Week to Oct 7th

V-Shaped flat week, Big NFP Miss, Oil holds highs

MY CALL THIS WEEK : SELL CADJPY

THIS WEEK

In a week of continuing two-way volatility, stock markets initially tested lower and reversed into strong rallies. Two of the major headwinds for risk markets were partially resolved or at least delayed. Firstly, the problematic rally in natural gas and oil took a breather after Russia agreed to increase supplies and also the US energy secretary Jennifer Granholm raised the prospect of releasing emergency oil reserves. Soon after, the US debt ceiling crisis was again kicked down the road as the Senate approved a deal to increase the borrowing limit into December. It was a good week for US yields as the 10-year broke the September high and the USD consolidated recent gains near the yearly highs.  The surprisingly low NFP at 194k (albeit with with +169k previous revisions) left equity traders confused, and markets hardly moved Friday. The dollar only had a brief spike down. 

WEEKLY PRICE MOVEMENT

The biggest mover this week was NKY, down 2.51%. The top forex mover was CADJPY this week, up 2.45%. Bitcoin and ETH were nicely up. FANGs were very variable.
Very bad choice to buy NZDCAD, down 1.45% and taking my year to date profit down to 5.78% and 27/39 wins. However, I will stick to the reversal plan 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

Earnings season opens next week, with as always, the banks. JPM is first out of the gate on Wednesday followed by BAC, WFC and C the next day and GS on Friday. DJIA health giant UNH also reports. In all cases, the estimates are materially lower than Q2 which means even if the banks beat (they usually do), there is no guarantee of further upward price movement. Notably, the financials sector estimates are underperforming the S&P as a whole for the first time in five quarters. It’s a relatively quiet week in sovereign data, with only inflation from the US (and Germany and China) of note. With US PPI also reporting on Thursday, any mismatch between raw material and finished goods prices will be highlighted. The FOMC minutes on Wednesday will be scrutinised, of course, but unlikely to move markets. The week ends with the start of the IMF conference.

CALENDAR (All times GMT, high volatility items in bold)

Monday October 11
02:00 China FDI (time approx.)
10:00 UK NIESR GDP Estimate (time approx.)

Tuesday October 12
06:00 UK Claimant Count/AHE/UnEmp (UnEmp e4.5% p4.6%)
09:00 Eurozone ZEW Economic Sentiment
09:00 Germany ZEW Economic Sentiment
23:30 Aus Westpac Consumer Confidence

Wednesday October 13
02:00 China Imports/Exports/TB
06:00 UK Manuf/Ind Production
06:00 UK GDP MoM
06:00 Germany CPI (e3.4% p4.1%)
09:00 Eurozone Ind Production
12:30 US CPI (e4% p4%)
14:30 BoE Cunliffe speech
18:00 FOMC Minutes
18:00 US Monthly Budget Statement
22:00 RBA Debelle speech

Thursday October 14
00:00 Aus Consumer Inflation Expectations
00:30 Aus NFP/UnEmp (NFP e-120k, p-146.3k)
01:30 China CPI (e0.9% p0.8%)
04:30 Japan Industrial Production
12:30 US PPI
12:30 US Jobless Claims
12:30 Initial Jobless Claims 4-week average
17:00 Fed Williams speech

Friday October 15
00:00 IMF Meeting (all day)
02:00 China NBS Press Conference
02:00 China Retail Sales (p2.5%)
10:30 Germany 10Y Bond Auction (time approx.)
12:30 US Retail Sales (e-0.2% p0.7%)
14:00 Michigan CSI (e74 p72.8)