Week to Jun 17th

Record rate hike causes market plunge

MY CALL THIS WEEK : BUY EURNZD

LAST WEEK

This week saw the Fed raise rates by 75bp, the first hike of this magnitude since 1994. The market was expecting a 50bp hike, but, during the blackout period on Monday, a WSJ journalist reported that the Fed are likely to "consider surprising markets" with the higher figure. SPX was off nearly 4% that day, and fell all week, other than a slight relief rally on the day itself. SPX is now 22.5% off the high and therefore 'officially' a bear market. Note that DJIA is still only 17.75% from its ATH. The UK and German markets pretty much followed suit, although DAX is still above its post-Ukraine March low, and FTSE, now the strongest of major indices is only 8.5% off, helped by its oil weighting.

The UK also raised rates on Thursday, but 'only' by 0.25% which held up GBP, although this may have also been dollar-driven, as EUR also rose. The BoJ continued with their loose policy (no rate hike, tightening of QE). DXY and USDJPY made their highest weekly close for 20 years, as 10-year yields rose 32bp and touched a new 11-year high, although notably pulled back to close the week only 5bp up.

Oil had its worst week since March, leading to a 18-month low for CAD, and gold pulled back, both more than you would expect for just the dollar movement. Bitcoin broke through June support to post its worst week since the March 2020 pandemic crash.

Next week we are expecting some SPX and DAX recovery, as shown in our subscriber analysis charts. This may however be followed by further lows. We have a similar view on EURUSD, some upside for now. The doji spike on 10-year yields is significant, which leads on to our view on USDJPY


WEEKLY PRICE MOVEMENT

The biggest index mover this week was SPX, down 5.79%. The top forex mover was USDCAD up 2.12%. Crypto collapsed hard, and FANG fell in line with SPX.

My EURGBP short lost 0.62% this week, meaning I am now ahead 3.09% with 11/22 (50% wins). This week I am reversing course and buying EURNZD. I feel EUR must rally, and NZD is the most overextended.

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 main event in the four-day week in the US is probably Fed Chair Powell's Humphrey-Hawkins testimony, where Congress will no doubt be focused on inflation and the Fed's plan to combat it. Monday is the Juneteenth holiday in the US only. There are no major US releases. Elsewhere we have further rising inflation expected in the UK and Canada, and a batch of PMIs, all looking fairly stable. Volatility is therefore likely to damp down, compared to last week's rate hike moves. Equity markets will probably move slightly upwards, now the rate hike has been digested. The dollar has come off the highs, but as we have said previously, may not be done yet.

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

Monday June 20
01:30 PBoC Interest Rate Decision (e3.7% hold)
06:00 Germany PPI
08:00 BoE Haskel speech
12:30 Chicago Fed National Activity Index
13:00 BoE Mann speech

Tuesday June 21
00:00 RBA Governor Lowe speech
01:30 RBA MPC Minutes
07:15 BoE Pill speech
12:15 BoE Tenreyro speech
12:30 Canada Retail Sales (e1.8% p0.0%)
23:50 BoJ MPC Minutes

Wednesday June 22
06:00 UK CPI/PPI/RPI (CPI 9.8% p9.0%)
08:40 BoE Cunliffe speech
12:30 Canada CPI (BoC Core e5.9% p5.7%)
13:30 Fed Chair Powell HH Senate Testimony
14:00 Eurozone Consumer Confidence
14:40 BoC Rogers speech
22:00 Aus S&P Svcs PMI
23:00 Aus S&P Mfr PMI

Thursday June 23
07:30 Germany S&P PMIs (Mfr e54.8 p54.8)
08:00 Eurozone Economic Bulletin
08:00 Eurozone S&P PMIs (Comp e54.2 p54.8)
08:30 UK S&P PMIs (Svcs e52.6 p53.4)
12:30 US Jobless Claims
13:45 US S&P PMIs
14:00 Fed Chair Powell HH House Testimony
20:30 US Bank Stress Test Info
23:30 Japan National CPI

Friday June 24
06:00 US Retail Sales
08:00 Germany IFO Business Sentiment
11:30 RBA Governor Lowe speech
12:30 BoE Pill speech
13:45 BoE Haskel speech
14:00 Michigan CSI
14:00 US New Home Sales

Week to May 7th

Resolution of Fed policy only reverses trends for a few hours

MY CALL THIS WEEK : BUY GBPAUD

LAST WEEK

The long-awaited 50bp rate hike occurred as expected on Wednesday, and a comment by Chair Powell that the Fed were not considering a 75bp bhike in June (despite Fed Bulllard's hawkish comments) caused a spike with SPX up 3.4% and NDX up 4.7% in the remaining 90 minutes of the session . This move was fully retraced in the US Thursday morning session, as were gains made.

