Week to Jul 30th

Earnings fail to lift market, dovish Fed keeps dollar weak

MY CALL THIS WEEK : SELL AUDJPY

LAST WEEK

In a week where China regulation and the spread of the Delta variant provided a negative backdrop, all the main US indices – the SPX, NDX and DJI - made brief but unsustained all-time highs. Other indices fared less well with China down 10% in two session and 30% off the 2021 high, while the NKY could barely distance itself from the 2021 lows. Earnings season in the US continued the theme of significant estimate beats, but strength was generally sold. NDX fell on Wednesday despite beats from GOOGL, MSFT, and AAPL, and the AMZN revenue miss caused another drop on Friday. The FOMC was the main event of the week and provided few surprises with the Fed still signalling dovishly but making more references to taper. This helped accelerate the USD reversal to new monthly lows against all currencies and gold. The reversal also helped Oil approach the previous $75 high.

WEEKLY PRICE MOVEMENT

The biggest mover this week was NDX, down 1.01%. The top forex mover was GBPAUD up 1.53%. Crypto continued sharply upwards. FANGs, in earnings week were very variable, with AMZN down hard.

My GBPJPY made 0.41% taking my year to date profit to 4.91% and 21/29 wins. This week I am selling AUDJPY.

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)


A new and traditionally low volume trading month (as traders take vacations) starts on Monday. As always the new month means NFP, where the estimate, as 926k is back up is the highest since August 2020. An uptick in unemployment held off taper fears last month, but the estimate this month is once again 5.7%. A lot of smaller tech companies report earnings, but the index giants are largely done. Also next week are BoE and RBA rate decisions, and a raft of PMIs.

CALENDAR


Monday August 2
22:30 Aus AiG Perf of Mfg Index (Sunday)
01:45 China Caixin Manufacturing PMI
06:00 Germany Retail Sales (p-2.4%)
07:55 Germany Markit Mfr PMI
08:30 UK Markit Mfr PMI
13:45 US Markit Mfr PMI
14:00 ISM Mfr PMI (e60.5 p60.6)
23:30 Tokyo CPI

Tuesday August 3
01:00 Aus TD Securities Inflation
01:30 Aus Building Permits
04:30 RBA Rate Decision/Statement (e0.1% hold)
13:30 Canada Markit Mfr PMI
14:00 US Factory Orders
22:30 Aus AiG Perf of Construction Index
23:00 Aus Commonwealth Bank Svcs PMI

Wednesday August 4
01:30 Aus Retail Sales (p-1.8%)
01:45 China Caixin Services PMI
07:55 Germany Markit Comp PMI
08:00 Eurozone Markit Comp PMI
09:00 Eurozone Retail Sales (p9%)
12:15 ADP Employment Change (p692k)
13:45 US Markit Comp & Svcs PMI
14:00 ISM Services PMI (e60.2 p60.1)

Thursday August 5 
01:30 Aus Imports/Exports/TB (p-9.7B)
06:00 Germany Factory Orders
08:00 Eurozone Economic Bulletin
11:00 BoE Rate Decision/Statement (e0.1% hold)
11:30 BoE Governor Bailey speech
12:30 US Trade Balance
12:30 US Jobless Claims
12:30 Canada Trade Balance
23:00 RBA Governor Lowe speech
23:30 Japan Overall Household Spending

Friday August 6 
01:30 RBA MPC Minutes
05:00 Japan Leading Economic Index
06:00 Germany Industrial Production
12:30 US NFP/AHE/UnEmp (NFP e926k p850k)
12:30 Canada NFP/AHE/UnEmp (NFP p-231k)
14:00 Ivey PMI

Week to Jul 23rd

Strong earnings, new ATHs, largely V-shaped flat week

MY CALL THIS WEEK : BUY GBPJPY

LAST WEEK

After a sharp COVID-driven drop on Monday, markets recovered on strong corporate earnings to reach new all-time highs. V-shaped (or inverted) patterns were also apparent in other markets, with Oil, yields GBPUSD, and FTSE posting long-tailed hammer candles for the week. The dollar was choppy, driven primarily by an equally choppy euro in ECB week, although the yen pattern was a lot smoother. The Nikkei was closed on Friday for a one-off public holiday for the Olympic opening.

