Week to Sep 24th

Brief dip on China Evergrande crisis, bonds and JPY underperform

MY CALL THIS WEEK : SELL CADJPY

LAST WEEK

The Chinese Evergrande crisis caused a weekend gap down (SPX 0.69%, NDX 1.73%) and equity markets spent the rest of the week filling the gap. This was helped by a slightly dovish take (vs expectations) on taper. The Fed offered no taper timetable, but a slight move up in the dot plot. Yields, which take a longer view, rallied on the latter. A sharp dip in EURUSD recovered the next day. An initial post-BoE rally in sterling quickly retracted. A strong oil-led loonie and weak equity recovery yen led to an overall flat dollar base for the week. Gold similarly had a flat week, and Oil rallied slightly towards the end of the week.

WEEKLY PRICE MOVEMENT

The biggest mover this week was FTSE again, up 1.26% after being down 0.93%. The top forex mover was CADJPY this week, up 1.64%. Bitcoin and ETH were down with the general risk-off. FANGs were generally flat as was NDX.

My second week buying EURNZD buy made another 0.32% taking my year to date profit to 7.52% and 27/37 wins. This week I will go with my reversal strategy and sell 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)

The final week of Q3 reports CPI from Germany and Eurozone, and US Personal Consumption Expenditure, the Fed’s preferred inflation metric. Otherwise the week is largely PMI reports, and volatility is as likely to come from end of month and quarter repositioning as it is from scheduled news. Of more interest is the next stage in the Chinese Evergrande saga, where further payment deadlines arise next week. In politics, we have the German election on Sunday, with the replacement of titan Angela Merkel after 16 years, although the new Chancellor and indeed the coalition makeup will not be known for days or weeks. More immediately is Japan’s LDP leadership vote, with maverick vaccines minister Taro Kono fighting it out with traditional and bland Fumio Kishida. The first round, with two other (female) candidates is on Wednesday.

CALENDAR (High volatility items in bold)

Monday September 27

12:30 US Durable/ND Capital Goods (Core DG e0.5% p0.8%)

23:50 BoJ MPC Minutes

Tuesday September 28

00:30 Australia Retail Sales (e-2.4% p-2.7%)

06:00 Germany Gfk Consumer Confidence

13:00 US Housing/Home Price Indices

14:00 US Consumer Confidence(Sep)

23:50 Japan Retail Sales

Wednesday September 29

09:00 Eurozone Consumer Confidence/Business Climate

14:00 US Pending Home Sales

23:50 Japan Industrial Production

Thursday September 30

01:00 China PMIs (Mfr e50.2 p50.1)

06:00 UK Final Q2 GDP (e-1.5% p4.8%)

07:55 Germany Unemployment Rate/Change

09:00 Eurozone CPI (Core p1.6%)

09:00 Eurozone Unemployment

12:00 Germany CPI (MoM e0.1% p0.9%))

12:30 US PCE QoQ

12:30 US Jobless Claims

12:30 US GDP Annualised (e6.6% p6.6%)

13:45 Chicago PMI

23:30 Japan Jobs/UnEmp

23:50 Japan Tankan Large Manufacturing Index (e13 p14)

Friday October 1 

00:30 Aus Building Permits

01:45 Caixin Manufacturing PMI(Sep)

06:00 Germany Retail Sales (MoM e1.5% p-5.1%)

07:55 Germany Markit Mfr PMI

08:30 UK Markit Mfr PMI

12:30 US PCE MoM & YoY

13:30 Canada Markit Mfr PMI

13:45 US Markit Mfr PMI

14:00 US ISM Mfr PMI (e59.9 p59.9)

14:00 Michigan CSI

Week to Sep 17th

Equities down, dollar up into OpEx, Oil bucks trend

MY CALL THIS WEEK : BUY EURNZD

LAST WEEK

Equity markets were weak across the board, with notably DJI outperforming NDX by 0.71%, and only recent star NKY posting a green candle to a new eight month high. The fade was exacerbated by OpEx on Friday, with indices closing at lows. After several moribund days, the dollar rose sharply on Thursday’s blowout Retail Sales figure, where the monthly ‘Control Group’ ie core printed +2.5% vs a -0.1% estimate (raw figure was +0.7% vs -0.8%). USDJPY rose 0.27% in 10 minutes, and 0.41% in an hour. DXY closed the week at a four-week high. Gold tracked the dollar to touch five-week lows. 10-year yields (and the 10-2 curve) stayed range bound, although notably the long curve (30-10) touched 0.536%, an 18-month low. It was a good week for oil bulls (and thus XLE +3.20% against -0.57% SPX), but of course, adding fuel to the fire (excuse the pun) of the global transport supply and cost crisis. (Notably DJT -0.67%) fell further than SPX.