In another volatile week, the RBA made a hawkish hike, the BoE made a dovish hike, and the Fed were somewhere in-between. The latter made all the headlines and led to the strongest session since 2020. This was all given back just as quickly on Thursday and Friday and the SPX closed the week pretty much where it opened, creating doji patterns on the weekly chart and daily chart. This signals indecision, which is apt as there no consensus on what the Fed will do next. Despite Chair Powell saying the Fed were not “actively considering” 75bps hikes, the markets are assigning a 83% chance of a 75bps hike in June. They clearly believe the Fed has lost the battle with inflation and will have to play catch up. This view can be seen in the continued collapse in long bonds, with TLT down over –5% on the week, and USD making a new 2022 high on Friday.

Last week’s action was a challenge to trade and there were rumours of a fund blowing up during Thursday’s crash. It certainly tested our bullish view, but Friday’s close was off the lows and the weekly doji could lead to a reversal. Bulls now want to see the Fed take a “whatever it takes” stance on inflation in the hope they can ease off later so the terminal rate comes in less than expected. Again, we note that 10Y yields and DXY both have weekly and monthly exhaustion signals, but since these are long-term, the short-term charts could still overshoot.  


WEEKLY PRICE MOVEMENT

The biggest index mover was DAX for the third week, down 3%. The top forex mover was GBPAUD down 2.05%. Bitcoin and Ethereum continued to slide, and once again, some FANGs underperformed. Yet again AAPL was relatively unscathed.

Last week's GBPAUD short was the worst trade I could possibly have done, losing 2.05%, which means I am ahead 6.75% this year, with 9/16 (56%) wins. This week I am doing a reversal trade and buying GBPAUD again.

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 only one important release next week which is US inflation (CPI) on Wednesday. As we have stated before, the unemployment part of the Fed dual mandate is satisfied, so the primary indicator of the rate hike path in now inflation, given that the Ukraine effect has receded. In addition to the US, there are inflation reports from Germany and China on the same day. The week is also heavy with CB speakers, with three Fed speakers on Tuesday. Earnings next week is mainly China tech companies.


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

Monday May 9
02:00 China Imports/Exports/TB
13:00 BoE Saunders speech

Tuesday May 10
09:00 Germany ZEW Surveys
11:40 Fed Williams speech
17:00 Fed Waller speech
17:20 ECB De Guindos speech
19:00 Fed Mester speech

Wednesday May 11
01:30 China CPI (e1.9% p1.5%)
06:00 ECB Elderson speech
06:00 Germany CPI (e7.8% p7.8%)
08:00 ECB President Lagarde speech
09:30 DE10Y Bond Auction
12:20 ECB Schnabel speech
12:30 US CPI (Core e6.0% p6.5%)

Thursday May 12
06:00 UK Q1 GDP (QoQ e1.0% p1.3%)
12:30 US Jobless Claims
12:30 US PPI
15:35 BoC Gravelle speech

Friday May 13
02:00 RBA Bullock speech
07:00 ECB De Guindos speech
14:00 Michigan CSI (e63.6 p65.2)
16:00 ECB Schnabel speech

Week to Feb 4th

Currencies and FANG earnings dominate

MY CALL THIS WEEK : BUY AUDNZD

LAST WEEK

A mixed week, over bullish saw SPX reversing a little of last week’s drop, although the sharp rise in EUR pushed DAX down towards January lows. There were strong FANG moves with GOOGL and AMZN sharply up, but FB over 20% down, all on earnings results.

Currencies and gold were the mirror image of last week as the dollar gave up its FOMC gains. The hawkish ECB triggered a strong rally, taking EURUSD back to the January highs and breaking the January highs on EURGBP after testing the 2020 low on Thursday. Oil made new 2022 highs again, although Gold, up with the falling dollar, only managed an inside week. AUD was particularly strong as the RBA abolished QE. Sterling only rallied a little, the BoE hike having been priced in for weeks. US yields made a new 2-year high, and German Bunds shot through the 0% point, touching 0.232%, a 3-year high.

WEEKLY PRICE MOVEMENT

The biggest index mover was again NKY, but this time up 2.70%. The top forex mover was EURJPY also up 2.70%. Bitcoin and Ethereum were sharply up again, and FANG was very volatile, ranging from AMZN up nearly 10%, to FB falling by double that.

Last week's GBPAUD short position lost 0.16%, the only currency other than EUR to beat GBP. which means I am ahead 2.47% this year, with 2/4 (50%) wins. This week I will buy AUDNZD expecting follow through on the AUD QE ending.

 
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 earning season continues, all the major companies results are in, and the only companies of note reporting are DIS and KO. The US CPI on Thursday stands alone as the primary release of the week, as it did in January. We also have German inflation.

