Week to Aug 27th

SPX & NDX ATH, Dollar falls after Jackson Hole

MY CALL THIS WEEK : BUY GBPAUD

LAST WEEK

In a week where strong action came on Monday’s ramp higher in stocks and oil, bad news/data was perceived as good for the market. Weak PMIs and Capital Goods reports globally dampened expectations for a taper announcement in the week’s main event at Jackson Hole and sent the SPX and NDX to new all-time highs. Powell’s Friday Jackson Hole speech confirmed that the inflation target had been met (no more talk of ‘transitory’) but that further job recovery was needed. This was more dovish than expected, and pushed stocks up further, and the dollar sharply down.

This meant that USD failed to hold last week’s break to new 2021 highs, posting an inside week. EURUSD spent the majority of the week above 1.17, also having an inside week as did the majority of currencies. Gold however broke out to a 3-week high. Yields surprisingly held up despite the dollar decline, and Oil fully reversed last week’s decline in line with the equity risk-on move.

Meanwhile, developments in New Zealand continue to be interesting, particularly as they are the G10 bank most advanced in normalizing rates. Assistant Governor Christian Hawkesby told Bloomberg that they were ready to raise rates last week and that policy decisions are not tightly linked to COVID and lockdowns. However, they held back on the hike as it would have been announced on the same day as the start of a national lockdown. 

WEEKLY PRICE MOVEMENT

The biggest mover this week was NKY, up 2.32%. The top forex mover was again AUDJPY this week  up 2.58%. Crypto was extremely flat, I cannot remember seeing weekly moves of less than 1%. FANGs were strong, following the risk-on NDX.

My CADJPY buy made 1.44% taking my year to date profit to 6.85% and 24/33 wins. This week I am buying GBPAUD as it is at support.

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)

Next week is the final week before the vacation season ends on Labor Day. A new month means of course NFP, and the estimate of 763k is in line with previous months. This print is crucial, as Fed Chair Powell indicated last week that with the inflation target met, only 

Otherwise, the week is packed with non-US data, including Eurozone and German inflation, Japanese and German Retail Sales, and PMIs from every territory including the important US ISM prints, both of which estimate slight pullbacks.

CALENDAR
High volatility items in bold

Monday August 30

23:50 Japan Retail Sales (Sun)
09:00 Eurozone Consumer/Industrial Confidence(Aug)
12:00 Germany CPI (e2.9% p3.1%)
12:30 Canada Current Account(Q2)
14:00 US Pending Home Sales
23:30 Japan Jobs/Unemployment

Tuesday August 31
01:00 China NBS PMIs (Services e50.8 p50.4)
01:00 Aus TD Securities Inflation
01:30 Aus Building Permits
07:55 Germany Unemployment
09:00 Eurozone CPI (YoY 2.5% p2.2%)
12:30 Canada Q2 Final GDP (e6.7% p5.6%)
13:00 US Housing/Home Price Indices
13:45 Chicago PMI
14:00 US Consumer Confidence
22:30 Aus AiG Performance of Mfg Index

Wednesday September 1 

01:30 Aus Q2 Final GDP (e1.6% p1.8%(
01:45 Caixin Mfr PMI
06:00 Germany Retail Sales (e3.2% p6.2%)
07:55 Germany Markit Mfr PMI
08:30 UK Markit Mfr PMI
09:00 Eurozone Unemployment
12:15 US ADP Employment Change (e575k p330k)
13:30 Canada Markit Mfr PMI
13:45 US Markit Mfr PMI
14:00 ISM Mfr PMI (e59.1 p59.5)

Thursday September 2
01:30 Aus Imports/Exports/TB (TB p-10.5B)
12:30 US Trade Balance
12:30 US Jobless Claims
12:30 Canada Trade Balance
14:00 US Factory Orders
22:30 Aus AiG Performance of Construction Index
23:00 Aus Commonwealth Bank Services PMI

Friday September 3
01:45 China Caixin Services PMI
07:55 Germany Markit Composite PMI
08:00 Eurozone Markit Composite PMI
09:00 Eurozone Retail Sales (p5.0%)
12:30 US NFP/AHE/UnEmp (e763k p943k)
13:45 US Markit Services PMI
13:45 US Markit Composite PMI
14:00 ISM Services PMI (e63.0 p64.1)

