Monday 13 December 2021

Week to Dec 10th

Omicron fears subside on Fauci comments, CPI as expected


The market rallied this week after Fauci comments that Omicron ‘almost certainly’ not more severe than Delta boosted optimism over the variant’s impact. Markets recovered last week's drop, with DJIA posting its best week since March. SPX came within 1% of its ATH. US 10Y climbed in line with stocks but trading an inside week. The DXY basket also traded an inside week, despite the importance of the CPI print, which was in line with estimates at 4.6%. Traders were glad it was not worse, and bought equities and sold the dollar. Oil rallied, and commodity currencies AUD and CAD were strong, in line with the risk-on mood. Gold continued to confuse, ending flat after also trading an inside week.


The biggest index mover was DJIA, up 4.02%. The top forex mover was AUDJPY for a second week, recovering last weeks loss and up 2,.92%. Bitcoin and Ethereum fell hard, and FANG refected NDX, with AAPL the strongest again.

Last week’s NZDJPY long made 1.25%, taking my year to date profit to 5.60% and 32/48 wins. This week I think NZD will catch up with AUD, so I am shorting 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.


The key event for next week is the FOMC meeting on Wednesday, where it is strongly expected that they will announce a firm accelerated timetable for QE taper, ending earlier than June 2022. Commentators are talking about doubling the speed. The CME Fedwatch has even priced in (admittedly a 3% chance) a rate hike at this meeting. So the hawkish bar is high, anything less than this would be very bearish for USD.

Also on the packed agenda for this holiday time of year are rate decisions from the UK (a possible rate hike) and Japan. Added to that we have UK and Australian unemployment, Canadian and Eurozone inflation, and various PMIs.

CALENDAR  (all times are GMT)

Monday December 13

23:50 Japan Tankan Large Mfr Index (Sun) (e25 p18)

17:00 UK Financial Stability Report

Tuesday December 14

04:30 Japan Ind Production

07:00 UK Claimant Count/AHE/UnEmp (UnEmp p4.3%)

10:00 Eurozone Ind Production

13:30 US PPI

23:30 Aus Westpac Consumer Confidence

Wednesday December 15

02:00 China Retail Sales (p4.9%)

07:00 UK CPI (p4.2%)

13:30 US Retail Sales (e1.0% p1.7%)

13:30 Canada BoC CPI (p3.8%)

19:00 Fed Rate Decision/Statement (e0.25% hold)

19:30 FOMC Powell Presser

22:00 Aus Commonwealth Bank PMIs

23:30 RBA Governor Lowe speech

23:30 Aus Westpac Leading Index

23:50 Japan Imports/Exports/TB

Thursday December 16

00:00 Aus Consumer Inflation Expectations

00:30 Aus NFP/UnEmp (UnEmp p5.2%)

08:30 Germany Markit PMIs (Mfr p57.4)

09:00 Eurozone Markit PMIs (Comp p55.4)

09:30 UK Markit PMIs (Svcs p58.5)

10:00 Eurozone Labor Cost

12:00 BoE Rate Decision/Statement (e0.1% hold)

12:45 ECB Rate Decision/Statement (e0.0% hold)

13:30 US Building Permits/Housing Starts

13:30 US Jobless Claims

13:30 Philly Fed Mfr Survey

13:30 ECB Lagarde Presser

Friday December 17

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

06:00 BoJ Presser

07:00 UK Retail Sales

07:00 Germany PPI

10:00 Eurozone CPI

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