WEEKLY PRICE MOVEMENT

The biggest mover this week was FTSE, down 0.93%, making an 8-week low and back under 7,000. The top forex mover was AUDUSD this week, down 1.02%. Bitcoin and ETH were slightly up. FANGs generally followed NDX.

My EURNZD buy made 0.32% taking my year to date profit to 7.20% and 26/36 wins. I will stay with buying EURNZD as this move does not appear to be done yet.

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)

The key event in the penultimate week of September is the FOMC meeting. A rate hold is 100% priced in, but traders will be looking for firm hints, or possibly even a calendar for the taper program, although this is hampered by the poor jobs print this month. There are also three other rate decisions, in China, Japan and UK. Other than that, only PMI data is of any significance.

CALENDAR (High volatility items in bold)

Monday September 20
06:00 Germany PPI

Tuesday September 21
01:30 RBA Meeting Minutes
12:30 US Building Permits/Housing Starts

Wednesday September 22
00:30 Aus Westpac Leading Index
01:30 PBoC Interest Rate Decision (e3.85% hold)
02:00 RBA Bullock speech
03:00 BoJ Rate Decision/Statement (e-0.1% hold)
06:00 BoJ Press Conference
14:00 Eurozone Consumer Confidence
18:00 Fed Rate Decision/Statement (e0.25% hold)
18:30 FOMC Press Conference
23:00 Aus Commonwealth Bank PMIs

Thursday September 23
07:30 Germany Markit PMIs (Mfr e65.0 p62.6)
08:00 Eurozone Markit PMIs (Comp e59.7 p59.0)
08:30 UK Markit Mfr/Svcs PMI (Svcs p55.0)
11:00 BoE Rate Decision/Statement (e0.1% hold)
12:30 US Jobless Claims
12:30 Canada Retail Sales (e4.4% p4.2%)
13:45 US Markit PMIs

Friday September 24
08:00 Germany IFO Sentiment Indicators
14:00 New Home Sales (MoM)(Aug)

Week to Sep 10th

NDX outperforms, NKY rally continues, Currencies flat

MY CALL THIS WEEK : BUY EURNZD

LAST WEEK

In a week of continued heavy rotation, the NDX was the only stock market to make new all-time while the NKY rally continued unabated. Central bank tapering once more dominated the narrative, with the RBA, the BoC and the ECB all taking turns in the spotlight. In a small but potentially significant hawkish shift, the ECB lowered its asset purchases if only to restore them to previous levels. This did little to shift a sluggish Euro and EU yields actually dropped sharply following the meeting. Meanwhile, the USD traded an inside week while US 10-year yields made a new recovery high only to fade again.

WEEKLY PRICE MOVEMENT

The biggest mover this week was again NKY, up 4.30% bucking the trend elsewhere. The top forex mover was AUDUSD this week, up 1.38%. Bitcoin and ETH fell sharply. FANGs were very mixed.

My GBPCAD buy made 1.14%, reversing last week's loss, and taking my year to date profit to 6.88% and 25/35 wins. This week I am buying EURNZD, it seems to be at support. This NKY rally will end and JPY will rally, but not yet.

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 lighter than usual on data, with inflation the main focus, as the US, UK, Canada and Eurozone report. However, as inflation has already reached 'the target' for taper everywhere except Eurozone, the prints assume less significance than in previous months. Friday is quarterly OpEx, the so-called triple witching, which includes the important index options (SPY, QQQ etc.). Markets will probably spend the whole week looking for clues to the Fed 22 September meeting.