Week to Aug 20th

FOMC Minutes break SPX run, Dollar makes 9-month high

MY CALL THIS WEEK : BUY CADJPY

LAST WEEK

The 10-week run of new highs in SPX ended this week, which fell sharply as the FOMC minutes confirmed that taper is on the agenda. The events in Afghanistan did not help, not did the US Retail Sales miss. The dollar hit a nine-month high (and currencies hit a corresponding low). Notably the yen’s move was more muted, and Gold actually managed a small advance.Oil fell for the third week as it returns to its medium-term mean.

WEEKLY PRICE MOVEMENT

The biggest mover this week was NKY, down 3.45%. The top forex mover was AUDJPY down 2.95%. Crypto was flat after recent strong gains. FANGs were again varied, with NFLX bucking the general trend.

My AUDNZD short made 0.27% taking my year to date profit to 5.41% and 23/32 wins. This week I am buying CADJPY.

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)

Next week is dominated by the annual Jackson Hole symposium, and of course the big question, when is taper time, and of course the trajectory of the taper. Inflation is over 2%, and the Initial Jobless figure finally started to fall last week, although it is still elevated, over five million pre-pandemic jobs are still missing, and COVID is still persistent in many states and other countries. Chair Powell speaks on Friday.

In other news, a raft of PMIs predict a slight pullback after months of growth. PCE, the Fed’s preferred inflation metric reports on Thursday and Friday, but otherwise there is nothing major.

CALENDAR

High volatility items in bold

Monday August 23

00:00 Aus Commonwealth Bank PMIs

08:30 Germany Markit PMIs (Mfr e65 p65.9)

09:00 Eurozone Markit PMIs (Comp e60.1 p60.2)

09:30 UK Markit Mfr/Svcs PMI

13:30 Chicago Fed National Activity Index

14:45 US Markit PMIs

15:00 Eurozone Consumer Confidence

Tuesday August 24

07:00 Germany GDP

15:00 US New Home Sales

Wednesday August 25

00:55 RBA Ellis speech

06:00 Japan Leading Economic Index

09:00 Germany IFO Sentiment Indicators

13:30 Durable/ND Capital Goods (NDC e0.5% p0.7%)

Thursday August 26

07:00 Germany Gfk Consumer Confidence

12:30 ECB MPC Minutes

13:30 US Core PCE QoQ

13:30 US Jobless Claims

13:30 US Q2 Prelim GDP (e6.6% p6.5%)

Friday August 27

00:30 Tokyo CPI

02:30 Aus Retail Sales (p-1.8%)

13:30 US Core PCE MoM/YoY

15:00 Michigan CSI

15:00 Fed Chair Powell speech

Week to Aug 13th

Tenth week of SPX ATHs, Dollar down on inflation and consumer sentiment

MY CALL THIS WEEK : SELL AUDNZD

LAST WEEK

Equity markets rose smoothly all week on a succession of good news. On Tuesday the Senate passed the $1Trn infrastructure bill, a rare bipartisan success with 17 GOP members supporting the President. Markets were given a further lift (and the dollar depressed) by another strong, although not too strong inflation print, and the dollar fell further on the Michigan CSI miss on Friday, taking yields down with it. SPX posted its tenth weekly all-time high, and DJI its third. Gold and currencies rose on the weaker dollar. Oil had a fairly flat week.

WEEKLY PRICE MOVEMENT

The biggest mover this week was DAX, up 1.37%. The top forex mover was GBPJPY down 0.59%. Crypto had another strong week. FANGs were very varied.

My GBPCAD long lost 0.38% taking my year to date profit to 5.14% and 22/31 wins. This week I am selling 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)

Next week’s calendar is quite busy, although the focus is not on the US. The key prints are CPI for the UK, Eurozone and Canada, and their corollary Retail Sales for the US, China and Canada, as inflation is currently the macro metric in focus. The FOMC minutes from the July 28 meeting will be scrutinised for precise wording. Earnings season moves into the retailer phase, with WMT reporting first as usual on Tuesday. Finally, it is OpEx week, with monthly options expiring on Friday.