CALENDAR  (all times are GMT)

Monday February 7
00:00 Aus TD Securities Inflation
01:45 China Caixin Services PMI

Tuesday February 8
13:30 US Trade Balance
13:30 Canada Trade Balance
23:30 Aus Westpac Consumer Confidence

Wednesday February 9
07:00 Germany Trade Balance

17:00 BoC Governor Macklem speech

Thursday February 10
00:00 Aus Consumer Inflation Expectations
09:00 EC Economic Growth Forecasts
10:30 UK NIESR GDP Estimate (time approx.)
13:30 US CPI (Core YoY e5.9% p5.5%)
13:30 US Jobless Claims
19:00 US Monthly Budget Statement

Friday February 11
07:00 UK Q4 GDP (QoQ e1.1% p1.1%)
07:00 UK Industrial/Mfr Production
07:00 Germany CPI (YoY e5.1% p5.1%)
15:00 Michigan CSI (p67.2)
16:00 US Fed MPC Report

Week to Dec 17th

Fed confirms taper acceleration, dollar up, equities down

MY CALL THIS WEEK : SELL USDCAD

THIS WEEK

As expected, the Fed doubled the pace of taper this week in response to runaway infation (worse this week), and forecast three rate hikes in 2021, the first in January. The BoE delivered a surprise rate rise of 0.15% which made GBP the second strongest currency after the dollar this week.

Markets sold into the Fed, and after a brief spike on the announcement, fell again, with rate-sensitive NDX underperforming. The dollar did the reverse, rallying into Wednesday, spiking down then rallying again. Gold was back up over $1,800 for the first time in three weeks, and Oil had relatively low volatility, despite the weak CAD move. Yields were down, in an inside week that partially reversed last week.

WEEKLY PRICE MOVEMENT

The biggest index mover was NDX, down 3.25%, in what was still an inside week. The top forex mover was USDCAD up 1.31%. Bitcoin and Ethereum were flat after last week's drop, and FANG performed even worse than NDX, except for FB.

Last week’s AUDNZD short made 0.23%, taking my year to date profit to 5.83% and 33/49 wins. This week I will take the reversal of the top mover and short USDCAD.

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 four-day week will be quiet as traders wind down for the Christmas holiday. The US, Europe and the UK (half day) will be closed on Friday. On the calendar is the relatively unimportant final GDP reading from the UGK, US and Canada, which are estimated to be in line with preliminary readings. Even PCE (Fed's preferred method of inflation) of low interest after Fed have already spoken on taper acceleration. Other than this, the week is traditionally bullish.

CALENDAR  (all times are GMT)

Monday December 20

01:30 PBoC Interest Rate Decision (e3.85% hold)

Tuesday December 21

00:30 RBA Meeting Minutes

07:00 Germany Gfk Consumer Confidence

13:30 Canada Retail Sales (MoM e1.2% p-0.6%)

15:00 Eurozone Consumer Confidence

23:30 Aus Westpac Leading Index

23:50 BoJ MPC Minutes

Wednesday December 22

07:00 UK Q3 Final GDP (e1.3% p1.3%)

13:30 Chicago Fed National Activity Index

13:30 US PCE QoQ

13:30 US Final Q3 GDP Annualised (e2.1% p2.1%)

15:00 US Consumer Confidence

Thursday December 23

13:30 US PCE MoM & YoY

13:30 US Durable/ND Capital Goods (Nov Durable e1.5% p-0.4%)

13:30 US Jobless Claims

13:30 Canada Q3 GDP

15:00 Michigan CSI

15:00 US New Home Sales

23:30 Japan National CPI

Friday December 24 

No releases

Week to Jan 24th

Coronavirus scare dominates, Worst week for five months, BoC dovish

Mon Jan 20

US markets were closed today, and volatility was light elsewhere, with DAX making small gains, but FTSE and GBP falling on remarks by the UK Chancellor Javid that the UK would not adhere to EU standards after leaving next week. Forex was also fairly quiet, a small move up in CAD led to a flat dollar overall. Gold and Bonds were slightly up, and Oil was down, following the UK mood.

Tuesday January 21

Asian markets fell on the Chinese coronavirus scare, and this mood was reflected in Europe and the US, with all markets down, although a late recovery meant SPX was flat, and NDX up. Nevertheless, DAX briefly hit an all-time high before pulling back. Positive results after hours for NFLX and IBM helped. GBP recovered and rose but otherwise currencies were down. The only exception was JPY, which along with Bonds and Gold was up, in line with the equity risk-off move. Oil was down for the same reason.

Wednesday January 22

SPX and NDX recovered at first today, briefly making intraday all-time highs, but fell back along with other markets as the virus scare dampened enthusiasm. Haven assets Gold and Bonds were up, although JPY was flat. A sharp early rise in GBP, followed the PSBR beat at 0930, and an expectation that interest rates will not be cut. CAD fell 1% on a dovish BoC report, downgrading growth projections. With EUR slightly up, the CAD move was not enough to prevent DXY from posting a red candle for the day.

Thursday January 23

Stocks fell again in early trading but rebounded on a WHO report that the coronavirus was not “a global emergency”, and all except FTSE closed up. A sharp fall in EUR after a dovish (or at least not hawkish, as expected) ECB presser resulted in a sharp uptick in DXY. AUD was strongly up on the Australian jobs beat, but gave up all up in the US session, on virus fears. The late rebound was not enough to prevent the haven trio from rising across the board, and Oil falling again.

