Week to Mar 25th

New multi-year highs for USDJPY and yields. Tech recovers.

MY CALL THIS WEEK : SELL AUDJPY

LAST WEEK

With a stalemate in Ukraine, this week’s moves were much more muted, although US indices made post-invasion highs, although DAX did not, despite the EU PMI beats, although European consumer confidence dropped by the second largest amount on record. The dollar (DXY) had an inside week, as did the euro and Gold. The yen continued to fall with USDJPY making highs not seen since Dec 2015. AUDJPY hit highs last seen in August 2015, and both AUD and NZD made new 2021 highs against the dollar. Yields broke 2.4%, a new three year high, after Fed Powell's remarks preparing markets for 50bp increases. Oil continued to consolidate after the high two weeks ago, still managed to post an 8% weekly gain, such is the current volatility.

WEEKLY PRICE MOVEMENT

The biggest index mover was oversold NKY, up 4.93%. The top forex mover was again AUDJPY up 3.59%. The pair has risen 6.93% in two weeks. Bitcoin and Ethereum rallied again although less than last week. Tech outperformed again with all FANGs except NFLX up in line.

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Last week's EURCAD long position lost 1.48%, which means I am ahead 4.08% this year, with 6/11 (54.5%) wins. This week I am banking on AUDJPY reversing and shorting it.

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

A new month and quarter, so the main event is NFP on Friday. Give the Ukrainian stalemate, this event may have more significance than last month. Fed Williams speaks this week, and traders will be alert to rate hike clues before earnings takes over next week. Germany and the Eurozone report inflation this week, both estimating a small increase. We also have US GDP (equal to inflation so zero real growth), and also UK GDP (well below inflation).

CALENDAR  (all times are GMT, volatile items in bold)

Monday March 28

11:00 BoE Governor Bailey speech

23:30 Japan Jobs/UnEmp

Tuesday March 29

00:30 Aus Retail Sales

06:00 Germany Gfk Consumer Confidence

13:00 Fed Williams speech

13:00 Housing/Home Price Indices

23:50 Japan Retail Sales

Wednesday March 30

08:10 BoE Broadbent speech

09:00 Eurozone Business Climate/Consumer Confidence

12:00 Germany CPI (e5.4% p5.5%)

12:15 US ADP (e400k p475k)

12:30 US PCE QoQ

12:30 US Q4 GDP (YoY e7.1% p7.0%)

23:50 Japan Ind Production

Thursday March 31

00:30 Aus Building Permits

01:00 China PMIs (Mfr e49.8 p50.2)

06:00 UK Q4 GDP (QoQ e1.0% p1.0%)

06:00 Germany Retail Sales (e2.4% p10.3%)

07:55 Germany Unemployment

08:00 OPEC Meeting

09:00 Eurozone Unemployment

12:30 US PCE MoM & YoY

12:30 US Jobless Claims

12:30 US Personal Income/Spending

12:30 Canada GDP

13:00 Fed Williams speech

13:45 Chicago PMI

21:30 Aus AiG Mfg Index

23:50 Japan Tankan Mfr Indices

Friday April 1

01:45 China Caixin Mfr PMI

07:55 Germany Markit Mfr PMI

08:30 UK Markit Mfr PMI

09:00 Eurozone CPI (Core 2.8% p2.7%)

12:30 US NFP/AHE/UnEmp (NFP e450k p678k)

13:30 Canada Markit Mfr PMI

13:45 US Markit Mfr PMI

14:00 US ISM PMI (e58.5 p58.6)

Week to Mar 18th

First rate hike since 2019, but priced in. Markets rally, JPY 6-year low.

MY CALL THIS WEEK : BUY EURCAD

LAST WEEK

In the best week for over a year, markets recovered, as the Ukraine situation didn't get any worse. The rally was halted by the widely predicted 0.25% rate hike on Wednesday, but didn't really fade, despite an dotplot suggest 11 hikes by the end of 2023. Chinese stocks had a V-shaped week, falling on COVID fears then rising on pro-business government announcements. EEM ETFs followed. The BoE raised rates as expected, but with one dissenting MPC member, and the 'rumor' rally stalled. In general though, all currencies beat the inside week dollar, except JPY, which made new six year highs. Yields hit their highest level since May 2019 on the rate hike. Gold and Oil continued to slide from their recent peaks.

