Week to Mar 7th

Growth forecast cuts in China, Europe and Canada, Worst US TB since 2008

Mon Mar 04

Despite encouraging remarks from President Trump at the weekend, and another call for a weaker dollar, a rally in China during the Asian session did not prevent optimism from fading in the US markets and SPX close down 0.4%. DAX and NKY followed suit although FTSE advanced as GBP faded some its Brexit hopes gains. Yields fells on stock-bond rotation.

President Trump also called for a weaker dollar again, but this had no effect, with all currencies except JPY declining slightly, in line with the equity softening. Gold fell in line, although Oil managed to move up after Friday’s sharp fall.

Tuesday March 05

Mixed US data left equities directionless today. The situation was better in Europe after UK, German and Eurozone PMI beats at 0855, and DAX and FTSE were both up slightly. The dollar benefited from continuing EUR weakness ahead of the ECB meeting, with DXY advancing 0.24%, and CAD and JPY also fell slightly, and GBP was flat, as was Gold. Oil was choppy but ended slightly up, whereas yields fell for a second day. AUD hardly moved after the rate hold.

Wednesday March 06

Markets faltered again today on the US trade balance miss at 1330, the worst deficit since 2008, together with the ADP miss at the same time, and all indices were down, even FTSE. Yields were down 3.2bp, and JPY was up in line with the risk off mood. DXY was flat (as was Gold), with small recoveries (after two days decline) in EUR and GBP balancing a sharp drop in CAD (only 9.1% of the basket) after gloomy growth forecasts from the BoC at 1500 and mixed Ivey PMIs at the same time. AUD dropped sharply by nearly 1% on the Australian Q4 GDP miss. Oil ended slightly up, with the usual choppiness around the EIA print at 1530. The headline missed, but the Gasoline estimate beat.

Thursday March 07

Another day, another problem. Following the record US trade deficit and the BoC forecast, today the ECB downgraded growth forecasts for the giant Eurozone, and more significantly reversed policy from tightening (the end of bond buying in December) back to easing by a new TLTRO program. The forecast was expected, the TLTROs were not, and EUR fell 1.27% during the next six hours. US, Japanese (futures), and UK equities accelerated their fall. DAX had a short currency related spike up and then joined them.

DXY had its best day since June 2018, and rose 0.75%. As you would expect EURJPY moved even more (down 1.18%). Other currencies moved down, although notably, CAD did not suffer from its usual risk aversion, having softened the day before. Gold was flat. Oil was up slightly again, staying in the 56.50-57.50 range it has held all week. Yield were down again, following the rotation principle rather than the stronger dollar. This is showing that the dollar was not really stronger, it is just EUR that is weaker, as evidenced by the move down in USDJPY.

Friday March 08

The February NFP miss (20k vs 180k) at 1330 gave us three bad days in a row. Small misses sometime push equities up on the theory that they will delay rate hikes, but this was the third-worst print since 2011, following a stellar (311k) January. No tweet from Trump today! Markets all slid down further, although there was a small rally in the last hour. Notably China fell 4% in Asia well before the NFP release.

DXY was down 0.26%, giving back a third of its Thursday gains, with all currencies up, in particular big moves up in JPY and Gold, and down in Oil in line with the equity fade, although the latter recovered somewhat into the close. The Canadian NFP beat had a surprisingly modest effect, with USDCAD only down 0.28%, no more than DXY as a whole. Yields were down 5bp on rotation or dollar tracking.

WEEKLY PRICE MOVEMENT

Despite the stronger yen, NKY was the biggest index decline this week. The strong yen also made shorting GBPJPY (down 2.35%) the best forex trade of the week. Cryptos went to sleep again after a brief burst of activity last week. Another mixed week for FANGs with a surprisingly strong performance from FB.

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)

• Yet another Brexit ‘high noon’
• BoJ Rate Decision
• US Inflation release
• US/Europe DST disconnect

Monday March 11

Today is the first day of the bi-annual one-hour disconnect between the start of daylight saving (summer) time in North America and Europe. The first effect is the Retail Sales print, an hour earlier for European traders, coming after the worst figure since 2001 last month. Our times remain on GMT, as they will when Europe enters DST.