Friday January 24

A second coronavirus case in the US caused a huge plunge in SPX, down 1% from the high of day, after an early rally. European indices did not therefore join in, and although pulling back slightly from the highs of the day, DAX and FTSE still closed green. Like yesterday, NKY was down on further yen strength. The dollar, however was up overall due to continuing EUR weakness, and a pullback in GBP. The haven trio of Gold, Bonds and JPY were all up, and Oil was down, in line with the equity move.

WEEKLY PRICE MOVEMENT

Equities were down with the worst performer DJIA hit as proportionally more earnings releases added to the downward sentiment. AUDJPY was the strongest mover, down 1.61%. FANGS held up quite well, with NFLX earnings bucking the trend and adding 3.97% to the TV giant. Cryptos pulled back after last week's rally but volatility is still quiet.

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 (all times are GMT)

(Calendar High volatility items are in bold)

• US and UK Rate Decisions
• Chinese New Year
• AAPL AMZN MSFT Earnings
• UK leaves the EU

Monday January 27

Markets are closed in China, Hong Kong, Taiwan and Vietnam for the Chinese New Year. The last Year of the Rat was 2008! Australia and Korea are also closed. This week, watch out for movement in the Democratic primary candidates support ahead of the Feb 3 caucus (Biden: good for markets, Sanders and Warren: less so). The Italian regional election on Sunday may affect European markets.

09:00 EUR Germany IFO  Climate/Expectations (Jan)

15:00 USD New Home Sales (MoM) (Dec)

Tuesday January 28

Earnings season continues with Dow defensive MMM before the bell, but the big one is AAPL, the world’s largest company (12% of NDX, 7.4% of DJIA and 4.84% of SPX) which joins fellow NDX stocks AMD and SBUX after the close. There is a rate decision today on HUF. Chinese markets remain closed until Friday.

13:30 USD US ND Capital Goods (MoM e0.2% p0.1%)

14:00 USD US S&P/Case-Shiller Home Price Indices

15:00 USD US Consumer Confidence

21:30 AAPL earnings

Wednesday January 29

The Fed rate decision today has a 1.75% hold 87% priced in, with a 13% possibility of a 25bp hike. A hold therefore points to a further upside in stocks. It’s another important earnings day today, with BA, DOW and MCD reporting pre-market. BA has been overtaken by AAPL as the top DJIA company, but is still 7.39% of the index, and the three together are 13.52% by weight. The end of the day sees MSFT FB and TSLA report. These three are 7.24% of NDX. All this portends a lot of volatility. Markets are closed in Mexico and New Zealand.

00:30 AUD Australia CPI (RMA Trimmed Mean QoQ e0.4% p0.4%)

07:00 EUR Germany Gfk Consumer Confidence Survey (Feb)

15:00 USD US Pending Home Sales (MoM) (Dec)

19:00 USD Fed Rate Decision/Statement (e1.75% hold)

19:30 USD FOMC Presser

21:45 NZD NZ Imports/Exports/TB

Thursday January 30

Today’s earnings are DJIA stalwart KO before the bell, and NDX giant (7.83% by weight) AMZN after the close. ECB hawk Wiedmann speaks at 1800.

08:55 EUR Germany UnEmp Rate/Change

10:00 EUR Eurozone UnEmp/Business Climate

12:00 GBP BoE Rate Decision/Statement

12:30 GBP BoE Presser

13:00 EUR Germany Prelim CPI (YoY e1.7% p1.5%)

13:30 USD US Prelim 19Q4 GDP (YoY e2.1% p2.1%)

13:30 USD US Jobless Claims/PCE QoQ)

23:30 JPY Tokyo CPI (Core YoY e0.8% p0.8%)

Friday January 31

Today is month end, which could involve repositioning, and also Brexit day, the long-awaited departure of Britain from the EU takes effect at 2300 (midnight in Europe). The Eurozone double GDP and inflation print is the most important event of the day.

02:00 CNY China PMIs

10:00 EUR Eurozone Prelim 19Q4 GDP (YoY e1.1% p1.2%)

10:00 EUR Eurozone Prelim CPI (Core YoY e1.4% p1.3%)

13:30 USD US PCE MoM/YoY

13:30 USD US Personal Income/Spending

14:45 USD Chicago PMI

15:00 USD Michigan CSI

This report is published every week as an email by MatrixTrade.com - you can sign up to receive it here. This blog is supported solely by advertising, so if any of the ads interest you, please click on them. If you want notification when the blog is updated, please follow me on Twitter, Facebook, Stocktwits, TradingView or Linkedin (all open in separate windows). Details of how I compile the report are here.