WEEKLY PRICE MOVEMENT

The biggest index mover was oversold NDX, up 8.41%. The top forex mover was AUDJPY UP 3.34%. Bitcoin and Ethereum rallied. Tech outperformed with NFLX and FB making up for last weeks underperformance.

Last week's GBPJPY short position lost 2.69%, which means I am ahead 5.56% this year, with 6/10 (60%) wins. This week I am buying EURCAD, as Eurozone recovers and oil falls

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

There is little US news next week, the biggest prints are PMIs (still all expanding). UK inflation is expected to edge up to 6%. It is the two year anniversary of COVID bottom on Wed, and we are a similar situation. Once again, the markets are probably going to be dominated by Ukraine, and perhaps China.

CALENDAR  (all times are GMT, volatile items in bold)

Monday March 21
01:15 PBoC Rate Decision/Statement (e3.7% hold)
07:00 Germany PPI
12:30 Chicago Fed National Activity Index

Tuesday March 22
01:00 RBA Governor Lowe speech

Wednesday March 23
07:00 UK CPI (e6.0% p5.5%)
12:30 UK Budget Report (time approx.)
14:00 US New Home Sales
15:00 Eurozone Consumer Confidence
22:00 Aus Commonwealth Bank PMIs
23:50 BoJ MPC Minutes

Thursday March 24
08:30 Germany Markit PMIs (Mfr e58.5 p58.4)
09:00 Eurozone Economic Bulletin
09:00 Eurozone Markit PMIs (Comp e55.7 p55.5)
09:30 UK Markit PMIs (Svcs e60.7 p60.5)
12:30 US Durable Goods (e-0.6% p1.6%)
12:30 US Jobless Claims
13:45 US Markit PMIs
23:30 Tokyo CPI

Friday March 25
07:00 UK Retail Sales
09:00 Germany IFO Sentiment
14:00 Michigan CSI
14:00 US Pending Home Sales
16:45 BoC Gravelle speech

Week to Mar 11th

Gold and Oil hit and retreat from highs

MY CALL THIS WEEK : SELL GBPJPY

LAST WEEK

The war in Ukraine continues with no clear progress by either side, and this is keeping markets depressed, but hugely volatile. US markets fell but held the Feb 24th invasion low, however European markets, which dipped below last week recovered, with a particularly strong showing from oversold DAX. The main news item, US CPI, was in line with estimates, and had little effect on markets.

The dollar (DXY) hit a new two-year high, and all currencies were down. EUR rose into the ECB meeting, and then fell away despite a relatively hawkish stance from President Lagarde, paving the way for rate hikes. GBP was sharply down, making a 16-month low. Notably, and unusually JPY fell sharply all week, unlike its fellow safe haven Gold, which shot up to $2,070, within a whisker of its all-time high, before falling back sharply. Similarly, Oil spiked up to highs not seen since 2008, before pulling back sharply. 10-year yields followed the dollar and reversed last week's drop.

WEEKLY PRICE MOVEMENT

The biggest index mover was oversold DAX, up 4.07%. The top forex mover was USDJPY down 2.18%. Bitcoin and Ethereum were flat again. Tech underperformed generally as the rate hike looms. We are seeing notable divergence by the weaker FANGs NFLX and FB.

Last week's EURNZD long position made 0.66%, which means I am ahead 8.25% this year, with 6/9 (66.7%) wins. This week I am expecting the BoE will not raise rates and selling GBPJPY.

 

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

Although Ukraine is still dominating the headlines, all eyes will be on the Fed on Wednesday for their anticipated first rate hike (25bp to 0.50%) since 2019. This is 97% likely (and priced in) according to the CME Fedwatch tool. Also notable is the BoE decision. They raised rates by 25bp last month, so a further hike is less likely. The US, China and Canada all report Retail Sales, expected to be sluggish. And finally, next week is the two week period we get every March where the US enters DST two weeks before Europe, meaning US markets open and close an hour earlier for Europeans.

CALENDAR  (all times are GMT, volatile items in bold)

Monday March 14

02:00 China FDI (time approx.)