21:45 NZD NZ Electronic Card Retail Sales (Sunday)

00:00 EUR Eurogroup meeting (all day)

07:00 EUR Germany Industrial Production/Trade Balance

12:30 USD US Retail Sales Jan (Control Group est 0.6% prev -1.7%)

13:00 GBP BoE Haskel speech

Tuesday March 12

Today, we have another attempt by embattled UK PM Theresa May to get her Brexit deal through the British Parliament. The vote seems likely to fail again, at which point the saga moves to later votes in the week. US inflation (one leg of the Fed’s dual mandate) will inevitiably affect USD if it is well off estimates. Fed Chair Powell is due to speak at some time today (unconfirmed).

00:00 EUR EcoFin Meeting (all day)

02:15 CNY China FDI

06:30 AUD RBA Debelle speech

09:30 GBP UK Industrial/Manufacturing Production

09:30 GBP UK GDP MoM

12:30 USD US CPI (Core YoY est 2.1% prev 2.2%)

13:45 USD Fed Brainard speech

19:00 GBP UK Parliamentary vote on Brexit (time approx)

20:30 WTI API Oil Stock

Wednesday March 13

Provided the Tuesday vote fails (as expected), a (free) vote by UK MPs is expected to on whether it is acceptable to exit on Mar 29 without a deal. This is designed to be rejected, and almost certainly will be.  In the middle of this, the UK Spring Statement (Budget) is announced, with possible tax changes. A new US report, the unwieldy-titled Nondefense Capital Goods Orders ex Aircraft has been marked by commentators as important, more so that the normal Durable Goods release at the same time.

10:00 EUR Eurozone Industrial Production s.a. (MoM)

12:30 USD US Core PPI

12:30 USD US Durable Goods

12:30 USD US ND Capital Goods (est 0.1% prev -1%)

12:30 GBP UK Budget Report (time approx)

14:30 WTI EIA Oil Stock

Thursday March 14

If the two previous votes are rejected, today’s British Parliament vote is crucial. This will be to extend the exit date (probably to May 23). There may be amendments for a longer delay, or even a second referendum (polls suggest a new people’s vote would cancel Brexit). This is the least certain and therefore potentially the most volatile for GBP. China’s Industrial Production figures are important, given reactions to recent Chinese data. There is a rate decision on UAH (0.5% cut expected)

00:00 AUD Aus Consumer Inflation Expectations

02:00 CNY China Retail Sales/Industrial Production (YoY)

07:00 EUR Germany CPI (est 1.% prev 1.7%)

12:30 USD US Jobless Claims

14:00 USD US New Home Sales (MoM)

21:30 NZD Business NZ PMI

22:50 CAD BoC Wilkins speech

Friday March 15

After growth downgrades elsewhere last week, traders will be listening carefully for any similar views from the BoJ, so for once, this normally unimportant rate decision and statement may cause some JPY volatility. The Michigan Sentiment Index is estimated to fall further. The miss two weeks ago caused a sharp fall in SPX, and another could do the same.

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

10:00 EUR Eurozone CPI

13:15 USD US Industrial Production (MoM)

14:00 USD Michigan Consumer Sentiment Index (est 93.0 prev 93.8)

18:00 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 them interest you, please click the links. If you want notification when the blog is updated, please follow me on Twitter, Facebook, Stocktwits or Linkedin (all open in separate windows). Details of how I compile the report are here

Week to Mar 1st

Brexit softening of position helps GBP, Tariff delay confirmed, Trump/Kim summit fails

Mon Feb 25

President Trump announced today that as there had been “substantial progress” in the US/China trade talks, he would be postponing the 15% increase in tariffs on $200Bn of Chinese imports. Although Chinese markets soared over 6%, the results were only modest in the US, Japan and Europe, which registered slight gains. DAX even retreated after the cash close. DXY had a flat day (as did Gold), with modest moves up in EUR, AUD and GBP being balanced by slight softening of CAD and JPY. Yields 

We have highlighted before the effect of President Trump’s tweets on his two favorite market subjects, the value of the dollar and the price of oil. Today he tweeted again that oil was too high, and  called on OPEC to “relax” Brent crude. The prices of both BNO and WTI quick dropped 3.2%.

Tuesday February 26

The big story of the day was UK PM May giving ground on Brexit, saying that if a vote for a deal could not be reached in time for the Mar 29 deadline, she would seek an extension. Sterling added over 1% on the news, which inevitably caused FTSE to fall (71% of the revenue of FTSE companies is from outside the UK). NKY moved down sharply in the cash session but recovered in futures to end the day flat, as did a volatile SPX. DAX continued to move independently and ended up.

