Week to May 10th

Trump tweet cast shadow on the week, Trade Talks still unresolve, AUD, NZD brief spikes only

Mon May 06

President Trump tweeted at weekend to confirm that he would be implementing China tariffs on Friday, and although this was the default condition, the confirmation caused SPX to gap down 1.5%, touching 2.2% by the middle of the Asian session, although this reversed when the US opened and the primary index closed down 0.5% on the day. It was a similar story with world indices. The dollar only moved very slightly (DXY -0.08%). Most currencies were up but the basket loss was trimmed by a GBP fade, as no progress appears to be being made on Brexit. Gold was down, surprisingly, and Oil was up 2%. Yields were roughly flat in line with the dollar.

Tuesday May 07

Equity markets slid further today on trade war fears, with SPX down 1.7% and the risk-sensitive NDX down 2%. DJIA posted its worst day since Jan 3. The risk-off assets (bonds, JPY and Gold) all rose, but with risk currencies falling, the net effect on DXY was a rare totally flat day. AUD spiked up 40 pips when the RBA did not cut rates, as a minority of commentators expected, but this was short-lived. Oil’s volatility continued, giving up most of Monday’s gains.

Wednesday May 08

There was some worry that Chinese vice-premier Liu may not even attend the latest talks after the Trump tweet, but it was confirmed they would go ahead tomorrow and Friday. Markets paused, and SPX ended flat, and NKY continued to slide. However, DAX and FTSE were up. We may have been seeing a rotation into (cheaper) European equities.

It was third flat day for the dollar (DXY+0.04%), again a GBP slide was covered by slight appreciation in EUR and JPY (EUR had not moved out of a 35 pip range since Monday). NZD plunged 1.2% in thin trading as the RBNZ cut rates, but quickly recovered to its opening level a few hours later. A later fade ended the Kiwi 0.4% down on the day. Both Gold and Bonds rallied then collapsed quickly to end the day lower, despite there being no obvious triggers. Oil was up slightly.

Thursday May 09

A fourth day of trade gloom was only slightly mitigated by President Trump saying he had received a “beautiful letter” from his counterpart in China, moving SPX from a low of 1.5% to ‘only’ 0.3% down at the close. Other indices followed suit. DXY finally made a noticeable move, down 0.17%, largely due to a sharp move in EURUSD which shot up 0.5% in 30 minutes as the US opened. There was no European news to prompt this, so it may have been a rotation into EUR similar to the equity rotation we mentioned yesterday. Most currencies (and Gold) were up, although AUD only managed to end flat. Oil was down in line with stocks.

Friday May 10

Despite the trade talks failing [to produce an agreement], positive remarks from US TreasSec Mnuchin and Vice-Premier Liu produced an end-of-week rally which put indices into positive territory, but still posting the worst week of 2019. USD paid little attention to the CPI miss at 1230, the only notable move was a big surge in CAD which added 100 pips (0.75%) on the Canadian NFP beat. DXY was down 0.1% on the day, with very slight appreciation across the board (including Gold and Oil). Yields were fairly flat.

WEEKLY PRICE MOVEMENT

All indices fell, with the NIFTY falling furthest. Last week the most volatile pair was GBPJPY up 2.41%, this week it’s down 2.38%. Yet another crypto rally, and notably Bitcoin added another 14% over the weekend. FANGs were all considerably further down than NDX as a whole.  

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)

• German and Eurozone GDP
• US Retail Sales but little else
• Option expiration week
• Several CB speakers

Monday May 13

A quiet start to the week with no significant European or US news. Markets are closed in Hong Kong. Fed Rosengren (hawk, voter) and Clarida (vice-chair) speak today. There is an election in the Philippines.

01:30 AUD Aus Investment Lending for Homes

02:15 CNY China FDI - Foreign Direct Investment (YTD) (YoY)

05:00 JPY Japan Leading Economic Index

21:30 CAD BoC Lane Speech

Tuesday May 14

All the news is from Europe today, with another day of nothing from the US. Fed George (hawk, voter)speaks today.