Tuesday March 15

00:30 Aus House Price Index

00:30 RBA MPC Minutes

02:00 China Retail Sales (e2.8% p1.7%)

07:00 UK AHE/UnEmp (UnEmp e4.0% p4.1%)

10:00 Eurozone Ind Production

10:00 Eurozone ZEW Economic Sentiment

10:00 Germany ZEW Economic Sentiment

12:30 US PPI

23:50 Japan Import/Exports/TB

Wednesday March 16

04:30 Japan Industrial Production

10:30 Germany 10Y Bond Auction (time approx.)

12:30 US Retail Sales (MoM e0.6% p3.8%)

12:30 Canada BoC CPI (Core e4.8% p4.3%)

18:00 Fed Rate Decision/Statement (e0.5% p0.25%)

18:30 FOMC Press Conference

Thursday March 17

00:30 Aus Jobs/UnEmp (UnEMp e4.1% p4.2%)

10:00 Eurozone CPI

12:00 BoE Rate Decision/Statement (e0.5% hold)

12:30 US Building Permits/Housing Starts

12:30 US Jobless Claims

12:30 Philly Fed Mfr Survey

23:30 Japan National CPI

Friday March 18

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

06:00 BoJ Press Conference

10:00 Eurozone Labor Cost

12:30 Canada Retail Sales (e-2.1% p-1.8%)

Week to Mar 4th

Ukraine war causes DAX and EUR collapse. Oil at record highs.

MY CALL THIS WEEK : BUY EURNZD

LAST WEEK

Whereas US markets only slipped slightly in an inside week, mostly on the Ukraine nuclear power plant attack, DAX had its worst week since the pandemic crash in Mar 2020, and FTSE fared little better, with its Russian components falling more than its oil components rose. Markets more or less ignored the otherwise important NFP beat, which gives the Fed little room to delay their tightening.

Oil hit 116.52, its highest price ever except for the summer of 2008, and easily its highest price ever expressed in GBP or EUR. The Brent/WTI spread varied by 10c in the week, the widest since the negative WTI crisis during COVID. 10-year yields dropped sharply, back to October 2021 levels, and EUR had its worst week since the start of the COVID crisis, propelling DXY up to levels not seen since 2020. Notably Asian currencies were not affected, JPY retraced last weeks' gains in an inside week, and AUD and NZD outperformed the dollar, the former on rate hike hints. An actual rate hike in Canada was already priced and the currency hardly moved.

WEEKLY PRICE MOVEMENT

The biggest index mover was Ukraine-sensitive DAX, down 10.11%. The top forex mover was EURAUD down 5.11%. Bitcoin and Ethereum were fairly flat. Some of the FANGs performed a lot worse than NDX, although in general tech underperformed.

Last week's EURNZD short position made 4.68%, which means I am ahead 7.59% this year, with 5/8 (62.5%) wins. I will now reverse that position and buy EURNZD, as the rate hike hint may drive AUD up more.

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

Although Ukraine is likely to dominate markets, the key day for schedule news is Thursday with the ECB simultaneous with US core inflation (ie without Ukraine factor-oil) which is estimated to make a new high. We also have inflation from Germany and China, US, Canada, China trade figures and GDP from Eurozone, UK and Japan.

CALENDAR  (all times are GMT, volatile items in bold)

Monday March 7
02:00 China Imports/Exports/TB
07:00 Germany Factory Orders
09:00 Germany Retail Sales (time approx.) (e9.5% p0%)
23:50 Japan Current Account

Tuesday March 8
10:00 Eurozone GDP (QoQ e0.3% p0.3%)
13:30 US Trade Balance
13:30 Canada Trade Balance
22:15 RBA Governor Lowe speech
23:30 Aus Westpac Consumer Confidence
23:50 Japan GDP (e1.4% p1.3%)

Wednesday March 9
01:30 China CPI/PPI
08:00 RBA Debelle speech

Thursday March 10
00:00 Aus Consumer Inflation Expectations
12:45 ECB Rate Decision/Statement (e0% hold)
13:30 ECB Press Conference
13:30 US CPI (Core e6.4% p6.0%)
13:30 US Jobless Claims
19:00 US Monthly Budget Statement
22:15 RBA Governor Lowe speech
23:30 Japan Overall Household Spending

Friday March 11
07:00 UK GDP
07:00 UK Ind/Mfr Production
07:00 Germany CPI (e5.5% p5.5%)
13:30 Canada NFP/AHE/UnEmp (UE e6.2% p6.5%)
15:00 Michigan CSI (e61.3 p62.8)