Week to Apr 22nd

Markets hit by Fed comments. 50bp hike looms.

MY CALL THIS WEEK : SELL EURUSD

LAST WEEK

Stock markets managed a few strong sessions but faded following more hawkish Fed signals indicating the May rate hike would be 50bp not 25bp. DAX and NKY were relatively unscathed, but US markets dropped to new April lows by the end of the week and the weak close presents a similar situation to last week—continuation is likely on Monday and Tuesday.

WEEKLY PRICE MOVEMENT

The biggest index mover was rate-sensitive NDX which was down 3.98%, over 7% in two weeks. Clearly rates are still the issue, as other indices moved much less. The top forex mover was EURNZD up 2.19%. Bitcoin and Ethereum pulled back again, and FANGs severely underperformed, after NFLX reported the first reduction in subscribers for a decade. Only AAPL was relatively unscathed.

Last week's EURAUD long position gained 2.17%, which means I am ahead 6.13% this year, with 8/15 (53%) wins. This week I am selling EURUSD.

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

Next week is the big week for earnings, in particular for NDX, with over 42% by weight of the index (including AAPL MSFT GOOGL INTC FB) reporting. These companies are also 22% of SPX. NDX has been severely hit by the rate hike narrative, and entered bear market territory last week. Focus will be in all cases on unit metrics rather than just earnings and revenue. News from the US is again light, with only Durable Goods and GDP of note. Inflation is reported from Australia, Eurozone and Germany, and again estimates show it is still increasing.

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

Monday April 25

08:00 Germany IFO Sentiment

15:00 BoC Governor Macklem speech

15:00 BoC Rogers speech

Tuesday April 26

12:30 US Durable/ND Capital Goods (DG e1.0% p-2.1%)

12:55 BoC Lane speech

13:00 US Housing/Home Price Indices

14:00 US Consumer Confidence

14:00 US New Home Sales

Wednesday April 27

01:30 Australia CPI (RBA Mean e1.2% p1.0%)

14:00 US Pending Home Sales

23:50 Japan Retail Sales

Thursday April 28

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

06:00 BoJ Press Conference

09:00 Eurozone Consumer Confidence

12:00 Germany CPI (e7.6% p7.6%)

12:30 US Q1 GDP (e1.0% p6.9%)

12:30 US Jobless Claims

12:30 US PCE QoQ

Friday April 29

01:45 China Caixin Mfr PMI

06:00 Germany Q1 GDP (QoQ e0.2% p-0.3%)

09:00 Eurozone GDP (YoY e5.1% p4.6%)

09:00 Eurozone CPI (Core e3.1% p2.9%)

12:30 US PCE MoM & YoY

12:30 Canada GDP

13:45 Chicago PMI

14:00 Michigan CSI