press Conference


Thursday June 17
00:00 RBA Governor Lowe speech
01:30 Aus Employment/UnEmp (Emp e30k p-30.6k)

09:00 Eurozone CPI
12:30 Philadelphia Fed Mfr Survey(Jun)
12:30 US Jobless Claims
23:30 Japan National CPI

Friday June 18
03:00 BoJ Rate Decision/Statement (e-0.1% hold)

06:00 BoJ Press Conference
06:00 UK Retail Sales
06:00 Germany PPI

Saturday 5 June 2021

Week to Jun 4th

ADP too high but NFP ‘miss is good’, Oil 2.5year high


Positive sentiment last Friday caused a long weekend futures gap up, although markets then slid, particularly on Thursday, with the taper fears on the blowout ADP print, and the US ban on investing in certain Chinese stocks. However, Friday’s NFP was ‘Goldilocks’, high enough to confirm the recovery, but not so high as to trigger immediate (ie Jun 16) taper fears, and markets rose again.

The dollar followed the same pattern in reverse, showing how taper is primary driver of markets at the moment. Gold and currencies inverse correlation was strong, showing that there were few other factors, except perhaps the RBA report, which widened the normally closely tied AUDNZD. The one exception was Oil, which made a two-and-a-half year high on OPEC cuts confirmation.


In this consolidating week, the only index moving more than 1% was DAX. The top forex mover was AUDNZD up 1.12%. BTC was fairly flat, with ETH recovering notably faster. FANGs generally reflected NDX but with more volatility. 

The NZDJPY reversal paid off, down 1.00%, and putting my running total to 15/21 wins yet still -0.32% down. I think USD is turning up so I will try buying USDJPY.

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)

Next week sees two rate decisions, each important in their own way. Europe is seeing rising inflation in Germany (and across the continent at the PPI level), but unemployment remains stubbornly high, and growth (see Tue) is non-existent. Meanwhile at the hawkish BoC, the QE reduction program was announced in March, and the loonie has risen ever since. Will Canada be the first country in the world to announced a post-COVID rate hike?

In US news, Thursday’s CPI estimate is 3.6% (2.3% core), down from last month, but still above the Fed’s 2% target. A print close to the estimate will probably leave traders waiting for the actual FOMC response on Jun 16th (a 7% chance of a hike is already priced in on the CME FedWatch tool), as Fed speakers are in the blackout period this week.

  • ECB and BoC Rate Decisions
  • US inflation
  • Eurozone and Japan GDP
  • Fed blackout week

Monday June 7

23:50 Japan Q1 Final GDP (QoQ e3.0% p-1.3%)

02:00 China Imports/Exports/TB (time approx.)

05:00 Japan Leading Economic Index

06:00 Germany Factory Orders

09:00 RBA Debelle speech

23:50 Japan Q1 Final GDP (QoQ e3.0% p-1.3%)

Tuesday June 8 

06:00 Germany Industrial Production

09:00 Germany ZEW Business Sentiment Surveys

09:00 Eurozone Q1 Final GDP (QoQ sa -0.6% p-0.6%)

12:30 US Trade Balance

12:30 Canada Trade Balance

23:30 RBA Kent speech

Wednesday June 9 

00:30 Australia Westpac Consumer Confidence

01:30 China CPI (YoY e1.0% p0.9%)

06:00 Germany Trade Balance

14:00 BoC Rate Decision/Statement (e0.25% hold)

Thursday June 10 

11:45 ECB Rate Decision/Statement (e0% hold)

12:05 BoE Haldane speech

12:30 US CPI (Core YoY e2.3% p3.0%)

12:30 US Jobless Claims

12:30 ECB President Lagarde Presser

17:00 BoC Lane speech

18:00 Monthly Budget Statement

Friday June 11 

00:00 G7 Meeting (all day)

06:00 UK Mfg/Ind Production

06:00 UK GDP (MoM)

11:00 NIESR GDP Estimate (time approx.)

14:00 Michigan CSI (e90.4 p82.9)