06:00 EUR Germany CPI (e1.7% p2.1%)

08:30 GBP UK Unemployment/AHE (Core AHE e3.4% p3.4%)

09:00 EUR Eurozone & Germany ZEW Sentiment

20:30 WTI API Oil Stock

Wednesday May 15

After the simultaneous German and Eurozone GDP, we have US Retail Sales and Canadian inflation, both at 1230. Expected USDCAD volatility. Fed Barkin (hawkish, non-voter) speaks today. NDX heavyweight CSCO reports after the bell. There are rate decisions on RON and PLN.

00:30 AUD Aus Westpac Consumer Confidence

01:30 AUD Aus Wage Price Index (QoQ)

02:00 CNY China Retail Sales (YoY)

02:00 CNY China Industrial Production (YoY)

02:00 CNY China NBS Presser

06:00 EUR Germany 19Q1 GDP (prelim) (QoQ e0.3% p0.0%)

09:00 EUR Eurozone 19Q1 GDP (prelim) (QoQ e0.4% lunch.)

12:30 USD US Retail Sales Apr (Control Grp e0.4% p1.0%)

12:30 CAD Canada CPI (Core YoY e1.8% p1.6%)

13:15 USD US Industrial Production (MoM)

14:30 WTI EIA Oil Stock

Thursday May 16

The most important print of the day is the Australian jobs report. DJIA component WMT reports before the bell. There are rate decisions on IDR and MXN.

00:00 EUR Eurogroup Meeting (all day)

01:30 AUD Aus NFP/UnEmp (NFP e14k p25.7k)

02:45 AUD RBA Bullock speech

08:15 EUR BuBa President/ECB Weidmann speech

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

12:30 USD US Jobless Claims

12:30 USD Philly Fed Manufacturing Survey

17:30 GBP BoE Haskel speech

21:30 NZD Business NZ PMI

Friday May 17

Today is monthly OpEx day, so expect additional volatility. The key release is the Michigan Consumer Sentiment Index. Markets are closed in Denmark and Norway. This weekend is the Australian Federal Election, and the results from India are due next week.

00:00 AUD Aus Consumer Inflation Expectations

09:00 EUR Eurozone CPI

14:00 USD Michigan CSI (prelim) e97.2 unch.

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 Jul 20th

Monday July 16

The week opened with little market movement from the Trump-Putin meeting, but a strong effect from 3.79% plunge in the price of Oil. (BNO was down 4.6%), on concerns about Libya production resumption, and OPEC output increases generally. Most markets were down, particularly FTSE (down 0.8%), which is an oil proxy, but oil-free DAX was slightly up. SPX was helped by gains in XLF (after the BAC beat on earnings) balancing a 1.2% fade in XLE, leaving the primary index only 0.1% down. The big event was NFLX earnings. This over-extended stock actually beat on EPS, but underwhelming subscriber growth precipitated a 13% drop after hours. Other NDX heavyweights dropped in sympathy, as QQQ trades hit stops.

It was a quiet day for USD, with hint of downside across the board. DXY down 0.19%. Gold was flat in line. Surprisingly US Treasury 10-year bond yields were 3bp up, and the yield curve (US10Y-US02Y) widened by 1bp. NZD shrugged off the CPI miss at 22:45.

Tuesday July 17

Jay Powell’s optimistic Humphrey-Hawkins testimony at 14:00 delivered a Turnaround Tuesday in both equities and USD. All indices rallied strongly, with NDX, which opened 0.9% lower, but closed 0.63% high posting a prominent bullish engulfing candle. GS and JNJ both beat, but only the latter advanced.

