Saturday 12 March 2022

Week to Mar 11th

Gold and Oil hit and retreat from highs


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.


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.


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%)

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