WEEKLY PRICE MOVEMENT

The biggest mover this week was NDX, up 2.93%. The top forex mover was CADJPY up 0.82%. Crypto recovered quite sharply. FANGS had a good week outperforming NDX.

My AUDNZD buy lost 0.09% taking my year to date profit to 4.50% and 20/28 wins. This week I will follow the hammer candle and buy GBPJPY.

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)

The final week of July is the busiest in earnings season, with the remaining FANGS all reporting. Over 50% by weight of NDX reports, and the main event is after the bell on Tuesday, when AAPL, MSFT and GOOGL report. With other companies, this is 30% by weight of NDX reporting simultaneously.  Also there is the Fed rate decision, where a 0.25% hold is 100% priced in. All eyes will be on the wording of the latest FOMC view on QE taper. Also this week are inflation report from Eurozone, Australia, Canada and Germany, and preliminary Q2 GDP from the US, Canada, Germany and Eurozone.

CALENDAR

Monday July 26

08:00 Germany IFO Sentiment Indicators

11:00 BoE Vlieghe speech

14:00 US New Home Sales

Tuesday July 27

07:30 BoJ Governor Kuroda speech

12:30 US Durable/ND Capital Goods (NDC e0.6% p0.1%)

12:35 RBA Debelle speech

13:00 US Home/Housing Price Indices

14:00 US Consumer Confidence(Jul)

21:00 Earnings MSFT, GOOGL

21:30 Earnings AAPL

Wednesday July 28

01:30 Australia CPI (RBA Trimmed Mean QoQ e0.5% p0.3%)

06:00 Germany Gfk Consumer Confidence

12:30 Canada CPI (BoC Core YoY e2.4% p2.8%)

18:00 Fed Rate Decision/Statement (e0.25% hold)

18:30 FOMC Press Conference

21:00 Earnings FB

Thursday July 29

07:55 Germany Unemployment Rate/Change

09:00 Eurozone Consumer Confidence/Business Climate

12:00 Germany CPI (e3.0% p2.1%)

12:30 US PCE QoQ

12:30 US Jobless Claims

12:30 US Q2 Prelim GDP (e8.2% p6.4%)

14:00 US Pending Home Sales

21:00 Earnings AMZN

23:30 Japan Jobs/Unemployment

23:30 Japan Retail Sales/Ind Production

Friday July 30

06:00 Germany Q2 Prelim GDP (QoQ e2.0% p-1.8%)

09:00 Eurozone Prelim CPI (Core YoY e0.8% p0.9%)

09:00 Eurozone Q2 Prelim GDP s.a. (QoQ e1.5% p-1.3%)

09:00 Eurozone Unemployment

12:30 US PCE MoM and YoY

12:30 Canada GDP MoM

13:45 Chicago PMI

14:00 Michigan CSI

Week to Jul 16th

ATHs, High Inflation, NZ ends QE

MT CALL THIS WEEK : BUY AUDNZD

LAST WEEK

This week saw strong earnings from the banks, easily beating predictions, and despite even further growth in inflation (overshooting the estimate), a cautious and dovish approach from Chair Powell at his ‘Humphrey-Hawkins’ testimony. The next result, although new highs were briefly achieved, was a consolidating week in equities. The dollar reacted positively to the CPI print, and then pulled back on Powell’s words, but the overall trend was up, although notably NZD outperformed after the RBNZ announced an immediate end to QE. Gold bucked the trend and rose. Oil came off its highs, failing to break the long-term resistance, and reacting to the dollar.


WEEKLY PRICE MOVEMENT

The biggest mover this week was FTSE, down 1.60%. The top forex mover was NZDCAD up 1.53%. Crypto fell further. FANGS were mixed, some up some down.

My EURGBP short lost 0.04% taking my year to date profit to 4.59% and 20/27 wins. 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)

The sector range widens in the second week of earnings season, with one-time bellwether IBM reporting on Monday, and a more useful measure, NFLX, the first FANG to report on Tuesday. Also in the week are several DJIA defensive heavyweights such as JNJ and KO, and more tech in the form of INTC (now down to #14 in NDX, but chip production forward guidance will be interesting) and TWTR.

In the sovereign area, the week is has, for once, no major US news. The main focus is on Europe with first the ECB bank lending survey, and then the important ECB rate decision, statement and press conference. As other CBs turn hawkish in response to global post-pandemic inflation,  and EUR sits at three-month lows, will the ECB follow suit. Friday brings the latest European PMIs, where a sharp contraction in the German Composite is forecast.