The risk-on indicators (Gold -1.04% and JPY -0.53%) fell noticeably, as did all other currencies. GBP fell particularly hard on further Brexit worries, as the UK ruling Conservative party continues to squabble internally. Average earnings, the first of the three UK prints this week came in as estimated. 10-year yields were up 1bp, but the two year note advanced 2bp, cancelling Monday’s curve widening. Notably the 3-month note rose 4bp to 2.02% on Powell’s remarks, the highest yield in a decade. Oil slid slightly ahead of the API stock miss.

Wednesday July 18

With the second day of upbeat Powell testimony, It was a flatter, but still positive day for USD, with Europe weakened by the CPI misses in the UK (08:30) and Eurozone (09:00). All currencies (and Gold) dipped down against the greenback in the Asian and European sessions, but AUD, JPY and CAD climbed back later to post modest gains, the latter helped by Oil reversing back up by over a dollar, despite the EIA miss at 14:30. The net effect was a flat (up 0.06%) DXY, although USDJPY did break 113 intraday, a six-month high. Equities showed a similar pattern, flatter but still up, except NKY which dipped slightly. 10-year yields were up 2bp widening the curve as the 2-year bond remained flat. AA earnings beat, but the stock fell as 2018 guidance was downgraded because of tariffs. AA operates three smelters in Canada, which will be subject to tariffs.

Thursday July 19

Equities fell today on trade war concerns again. The exception was FTSE which managed a modest gain, buoyed by a weak GBP which hit a 10-month low, after the Retail Sales miss at 08:30 added to Wednesday’s CPI miss. Chinese stocks also fell and CNY fell to a 12-month low against USD.

USD had been doing well until President Trump said he was “not thrilled” by the Federal Reserve’s interest rate hiking policy and said a strong dollar “puts us at a disadvantage”.  The comment, at 17:00, immediately knocked 0.54% off DXY, and 0.71% off USDJPY. Some recovery, coupled with GBP (which hit a new 2018 low) and an equally weak CAD left DXY flat for the day. AUD (not part of DXY) was down 0.57%, despite a stellar jobs beat (51k vs 17k estimate). Gold was down $3 after earlier touching $1211.45 a 12-month low. WTI Oil was slightly up, but Brent fell, and the spread between the two fell sharply by over $1. Yields fell 3bp in line with the weaker dollar.

Friday July 20

Further remarks by Trump about tariffs on Chinese goods, plus his remarks about the dollar continued to upset markets. All indices were down, particularly DAX which fell over 1%. NDX however manage to end the day flat, after MSFT beat earnings after Thursday’s bell and put on 3.34%, although some of this faded during the day. Some of the movement today can be attributed to option expiry.

The fallout from Trump’s remarks continued, with DXY down 3.34% to 94.48, coincidentally exactly half way between the price on Apr 12 2017 (100.50) when the President said the dollar was “too high” and Jan 25 2018 (88.44) when he said it was too low. On this basis, another halfway point between the current price and the “too low” price would be 92.50. All currencies and Gold were up, CAD helped by the CPI beat at 12:30. The August Oil contract expired, and Oil was 1.2% up at $70.31. However the September contract traded nearly 2% lower. Bond yields did not follow the dollar’s fall, and rebounded to the earlier high of nearly 2.89%

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

There was minimal movement in many currencies this week, especially AUD and CAD. Both NZD and JPY recovered, but GBP was hit by continuing Brexit turmoil. The best trade would have been to short GBPJPY. Indices were even flatter, with the tiny 0.16% drop in NKY being the strongest mover, belying a 400 point intra-week swing. Cryptos recovered, with BTC noticeably outperforming ETC.

AUDUSD 0.7418 (-0.05%)

EURGBP 0.8923 (+1.09%)

EURUSD 1.1719 (+0.30%)

GBPUSD 1.3127 (-0.80%)

NZDUSD 0.6806 (+0.61%)

USDCAD 1.3141 (-0.09%)

USDJPY 111.42 (-0.81%)

DAX     12561 (+0.12%)

FTSE     7666 (-0.01%)

NIFTY   11010 (-0.07%)

NKY     22538 (-0.16%)

SPX    2798.2 (-0.11%)

GOLD  1231.23 (-0.78%)

OIL     68.11 (-3.38%)

BTCUSD   7333 (+17.91%)

ETHUSD 449.09 (+3.92%)

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

NEXT WEEK (High volatility items are in bold)

Another G20 meeting in Buenos Aires for finance ministers and central bankers this weekend. TreasSec Mnuchin is there. Trade wars are likely to dominate.