The miss on US Housing Starts and Home Prices led to a weaker dollar, with DXY down 0.39%. Although not as strong as GBP, all currencies and Gold were up. Oil recovered 1% after the tweet crash. Yields were down in line with the weaker dollar. The Powell Humphrey-Hawkins testimony (summary: ‘patient’) did not add anything to what we already know.

Wednesday February 27

Another down day in equities as USTR Lighthizer testified to the House that a China trade deal was not yet certain, and would be a “long process”. Although not directly market-related, it didn’t help that Pakistan shot down two Indian military jets in Kashmir. Also the US Trade Balance (1330), Capital Goods, and Factory Orders (both 1500) reports were all down on the previous figure. World markets followed suit, although NKY managed to close flat in futures helped by the weaker yen.

The Brexit softening by PM May was accompanied by softening from both the hardline (want out, don’t care about a deal) ERG group in her party, and also the opposition Labour Party. Sterling continues to rise to its highest level in nearly eight months. Further oil recovery on the strong EIA beat at 1530 helped CAD, which despite a miss on annualised CPI, improved core monthly to 0.3% from -0.2% previously. Other currencies and Gold fell, resulting in a flat dollar basket. Yields were unusually up 4bp today, following USDJPY on part two of the Powell testimony.

Thursday February 28

Another down day after the failure of the Trump/Kim summit, where no progress was achieved. Also the long-awaited US Q4 GDP print at 1330, which beat estimates (YoY 2.6% vs 2.3% est, but was still well down on Q3 (3.4%). US Jobless Claims also missed. The markets are also working off an overbought condition after the strong 10-week bull run. Only DAX managed to post a small gain. The GDP print gave DXY a small boost (up 0.11%) with all currencies (even GBP) and Gold softening. Yields were up again. Oil continued its post Trump tweet recovery.

Friday March 01

Markets recovered again today, buoyed initially by the Chinese Manufacturing PMI beat at 0145, and German (0855) and Eurozone (1000) unemployment beats. The mood continued into the US Open, but was sharply halted by the double whammy of misses on the Michigan Consumer Sentiment (93.8 vs 95.7) and ISM Manufacturing PMI/Prices Paid at 1500. SPX dropped 0.73% in the two hours after the print. However, it then went on to fully recover into the close.

The GDP feelgood factor continued today with DXY up 0.22%, and all currencies and Gold down. However over half of the move was a plummet by CAD after the severe Q4 YoY GDP miss (0.4% vs 1.2%). The loonie is 9.1% of DXY, and fell 1.32% after the print, meaning if it had gone the other way, DXY would have been flat. The CAD move was accentuated by a 2.5% drop in Oil, fuelling by the ISM PMI miss.

WEEKLY PRICE MOVEMENT

A strong recovery from DAX this week, as it beat US indices and was the best performer. For the first time this year, we have a strong divergence in forex, with GBPCAD easily the biggest mover, up 2.26%. Last week’s crypto rally was short-lived, with BTC and ETH down again. A mixed week for FANGs, which were more volatile than the underlying NDX.

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.

• Rate decisions in EUR, CAD and AUD
• Non-farm payrolls in US and Canada
• Australian and Eurozone Q4 GDP
• China’s main political conference

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

Monday March 04

A quiet start to a busy week, with limited scheduled news, so as usual, the trade war and Brexit will dominate. Brazil and Argentina are closed for two days for Carnival. India is also closed for Mahasivarathri Day.

00:30 AUD Aus Building Permits (MoM)

09:30 GBP UK Markit Construction PM

Tuesday March 05

The 13th National People’s Congress in China is expected to produce economic growth targets going forward, and review intellectual property and technology transfers, key areas in the trade dispute. The key scheduled event is the RBA rate decision. Fed Rosengren (hawk, 2019 voter) speaks at 1230, followed two hours later by Kashkari (dove, 2020 voter). Barkin (hawk, non-voter) is also on. Brazil and Argentina remain closed.

01:45 CNY China Caixin Services PMI

03:30 AUD RBA Rate Decision/Statement

07:00 EUR Germany Retail Sales (MoM)

09:00 EUR Eurozone Markit PMI Composite

09:30 GBP UK Markit Services PMI

10:00 EUR Eurozone Retail Sales (YoY)

14:00 NZD NZ GDT Milk Index

14:45 USD US Markit Services/Composite PMI

15:00 USD US ISM Non-Manufacturing PMI

15:00 USD US New Home Sales (MoM)

19:00 USD US Monthly Budget Statement

21:30 WTI API Oil Stock

23:01 GBP UK BRC Like-For-Like Retail Sales (YoY)

Wednesday March 06

The Canadian rate decision is expected to be a hold, but watch out for Gov Poloz remarks. It’s Australia’s turn to report Q4 GDP, which we have seen has moved markets in other countries. The ADP ‘sneak preview’ jobs estimate is 190k, 10k more than the NFP estimate for Friday. Fed Williams (hawkish, 2019 voter) and Mester (hawk, 2019 voter) both speak at 1700. There are also rate decisions on TRY and PLN. Brazil and Argentina reopen.