Week to Mar 15th

Brexit deadlock: UK seeks extension, Trade talks postponed, SPX NDX and Oil hit new 2019 highs

Mon Mar 11

Equities sharply reversed last week’s decline today as the mood changed, driven by M&A enthusiasm as NVDA announced the acquisition of MLNX, and the merger of DB and CBK.DE moved closed. All four stocks shot up. SPX added 1.5% and NDX was up 2%. DJIA opened much lower as its largest component BA gapped down 10% after the 737-Max disaster in Ethiopia, but recovered during the day to close 1.2% up. DAX and NKY followed the US, but FTSE was in the red due to the strong pound. As explained many times in the past, the FTSE has an large number of companies whose revenue is in USD, and so their GBP-quoted stock price moves up when GBP moves down.

DXY was down 0.42% mainly because of a 1.4% surge in GBP, after reports that the weekend had led to something new from the EU side for the Brexit deal vote on Tuesday. The other instruments were as you would expect on a risk-on day. AUD, CAD, Oil and US 10-year yields were up, JPY and Gold were down.

Tuesday March 12

US indices took a breather today and closed only marginally up. DJIA was marginally down, as BA fell again as countries around the world started grounding the 737-Max. DAX was down as DB and CBK gave up some of Monday’s gains, as did NKY. Only FTSE benefited for the same reason it bucked the prevailing trend yesterday.

The high hopes that today, embattled British PM May was finally going to get her Brexit deal passed by Parliament crashed and burned at 1100, when AG Cox confirmed the legal position on the backstop had not changed. GBP instantly fell 1.5%. As expected, the vote later in the day failed.

The US CPI miss at 1230 weighed on USD which fell against most currencies, which when added to the GBP crash resulted in a flat dollar basket for the day. Yields fell sharply by 4.1bp on the CPI news to under 2.6%, a two-month low. Gold rose in line with the dollar move, and Oil was flat.

Wednesday March 13

Enthusiasm returned today, and stocks took another leg up, with SPX and NDX adding 0.7%. The US joined other countries in grounding BA airplanes, but after an initial 3.2% dip, the stock closed 0.5% up. Global indices were up in line. NKY, which had fallen sharply at the open on weak Japanese machinery data recovered in futures to join the others. Yields pulled back 2bp in line.

The dollar was firmly down (DXY -0.53%) across the board (even against JPY) after a miss on PPI at 1230 added to yesterday’s poor CPI print, and GBP soared again, after UK MPs voted to reject a no-deal exit from the EU. Gold and Oil were up in line, the latter reaching a four-month high after the EIA beat at 1430.

Thursday March 14

Just as Wednesday was like Monday, today was like Tuesday, and US indices were flat (this time SPX and NDX were a shade down and DJIA a little up, after strong day for AAPL and V). Misses on Jobless Claims and New Home Sales, and reports of a postponement to April in the US/China talks did not help. It was a similar picture in non-US indices, except for FTSE, buoyed by the no-deal rejection and a pullback in GBP.

USD recovered some of yesterday’s losses and was up against all currencies and Gold. The fall in Gold and AUD was particularly sharp and both may be linked to Copper giving up 1.75% on the day. Yields climbed slightly in line with the dollar. Oil made a small advance. The rise all week has been built on supply cut hopes, and the US sanctions on Venezuela.

Friday March 15

There was another step up today, although slightly weaker as SPX added 0.5% to make a total of 2.9% for the week, the best this year, and together with NDX, a 2019 high. This is all driven by US/China hopes and a ‘patient’ Fed. Today’s rally was largely driven by the JOLTS Jobs beat and the Michigan Consumer Sentiment beat (97.8 vs 95.3) both at 1400. The MCS estimate had already been revised above the 93.0 we published last week, but the print was read as a reversal of the recent decline.

Different prints affect different assets, and the NY Manufacturing Index and Industrial Product and Capacity Utilisation misses at 1230 had little effect on index futures, but precipitated move down in USDJPY and 10-year yields, the latter dropping 5bp in two hours. The decline in both was arrested by the MCS print, but they did not recover. Overall DXY was down 0.24% today, with only CAD weakening as it followed Oil which pulled back slightly after four days of gains. There was nothing surprising from the BoJ rate hold meeting, and despite a brief 30 pip wobble, the yen remained flat during the Asian session.

WEEKLY PRICE MOVEMENT

NDX was the standout performer this week, reflecting a return to risk-on mood, with its biggest component AAPL the star performer. In currencies the wild GBP swings. DXY fell 0.89%, giving up last week’s gains, with only yen declining, also reflecting risk-on. Therefore last week’s top short GBPJPY is this weeks best buy, up 2.42% to pretty much exactly where it was two weeks ago. BTC and ETH had a second quiet week. It was unthinkable even a year ago that crypto would be less volatile than currencies and indices, never mind individual stocks. The CBOE closed its Bitcoin futures contracts this week, citing lack of interest, although the rival CME continues to offer the product.

Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on UUP. The equity and index prices are now based on the cash close each day.