Monday July 23

Today is fairly quiet. BoE Broadbent (centrist, voter) speaks at 17:00. Singapore inflation is released and Egyptian markets are closed. AABA, which is Yahoo Japan plus the BABA holding reports after the bell.

12:30 USD Chicago Fed National Activity Index 

14:00 USD Existing Home Sales (MoM)

17:00 GBP BoE MPC Member Broadbent Speech

Tuesday July 24

The day opens with German and Eurozone Markit PMIs, with all three prints (Manufacturing, Services, Composite) released simultaneously for each region. There is a public hearing on $16Bn of proposed tariffs on China, for consideration by the USTR. The UK Parliament goes into recess until Sep 4. There is a rate decision in Turkey. The first of three FANG earnings reports this week, GOOGL, comes after the US closing bell.

07:30 EUR Germany Markit PMIs

08:00 EUR Eurozone Markit PMIs

13:00 USD US Housing Price Index (MoM)

13:45 USD US Markit Services/Composite PMIs

20:30 WTI API Stock

22:45 NZD NZ Imports/Exports/Trade Balance

Wednesday July 25

Some political news on Wednesday; Trump campaign manager Paul Manafort’s trial opens in the US, and SecState Pompeo testifies to the Senate Foreign Relations Committee. As well as North Korea, he will be asked questions about the Trump-Putin summit. EC President Juncker is scheduled to meet President Trump for trade talks. The German IFO business sentiment indicators (Current Assessment, Business Climate, Expectations) have similar estimates to last month’s prints. It remains to be seen if they miss, like the investor sentiment figures on July 10 did. FB reports earnings today after the bell, as do KO, BA (before the bell) and V (after the bell). BA, KO and V make up 14.62% of DJIA, with BA 9.61% on its own.

01:30 AUD Australia CPI (QoQ est 0.5% prev 0.4%)

08:00 EUR Germany IFO Business Sentiment Indicators

14:00 USD New Home Sales (MoM)

14:30 WTI EIA Stock

23:50 JPY Japan Foreign investment stocks/bonds

Thursday July 26

Today’s ECB rate set meeting would normally be the big event of the week, but little is expected (ie continuity) at this summer meeting. As always any fireworks will be at the press conference, not the actual rate release. If anything, a tendency toward dovishness is expected. The third FANG earnings report in as many days is AMZN, who report after the bell along with INTC. These two comprise 13.57% of NDX. Also reporting before the bell today is MCD, which is 4.26% of DJIA.

00:00 WTI OPEC meeting (all day)

06:00 EUR Germany Gfk Consumer Confidence Survey

11:45 EUR ECB Rate Decision (est 0% prev 0%)

12:30 EUR ECB statement and press conference

12:30 USD Jobless Claims

12:30 USD Durable Goods

23:30 JPY Tokyo CPI (YoY est 0.7% prev 0.7%)

Friday July 27

The lead story today is the Q2 US advance GDP release, with an estimate of more than double the last one, along with PCE (inflation proxy) figures. Bullard (dove, non-voter) makes the only Fed speech this week. Before the opening bell we have earnings from TWTR (surprisingly not in NDX), and also oil giants XOM and CVX, which together make up 5.51% of DJIA.

12:20 USD Fed Bullard speech

12:30 USD US GDP/PCE (YoY GDP est 4.2% prev 2%)

17:00 WTI Baker Hughes US Oil Rig Count

This report is published every week as an email by MatrixTrade.com - you can sign up to receive it here.