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.
WEEKLY PRICE MOVEMENT
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.
NEXT WEEK
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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