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

• Brexit saga continues with two weeks to go
• Fed Rate Decision week
• UK inflation, jobs, and rate decision
• Bumper PMI day Friday

Monday March 18

Another quiet Monday, unless some black swan flies in over the weekend. There is no European or US news today. Markets are closed in Mexico for Benito Juarez' birthday.

23:50 JPY Japan Imports/Export/TVB (Sunday)

04:30 JPY Japan Industrial Production (YoY)

20:00 NZD NZ Westpac Consumer Survey

22:00 AUD RBA Kent speech

Tuesday March 19

The German sentiment index is likely to be balanced with a continuing strong equity index being offset by continual weak data and Brexit concerns. Any move in GBP from the UK earnings and unemployment results is likely to be overshadowed by Brexit.

00:30 AUD Aus House Price Index (QoQ)

00:30 AUD RBA Meeting Minutes

09:30 GBP UK AHE/Unempl/Claimant Count (AHE est 3.4% prev 3.4%)

10:00 EUR Eurozone Labour Cost

10:00 EUR Germany ZEW Sentiment (est -11.3 prev -13.4)

14:00 USD US Factory Orders (MoM)

14:00 NZD NZ GDT Milk Index

20:30 WTI API Oil Stock

23:50 JPY BoJ MPC Minutes

Wednesday March 20

The CME FedWatch tool has a 98.7% priced-in hold at today’s Fed meeting. With the recent weak jobs and inflation data, yet strong ISM prints, it will be interesting to see which way the Fed jumps in their rhetoric. Note the press conference is 30 minutes later, allowing for some wild moves in the short intervening period. Also scheduled today is yet another UK Parliamentary vote. on Brexit. This could be ‘the one’ with only nine days to go before the scheduled leaving date. This thing is changing every day, so keep watching the press. UK inflation, normally important is overshadowed by Brexit developments. There is a rate decision on BRL (1700)

00:00 AUD RBA Bullock speech

05:00 JPY Japan Leading Economic Index

07:00 EUR Germany PPI

09:30 GBP UK CPI/RPI/PPI (est 1.8% prev 1.8%)

14:30 WTI EIA Oil Stock

18:00 USD Fed Rate Decision/Statement (est 2.5% hold)

18:30 USD Fed Presser

19:00 GBP UK Parliamentary Vote on Brexit

21:45 NZD NZ 18Q4 GDP (est 0.6% prev 0.3%)

Thursday March 21

The UK rate statement allows Gov Carney to give his view on the Brexit situation. It may be hard to determine the general dovish/hawkish view through this. The European Council meets today to discuss China and the US-EU trade deal. Markets in Japan and India are closed for Vernal Equinox Day and Holiday respectively. There are also rate decisions on CHF, NOK, IDR, PHP, and TWD.

00:00 EUR European Council Meeting (all day)

00:30 AUD Aus NFP/Unemployment (est 15k prev 39.1k)

00:30 AUD RBA Bulletin

08:30 CHF SNB Rate Decision/Statement (est -0.75% hold)

09:00 EUR Eurozone Economic Bulletin

09:30 GBP UK Retail Sales

12:00 GBP BoE Rate Decision/Statement (est 0.75% hold)

12:30 USD US Jobless Claims

12:30 USD Philly Manufacturing Survey

23:30 JPY Japan National CPI

Friday March 22

Mostly PMIs today, the full Markit sets (Manufacturing, Services, Composite) are published for Germany, the UK and the US. The main volatility today will probably be in CAD with the Retail Sales and CPI simultaneous prints. Fed Bostic (dovish, non-voter) speaks at 0130 Saturday. There are rate decisions on RUB (1030) and COP (2000).

08:30 EUR Germany Markit PMIs

09:00 EUR Eurozone Markit PMIs

09:30 GBP UK PSBR

12:30 CAD Canada Retail Sales

12:30 CAD Canada CPI (Core est 1.2% prev 1.5%)

13:45 USD US Markit PMIs

14:00 USD Existing Home Sales (MoM)

17:00 WTI Baker Hughes Rig Count

18:00 USD Monthly Budget Statement

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Week to Sep 14th

Monday Sept 10

After posting red candles every day last week, SPX recovered (as shown on our chart last week) and managed a modest 0.2% gain. DAX and NKY were more firmly up, as Italian stocks and bonds recovered, with the MIB adding 2.30%, its best day since April 2017, after comments about prudence from the Italian economy minister. Only FTSE was red, reflecting a fall in Oil and a strong (0.79%) rally in GBP following positive comments from EU negotiator Barnier, and the UK GDP (0.3% vs 0.2%) and Trade Balance beats at 08:30. EM currencies TRY, ARS and RUB fell again, but the overall picture for USD was weak with DXY giving up 0.29%. All currencies rose, except JPY which pulled back on the risk on mood. Gold was flat, and US 10-year yields fell 1.5bp in line with the fading dollar. The Swedish election result had little effect on either SEK or EUR.

