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