Sunday 20 March 2022

Week to Mar 18th

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


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.


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.


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

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