Tuesday September 11

After a shaky start both in Europe and in the US, indices recovered, leaving SPX slightly up, and DAX and FTSE, which close earlier, slightly down. NKY NKY did better, reacting to the falling yen, as you can see from our main chart, the week’s price action for NKY and USDJPY is very similar. Generally positive news, such as the JOLTS jobs beat at 15:00 was tempered with tariff concerns.

The big story of the day was Oil, which added 3.54%, its best day since June on a combination of Hurricane Florence concerns, sanctions on Iran, forecasts for lower US shale production, and a stellar beat on the API stock level (-8.64M vs -1.20M last week). We sometime have to search for reasons [for price moves], and sometimes we have too many of them!

It was a flat day for DXY, with EUR and GBP relatively quiet (despite the jobs and average earnings beats in the UK at 08:30), and the small fall in JPY (13.6% of DXY) being balanced by a slightly large move up in CAD (9.1%), probably following the Oil price, as the only Canadian data of the day, Housing Starts at 12:15 missed. Gold was also flat. It was therefore surprising to see yields rise 4bp on the ten and two year notes. This was probably due to a $35Bn 3-year auction which raised 2.821%, the highest since May 2007. Italian and German 10-year yields were also up substantially.

Wednesday September 12

Today was fairly flat day for indices, with SPX and NDX moving down very slightly. NKY was also flat. DAX and FTSE posted modest gains, although the former lost these in post-market futures. FTSE held on to finish green, as Oil continued to rise, pushing through the psychological $70 mark after the EIA beat at 14:30, and BNO touching $80 for the first time since May. It was another down day for USD, and this time JPY came into line, so all currencies were up against the greenback. Gold had its best day this month adding nearly $8 (0.65%) and yields fell 1.5bp, both in line with the across-the-board dollar move, not helped by the Core PPI (CPI proxy) miss at 12:30. AUD was particularly strong, in line with the Gold rally, proving again the strong intermarket link between these two instruments.

Thursday September 13

Today was the best day for stocks this week, as China welcomed an invitation to hold fresh trade talks, which traders interpreted that the $200Bn package may be delayed. US markets rose substantially, with SPX adding 0.6%, its best day of the month. NKY had a similar rally, following a weaker yen, which did its usual risk-off thing. NKY/USDJPY divergence is often seen in the Asian cash market, but when the US market is open, the NKY futures contract is closely correlated with USDJPY. DAX and FTSE were more or less flat, after a clear rally in EUR and GBP.

Overall, the currency situation was very much like Monday. DXY pulled back 0.28% after the important CPI print at 13:30 missed (Core 2.2% vs 2.4%). Interestingly, the normally important BoE and ECB rate decisions (11:00 and 11:45, hold, as expected, in both) made little difference to GBP and EUR, their sharp upward moves came later on the CPI print. Similarly, AUD also reacted much more strongly to US CPI that its own jobs report beat at 01:30.

JPY rallied very slightly at that time, but quickly assumed its risk on fade, and ended up down 0.6% on the day at a two-week low. Gold faded with equity risk-on, rather than follow the dollar. Oil pulled back, giving up some of the previous two days gains. The Turkish central bank raised rates by 6.25% to 24%, and TRY rallied 4.22% on the news, although still lower than the price two weeks before.

Friday September 14

Although retail sales missed at 12:30, the previous month was revised upwards, and the Michigan Consumer Sentiment Index beat, and broke through 100, the original 1966 base. This was enough for another equity rally, particularly with NKY which reached to a new seven month high. US and European indices also rallied, but pulled back (after the European close) when President Trump confirmed the $200Bn China tariffs at 16:00. SPX promptly dropped 12 handles and DJIA 143 points. Some of this was recovered later in the session, and added to the earlier gains, SPX, DAX and FTSE all closed green.

Following Turkey, Russia raised rates today, and RUB added 0.48%. With the lighter EM mood and positive stock sentiment, DXY was up 0.42%, and rose across the board, with all currencies and Gold retreating. Yields rose in line, and briefly broke the 3% psychological barrier, to settle at 2.998%, up 3bp on the day. Oil was flat on the day.

Please note all figures and percentages given for daily movement on indices cover the entire cash and futures period in that day.

WEEKLY PRICE MOVEMENT

A downturn for DXY this week (-0.41%), and a reversal of last week’s situation with an increase in all currencies except yen, and indices up. The good news for sterling made buying GBPJPY this week’s best trade. The outstanding index was NKY, which had its best week since March and was this week’s best index trade. Cryptos were unusually stable this week, with BTC in its narrowest range (6.19%) since the crash in January. ETH touched its lowest price in over a year. In FAANGs, NFLX outperformed against a fairly flat performance from the others.