CALENDAR

Monday July 19
10:00 BoE Haskel speech
23:30 Japan National CPI

Tuesday July 20
01:30 PBoC Rate Decision/Statement (e3.85% hold)
01:30 RBA Meeting Minutes
06:00 Germany PPI
08:00 ECB Bank Lending Survey
12:30 US Building Permits/Housing Starts
23:50 BoJ MPC Minutes
23:50 Japan Imports/Exports/TB

Wednesday July 21
00:30 Aus Westpac Leading Index
01:30 Aus Retail Sales (e-0.5% p0.4%)

Thursday July 22
01:30 Aus NAB Business Confidence
11:45 ECB Rate Decision/Statement (e0% hold)
12:30 US Jobless Claims
12:30 Chicago Fed National Activity Index
12:30 ECB Pres Lagarde Presser
14:00 Eurozone Consumer Confidence
23:00 Aus Commonwealth Bank PMIs

Friday July 23
06:00 UK Retail Sales
07:30 Germany Markit PMIs (Mfr e64.1 p65.1)
08:00 Eurozone Markit PMIs (Comp e61 p60.1)
08:30 UK Markit PMIs (Svcs e62 p62.4)
12:30 Canada Retail Sales (MoM e-3% p-5.7%)
13:45 US Markit PMIs

Week to Jul 9th

Marginal ATHs after dip, Dollar rally falters, Gold/Oil up

MY CALL THIS WEEK : SELL EURGBP

LAST WEEK

The four-day week saw stocks continued to consolidate, with a noticeable dip on Thursday, which recovered firmly on Friday, to close the week very slightly up (DJIA +0.24%, NDX +0.67%), with new SPX and NDX ATHs. The Thursday dip was influenced by falling 10-year yields, which touched February lows this week, and the ISM miss on Tuesday, but the trigger was probably the speech by Fed Bostic, who gave a very hawkish speech on Wednesday evening, saying “delaying rate rises might cause … instability”. Oil briefly touched its 2018 high on continuing OPEC uncertainty, but then pulled back from an oversold condition. The dollar had an inverted V-shaped week, slightly leading the V-shaped yield pattern. In line with the fragility of sentiment, this was largely euro and sterling strength, the latter bouncing off a three month low. Other currencies were weaker, and gold outperformed, hitting a three-week high.

WEEKLY PRICE MOVEMENT

The biggest mover this week was NKY, down 2.93% in contrast with other markets. The top forex mover was CADJPY down 1.86%. Crypto was very flat this week, with BTC probably having its flattest week for years. FANGS again outperformed NDX.

My NZDJPY short worked, making 1.25%, one of my best this year, taking my year to date profit to 4.63% and 20/26 wins. This week I am shorting 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 (all times are GMT)

(Calendar High volatility items are in bold)

Earnings season for Q2 opens this week as always with the banks first, with EPS estimates notably lower than Q1. JPM (e3.09 p4.50) and GS (e9.41 p18.60) report Tuesday, and BAC (e.077 p0.86), WFC (e0.93 p1.05) and C (e2.01 p3.62) the day afterwards. Fed Chair Powell gives his biannual ‘Humphrey-Hawkins’ testimony to Congress. He may address the gap between stronger inflation and falling bond yields. The macro schedule is packed, with rate decisions in Canada, Japan and New Zealand, inflation from the US, UK, Eurozone and Germany. The key US print, with MoM estimated as slightly lower than last month, which may support the view that the COVID rebound figure last month was transitory. Finally, China is first out of the gate with Q2 GDP, a modest 1.3% QoQ growth is expected. Markets are closed in France for La Quatorze Juillet.

CALENDAR

Monday July 12

12:10 ECB President Lagarde speech (Sunday)

13:20 Fed Quarles speech (Sunday)

02:00 China FDI (time approx.)

Tuesday July 13

01:00 Aus HIA New Home Sales (time approx.)

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

06:00 UK Financial Stability Report

06:00 Germany CPI (e2.2% p2.1%)

12:30 US CPI (Core MoM e0.5% p0.7%) 

18:00 US Monthly Budget Statement

Wednesday July 14

00:30 Aus Westpac Consumer Confidence

04:30 Japan Industrial Production

06:00 UK CPI (e2.2% p2.1%)

09:00 Eurozone Industrial Production

10:30 DE10Y Auction (time approx.)