CALENDAR

Monday August 16

23:50 Japan Q2 Prelim GDP (Sun) (e0.2% p-1.0%)

02:00 China Retail Sales (e11.5% p12.1%)

04:30 Japan Industrial Production

Tuesday August 17

01:30 RBA Meeting Minutes

06:00 UK Claimant Count/AHE/UnEmp (UnEmp e4.7% p4.8%)

09:00 Eurozone Q2 Prelim GDP (YoY e13.7% p13.7%)

12:30 US Retail Sales (Control Group Jul e0.4% p1.1%)

23:50 Japan Imports/Exports/TB

Wednesday August 18

00:30 Aus Westpac Leading Index

01:30 Aus Wage Price Index

06:00 UK CPI (e2.2% p2.5%)

09:00 Eurozone CPI

12:30 US Building Permits/Housing Starts

12:30 Canada BoC CPI (p2.7%)

18:00 FOMC Minutes

Thursday August 19

01:30 Aus Jobs/UnEmp (Jobs p29.1k)

12:30 Philly Mfr Survey

12:30 US Jobless Claims

23:05 RBA Kent speech

23:30 Japan National CPI

Friday August 20

01:30 PBoC Rate Decision/Statement (e3.85% hold)

06:00 UK Retail Sales

06:00 Germany PPI

12:30 Canada Retail Sales (e-3.0% p-2.1%)

Week to Aug 6th

New ATHs, Dollar and yields rise and Gold slumps on strong NFP

MY CALL THIS WEEK : BUY GBPCAD

LAST WEEK

Yet another week of the major indices just about ekeing out a new ATH, but not advancing over 1%. Most of the action was on Friday after a strong 943k NFP beat, where DJI and SPX hit new highs and NDX retreated.  Notably NDX was stronger over the week, with the NDX/DJI ratio making a six-month high. The NFP caused a strong spike in USD (although DXY still made an inside week). All currencies except NZD were down on the week, and Gold was particularly weak, dropping 2.5% to a five week low after the release, on combination of the dollar spike and risk on sentiment. Oil continued to retreat from the $75 long-term resistance. US 10-year yields were up on the week.

WEEKLY PRICE MOVEMENT

The biggest mover this week was NKY, up 1.97%. The top forex mover was EURNZD up 1.39%. ETH continued sharply upwards, although BTC was flat. FANGs were actually flatter than NDX for once.

My AUDJPY made 0.61% taking my year to date profit to 5.52% and 22/30 wins. This week I am buying GBPCAD.

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 light, with only one major release, the US inflation figure on Wednesday. The estimate at 0.4% is less than half of that last month, which lowers the YoY total by 0.1% to 5.3%. The core figures are slightly lower, but still well above the Fed 2% estimate. China and Germany also report inflation, but other than UK GDP there is little else of interest. The week is also quiet on earnings with DIS the only major company reporting, although notably meme stock AMC reports Monday.

CALENDAR

Monday August 9
01:30 China CPI (YoY e0.8% p1.1%)
06:00 Germany Trade Balance (e3.1% p3.1%)
23:50 Japan Current Account

Tuesday August 10
09:00 Germany ZEW Sentiment Indicators
12:30 US Nonfarm Productivity/Labor Costs

Wednesday August 11
00:30 Aus Westpac Consumer Confidence
06:00 Germany CPI (e3.1% p3.1%)
10:00 DE10Y Bond Auction (time approx.)
12:30 US CPI (MoM e0.4% p0.9%)
18:00 US Monthly Budget Statement

Thursday August 12
01:00 Aus Consumer Inflation Expectations
06:00 UK Manufacturing/Industrial Production
06:00 UK Prelim Q2 GDP (e4.8% p-1.6%)
07:00 NIESR GDP Estimate (time approx.)
09:00 Eurozone Industrial Production
12:30 US Core PPI
12:30 US Jobless Claims

Friday August 13
14:00 Michigan CSI (e81.3 p81.2)