AUDUSD 0.7151 (+0.69%)

EURGBP 0.8902 (-0.39%)

EURUSD 1.1635 (+0.73%)

GBPUSD 1.3070 (+1.21%)

NZDUSD 0.6550 (+0.26%)

USDCAD 1.3047 (-0.90%)

USDJPY 112.06 (+0.92%)

DAX     12124 (+1.49%)

FTSE     7310 (+0.34%)

NIFTY   11515 (-0.64%)

NKY     23243 (+4.20%)

SPX    2906.2 (+1.16%)

GOLD  1193.60 (-0.24%)

OIL     68.96 (+1.76%)

BTCUSD   6477 (+1.28%)

ETHUSD 208.49 (-3.10%)

FB     162.32 (-0.44%)

AAPL   223.84 (+1.15%)

AMZN  1970.19 (+0.93%)

NFLX   364.56 (+4.55%)

GOOGL 1177.98 (+0.03%)

(Crypto prices are given as at 0000GMT Saturday, after the other markets close.)

NEXT WEEK (High volatility items are in bold)

Monday September 17

US-Canada trade talks resume today, with Thursday being a deadline for the final report on Sep 30. The $200Bn China tariffs confirmed on Friday could start at any time. The NY Empire State manufacturing index print is at 12:30, but the only important news of the day is Eurozone CPI, and even this is usually a non-event, as the constituent countries have already reported.

09:00 EUR Eurozone CPI (est 2% prev 2%)

Tuesday September 18

No important US releases today. The minor Redbook Index (a proxy for Retail Sales, which was released last week and is itself a proxy for CPI) is released at 13:55. In the EM arena, there are new polls out for the presidential race in Brazil, and a rate decision on HUF from the MNB (Magyar Nemzeti Bank, Hungary’s CB). HUF is down 7.89% against USD so far this year, although it is off its lows. Hungarian CPI is also released today. There is a small possibility of some trade dialogue between China and the US at UN meetings held today. North and South Korea start a two day summit. ECB President Draghi speaks at 07:15. The RBA minutes are unlikely to surprise.

01:30 AUD Australian House Price Index (QoQ)

01:30 AUD RBA Meeting's Minutes

14:00 NZD GDT Milk Index (time approx.)

20:30 WTI API Stock

22:00 NZD NZ Westpac Consumer Survey

23:50 JPY Japan Imports/Exports/Trade Balance

Wednesday September 19

Today is this week’s big day for news. In EMs we have South African CPI at 08:00, the Brazilian rate decision at 17:00, and Argentina GDP at 19:00. The reason we watch these during the current EM crisis is contagion theory. Very bad news from any EM country can precipitate severe moves, which in turn can be reflected in other EM currencies. If the contaminated currency then has further bad news and, say, breaks a key support level, a chain reaction can occur. In mainstream markets, again the US is quiet. The key news of the day is UK CPI, although this is muted as the UK rate decision was last week. BoE Chief Economist Haldane speaks in Estonia at 08:00.

01:30 AUD RBA Assistant Governor Kent speaks

02:00 JPY BoJ Rate Decision/Statement (est -0.1% hold)

04:00 JPY BoJ Press Conference

08:00 GBP BoE MPC Member Haldane speaks

08:30 GBP UK CPI/RPI/PPI

09:40 EUR Germany 10-year Bond Auction (time approx.)

12:30 USD Housing Starts/Building Permits (MoM)

13:00 EUR ECB President Draghi speaks

14:30 WTI EIA Stock

22:45 NZD NZ GDP

Thursday September 20

The Japanese LDP (ruling party) leadership election (by members of parliament) is held today. It is likely that Shinzo Abe will retain the job, but if he didn’t, look out for volatility in JPY and NKY. Three rate decisions today in Switzerland (07:30), Norway (08:00) and most importantly South Africa (13:00). ZAR is down 29.4% from the 11.50 high at the beginning of March. It is also the practical deadline for Mexico to agree NAFTA terms (like Monday was for Canada). ECB Praet speaks at 17:20. UK Retail Sales will be watched closely, given recent dire reports from Debenhams (LON:DEB) and John Lewis (private). The FTSE 350 General Retailer index has been falling heavily since mid-July.

00:00 EUR EU leaders summit (all day)

01:30 AUD RBA Bulletin

08:30 GBP UK Retail Sales

12:30 USD US Jobless Claims

12:30 USD Philadelphia Fed Manufacturing Survey

14:00 USD US Existing Home Sales (MoM)

14:30 CAD BoC Review

23:30 JPY Japan National CPI

Friday September 21

There’s nothing on the calendar today other than the releases., which are mostly Markit PMIs. Canadian CPI and Retail Sales (the same thing) may provide some CAD volatility. Of course for the previous two Fridays, President Trump has hit the markets with tariff announcements. If he does so today, it is more likely to be about NAFTA than China. Apple’s new iPhones are released in-store, cue lines outside shops … or not.

04:30 JPY Japan All Industry Activity Index (MoM)

07:30 EUR Germany Markit PMIs

08:00 EUR Eurozone Markit PMIs

08:30 GBP UK Public Sector Net Borrowing

12:30 CAD Canada CPI/Retail Sales

13:45 USD Markit Services/Composite PMIs

17:00 WTI Baker Hughes US Oil Rig Count

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