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 Apr 12th

EU grant further Brexit delay, No ECB or Fed surprises, Strong start to earnings season

Mon Apr 08

Last week’s equity rally ran out of steam, and in the absence of important news, equity markets drifted. DAX was slightly down, other markets slightly up. The dollar was firmly down (DXY -0.31%) after two weeks of gains, and all currencies (and Gold) were up with a particularly strong showing from CAD, tracking Oil, which was up nearly 2% on concerns about Libyan politics and conflict.

It is pleasing to see the CAD/Oil link work so well, the loonie tracked black gold pretty much all this week, as seen in the chart below. Yields advanced slightly.

Tuesday April 09
A gloomy growth forecast from the IMF, and a Trump tweet threatening EU tariffs spooked markets, which pulled back today. The DAX move was particularly sharp on the tweet, as you would expect as 20% of the German index is autos, one of Trump’s well-known targets.

The dollar had a flat day, with a slight move up in JPY (and Gold) being matched fades in CAD (as Oil gave up some of Monday’s gains) and GBP (the usual reason). EUR and AUD were flat. Yields were down due to stock-bond rotation.

Wednesday April 10

Today was packed with events, but they had little effect on the market. The ECB and Fed offered nothing new, merely repeating their dovish rhetoric from previous months, and the mixed US CPI at 1230 (MoM beat 0.4% vs 0.3%, Core miss, MoM 0.1% vs 0.2%, YoY 2.0% vs 2.1%) was disregarded. Even the hefty EIA miss (7.03M v 2.29M) at 1430 had little effect on Oil which followed equities up, recovering some (Europe/Japan) or all (US) of Tuesday’s losses.

DXY slipped slightly (-0.11%) largely due to a GBP recovery after the GDP beat at 0830. EUR did crash 40 pips when ECB Draghi spoke at 1230, but this was recovered in four hours. Of course this may have been caused by the simultaneous CPI print (as CAD made a similar move, as did yields, which stayed down). Despite the equity recovery, Gold and JPY continued to advance, as counterintuitively did AUD.

Thursday April 11

Equities stalled today, with most markets flat. DAX and FTSE dumped at the European open, probably in disappointment at the Brexit 6-month (and not 12-month extension) but quickly recovered. The dollar was slightly up (DXY +0.26%) but evenly (all currencies down) up after positive comments on the US/China situation from TreasSec Mnuchin.

Despite flat indices, there were mixed messages from the usual indicators. JPY and Gold gave clear risk-on signals. The yen was the weakest currency today, and Gold fell 1.39%, its worst day this month. However, yields rose 3bp, and Oil gave up 2% from Wednesday’s high.

Friday April 12

The long awaiting earnings season opened with a bang with banking giant JPM beating estimates and filing the highest ever first quarter profit for a US bank. It added 4.6% on the day. WFC also beat on EPS but missed on revenue and its stock fell 2.6%. DIS gapped up 10% on news of their new streaming service. SPX is now only 0.81% off its all-time high, and NDX is only 0.45% away, a remarkable recovery from the December lows. A sharp rise in yields signalled further bond-stock rotation, and Oil followed stocks although giving up those gains into the close.

Other world indices followed suit with the exception of FTSE which collapse on a very strong GBP rally, although this faded after European equities closed. Overall DXY continued its downward trending for the week with all currencies up, except of course JPY (and Gold).

WEEKLY PRICE MOVEMENT

Equity markets were directionless for much of the week, only rallying on Friday. NDX was the best performer. In forex, USD finally had a pullback week, with DXY shedding 0.53%. The best performer was, unusually, AUDJPY up 1.21%.  FANGs were fairly flat, except for NFLX, which pulled back on the DIS streaming channel announcement. DIS was up 13% on the week, its best for 10 years. Cryptos went back to sleep after a couple of wild weeks.

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)

Monday April 15

The four-day pre-Easter week opens with little scheduled news, so attention will be on the next two banks, GS and C who report before the bell. GS is 5.26% of DJIA. Fed Evans (2019 voter, centrist) speaks at 1700, and BoE Haskel (centrist) is on an hour earlier. It is Tax Day in the US, so expect additional volatility. Markets are closed in Vietnam, Thailand and Sri Lanka.

14:30 CAD BoC Business Outlook Survey

16:00 GBP BoE Haskel speech

Tuesday April 16

A big day on earnings with BAC, and JNJ and UNH (together 9.62% of DJIA) reporting before the bell, and tech giants IBM and NFLX reporting after the close. Fed Rosengren (hawk, 2019 voter) speaks at 0000. Markets are closed for a second day in Thailand for the Songkran Festival.

00:00 USD Fed Rosengren speech

01:30 AUD RBA Meeting Minutes

02:00 CNY China NBS Press Conference

08:30 GBP AHE/Unemployment/Claimant Count Change (AHE e 3.4% uc)

09:00 EUR ZEW Sentiment Surveys (Econ Sentiment e -11 p -3.6)

12:00 NZD GDT Milk Index (time approx.

13:15 USD US Industrial Production (MoM)

20:30 WTI API Oil Stock

22:45 NZD NZ CPI (e 1.8% uc)

23:50 JPY Japan Imports/Exports/TB

Wednesday April 17

The earnings reports continue today, with banker MS before the open, and AA after the close. UK inflation will be watched closely, now the immediacy of Brexit is muted. Fed Bullard (dove, 2019 voter) speaks on the economic outlook. Markets are closed in India and for a half-day in Norway. There is a rate decision on HKD, and a general election in Indonesia (incumbents leading in polls).

02:00 CNY China Retail Sales/Industrial Production

02:00 CNY China NBS Press Conference

02:00 CNY China Q1/19 GDP (YoY e 6.3% p 6.1%)

04:30 JPY Japan Industrial Production (YoY)

08:30 GBP UK CPI/RPI/PPI (Core CPI YoY e 1.8% uc)

09:00 EUR EZ CPI (Core YoY est 0.8% unch.)

12:30 USD TB (Feb)

12:30 CAD Canada CPI (BoC Core p 1.5%)

14:30 WTI EIA Oil Stock

18:00 USD Fed's Beige Book

Thursday April 18

Today is option expiration date for April and the week as tomorrow is a holiday. DJIA components TRV (before the market) and AXP (after) report today. Markets are closed in the Nordic Countries (except Finland), The Philippines, and most of Latin America for Maundy Thursday. There is a rate decision on KRW.

01:30 AUD Australia NFP/UE (e 12k/5% p 4.6k/4.9%)

06:00 EUR Germany PPI MoM (Mar)

07:30 EUR Germany Markit PMIs (Mfr e 45, p 44.1)

08:00 EUR EZ Markit PMIs (Composite e 51.8 p 51.6)

08:30 GBP UK Retail Sales

12:30 USD US Retail Sales (Mar Control Group e 0.4% p -0.2%)

12:30 USD US Jobless Claims

12:30 USD Philly Fed Manufacturing Survey

12:30 CAD Canada Retail Sales (p -0.3%)

23:30 JPY Japan National CPI

Friday April 19

The USTC is expected to release its report on the USMCA (NAFTA 2). There may also be a report this week (scheduled mid-April) on China currency manipulation. Markets in the US and Europe are closed today for Good Friday. Asia remains open. Note that Europe and Australasia are also closed on Monday. There are no earnings reports of note, and only one news item. Futures trading and forex remain open.

12:30 USD US Building Permits/Housing Starts

17:00 WTI Baker Hughes Rig Count

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