12:30 US PPI

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

15:15 BoC Press Conference

16:00 Fed Chair Powell H-H House Testimony

18:00 Fed Beige Book

Thursday July 15

01:00 Aus Consumer Inflation Expectations

01:30 Aus Jobs/UnEmp (Empfehlen e30k p115.2k)

02:00 China Q2 GDP (QoQ e1.3% p0.6%)

02:00 China Retail Sales (YoY e11.0% p12.4%)

06:00 UK AHE/UnEmp (UnEmp e4.7% p4.7%)

12:30 Philly Fed Mfr Survey

12:30 US Jobless Claims

13:30 Fed Chair Powell H-H Senate Testimony

Friday July 16

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

06:00 BoJ Press Conference

09:00 Eurozone CPI

12:30 US Retail Sales (MoM e-0.6% p-1.3%)

14:00 Michigan CSI (e87.0 p85.5)

Week to Jul 2nd

New ATHs, Dollar recovers, Oil rallies on OPEC

MY CALL THIS WEEK : SELL NZDJPY

LAST WEEK

In a week of continuation, the SPX and NDX made further all-time highs, long-term yields pushed lower and the US dollar put in another strong week to test the gap created on 6th April. NFP was the event of the week and beat estimates (which were trending higher anyway) with a print of 850k. While a solid number, the unemployment rate actually rose to 5.9% and the Fed can still point to weaknesses in the labour market as reason enough to stay put. Other data was mixed with soft inflation readings in the EU inflation and an uncomfortably hot US ISM PMI. The much-anticipated OPEC+ meeting failed to reach agreement but is likely to settle on an output rise of 400,000 bpd, some way short of the expected 500,000 bpd and accompanied by talk of extending the cuts beyond their April 2022 cut-off point. Oil rallied on the news and broke above $75/bbl for the first time since October 2018.  


WEEKLY PRICE MOVEMENT

The biggest mover this week was NDX, up 2.67%. The top forex mover was AUDUSD down 0.76%. Crypto recovered, particularly ETH, and FANGs outperformed NDX.

My NZDJPY short worked, making 0.38%, taking my year to date profit to 3.38% and 19/25 wins. The pair actually fell much further in the week, and then recovered. The move does not seem done yet. I will short NZDJPY again 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)

The first full week of H2 and Q3. Calendar events this week include the RBA meeting, where there is, unusually a Governor Lowe press conference scheduled, hinting at a possibly policy change (to the hawkish side), possibly arresting AUD’s recent slump. Sticking with CBs, the wording of the FOMC June meeting minutes will be scrutinised by traders. Other than that, there is a steady stream of industrial data prior to JPM and GS opening earnings season in the following week.

Monday July 5
22:30 Aus AiG Performance of Construction (Sunday)
23:00 Aus Commonwealth Bank Svcs PMI (Sunday)
01:30 Aus Building Permits
01:30 Aus Retail Sales (e0.1% p0.1%)
01:45 China Caixin Services PMI
07:55 Germany Markit PMI Comp
08:00 Eurozone Markit PMI Comp
14:30 BoC Business Outlook Survey

Tuesday July 6
01:00 Aus TD Securities Inflation
04:30 RBA Rate Decision/Statement (e0.1% hold)
06:00 RBA Governor Lowe speech
06:00 Germany Factory Orders
09:00 Eurozone Retail Sales (e7.9% p23.9%)
09:00 Germany ZEW Sentiment Indicators
13:45 US Markit Svcs/Comp PMI
14:00 US ISM Services PMI (e63.5 p64.0)

Wednesday July 7
06:00 Germany Industrial Production
09:00 EC Economic Growth Forecasts
14:00 Canada Ivey PMI
15:00 Fed Monetary Policy Report
18:00 FOMC Minutes

Thursday July 8
02:15 RBA Governor Lowe speech
06:00 Germany Trade Balance
12:30 US Jobless Claims

Friday July 9
01:30 China CPI (YoY e1.4% p1.3%)
06:00 UK Mfr/Ind Production
06:00 UK GDP MoM
12:30 Canada NFP/AHE/UnEmp (NFP e-20k p-68k)