CALENDAR (High volatility items in bold)

Monday September 13
18:00 US Monthly Budget

Tuesday September 14
01:30 Aus House Price Index
04:30 Japan Industrial Production
06:00 UK Claimant Count/AHE/UnEmp (UnEmp e4.8% p4.7%)
12:30 US CPI (MoM e0.3% p0.3%)

Wednesday September 15
00:30 Aus Westpac Consumer Confidence
02:00 China Retail Sales (YoY e11.5% p8.5%)
06:00 UK CPI (YoY e2.3% p2.0%)
09:00 Eurozone Labor Cost/Ind Production
12:30 Canada BoC CPI (p3.3%)
23:50 Japan Imports/Exports/TB

Thursday September 16 
01:00 Aus Consumer Inflation Expectations
01:30 Aus NFP/UnEmp (UnEmp e5.0% p4.6%)
12:30 US Retail Sales (Control Group Aug e-0.1% p-1%)
12:30 Philly Fed Manufacturing Survey
12:30 US Jobless Claims

Friday September 17
06:00 UK Retail Sales
09:00 Eurozone CPI
14:00 Michigan CSI

Week to Sep 6th

Another ATH, NFP Miss, Weak USD

MY CALL THIS WEEK : SELL GBPCAD

LAST WEEK
In a week of new all-time highs for SPX and NDX, and lower highs for DJI and the majority of other global stock markets, the main focus was Friday’s NFP print and whether it would be strong enough to pave the way for a taper announcement in September’s FOMC meeting. In the end, the significant miss of 235k was likely weak enough to delay any announcement till November at least.  The USD was understandably weak and was also pressured by a stronger Euro, buoyed by hawkish comments from several members that suggest taper discussions are not completely one-sided, making next week’s ECB meeting all the more interesting.

WEEKLY PRICE MOVEMENT
The biggest mover this week was NKY, up 5.38%. The top forex mover was again NZDUSD this week, up 2.00%. Bitcoin was flat but ETH moved sharply up. FANGs were generally much stronger than NDX itself.

My GBPAUD buy was a bad one, I lost 1.11% taking my year to date profit to 5.74% and 24/34 wins. This week I am shorting 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)

The vacation period traditionally ends this week with Labor Day on Monday when US markets are closed. In any event, the focus for the week is outside the US with rate decisions in Australia, Canada and most importantly the Eurozone. The ECB is the laggard in tightening hints, and traders will be keen to see if their stance has changed. Also this week are inflation figures from China, and Germany, and GDP prints from Eurozone, Japan and the UK.

CALENDAR (High volatility items in bold)

Monday September 6
01:00 Aus TD Securities Inflation
06:00 Germany Factory Orders s.a. (MoM)(Jul)
23:30 Overall Household Spending (YoY)(Jul)

Tuesday September 7
02:00 China Imports/Exports/TB (time approx.)
04:30 RBA Rate Decision/Statement (e0.1% hold)
05:00 Japan Leading Economic Index
06:00 Germany Industrial Production
09:00 Eurozone ZEW Economic Sentiment
09:00 Eurozone Q2 Final GDP (e-0.6% p2.0%)
09:00 Germany ZEW Sentiment Indicators
23:50 Japan Q2 Final GDP (e0.4% p0.3%)

Wednesday September 8
08:10 RBA Debelle speech
10:00 DE10Y Bond Auction (time approx.)
14:00 Canada Ivey PMI
14:00 BoC Rate Decision/Statement (e0.25% hold)
17:10 Fed Williams speech
18:00 Fed Beige Book

Thursday September 9
01:30 China CPI (e1.0% p1.0%)
06:00 Germany Trade Balance
08:35 RBA Debelle speech
11:45 ECB Rate Decision/Statement (e0% hold)
12:30 US Jobless Claims
12:30 ECB Lagarde Presser
16:00 BoC Governor Macklem speech
18:00 Fed Williams speech

Friday September 10 
06:00 UK Manuf/Ind Production
06:00 UK GDP MoM
06:00 Germany CPI (e3.4% p3.4%)
12:30 US PPI
12:30 Canada NFP/AHE/UnEmp (UnEmp e7.4% p7.5%)