00:00 CNY China PPI

00:30 AUD Aus GDP Q4

12:15 GBP BoE Cunliffe speech

13:15 USD US ADP Employment Change

13:30 USD US Trade Balance

15:00 USD US Factory Orders (MoM)

15:00 USD US New Home Sales (MoM)

15:00 CAD BoC Rate Decision/Statement

15:00 CAD Canada Ivey PMI

15:30 WTI EIA Oil Stock

19:00 USD Fed Beige Book

21:30 AUD Aus AiG Performance of Construction Index

Thursday March 07

Another day, another rate decision, this time the key Eurozone figure. A hold is virtually certain, but as always it’s the report and press conference 45 minutes later which will be examined. The third day of Fed speeches as well, this time Brainard (was dovish, now centrist, 2019 and 2020 voter) is on at 1715. BoE Tenreyro speaks at 0930.

00:30 AUD Aus Retail Sales s.a. (MoM)

00:30 AUD Aus Imports/Exports/Trade Balance

05:00 JPY Japan Leading Economic Index

09:30 GBP BoE's Tenreyro speech

10:00 EUR Eurozone GDP Q4

12:30 USD US Jobless Claims

12:45 EUR ECB Rate Decision/Statement

13:30 USD US Trade Balance

13:30 USD US Nonfarm Productivity/Unit Labor Costs

13:30 EUR ECB Draghi Presser

13:30 CAD Canada International Merchandise Trade

23:30 JPY Japan Overall Household Spending (YoY)

Friday March 08

Simultaneous US and Canadian NFPs offer strong volatility for USDCAD today. As usual, the AHE figure may be more important than the jobs print itself. This is the final day before the US/Europe summer time disconnect. For the next three weeks, for Europeans, US markets will appear to open an hour earlier (1330 GMT), and for Americans, Europe will appear to run an hour later, closing at 1230 EDT. ECB Mersch (hawkish) speaks at 1630. Fed Chair Powell may also speak.

02:00 CNY China Imports/Exports/TB

09:30 GBP Industrial Production (MoM)

13:30 USD US NFP/AHE/UE/Participation/Productivity

13:30 CAD Canada NFP/UE/AHE/Participation

18:00 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 them interest you, please click the links. If you want notification when the blog is updated, please follow me on Twitter, Facebook, Stocktwits or Linkedin (all open in separate windows). Details of how I compile the report are here

Week to Feb 22nd

Four day week in US markets, Oil climbs for a second week, FTSE100 underperforms

Mon Feb 18

US markets were closed today for President’s Day (George Washington’s birthday), and SPX and bond futures were flat, as was Oil. However Asian markets were strong. The sentiment did not transfer to DAX, which was down. FTSE fared better after news of a firm post-Brexit Australian trade agreement, although it sold off at the very end of the day to end flat. Without US news, the dollar was directionless. DXY was down a mere 0.15%, with AUD and JPY up, but other currencies were up slightly.

Tuesday February 19

Despite an EPS beat WMT, US markets were only slightly up (DJIA was flat), with little reaction to the confirmation from President Xi that trade talks would continue in the US, after the sixth(!) round finished in Beijing. Other markets were down in their cash sessions but recovered in late futures trading to end roughly flat. DXY was down 0.29%, with notable moves up from all currencies and Gold, the exception being JPY which fell 0.3% on a dovish statement from BoJ Governor Kuroda, before ending the day flat. Oil was also flat on the day, 10-year yields were down 3bp in line with USD.

Wednesday February 20

Equities moved up today after the Fed minutes offered little in the way of surprises, given the various speeches since the last release. There was little other news to move markets. DXY fell slightly at the time of the release but ended the day flat. Currencies showed slight and indecisive moves, with GBP and JPY slightly up and CAD a little down. Oil rose sharply at the US Open to finish the day over 1% up (despite the one day late API report which missed). Yields were flat.

Thursday February 21 

The mood changed today as the Mar 1 tariff hike deadline approaches. After a rally in futures before the open, SPX fell fast, and ended the day 0.4% down. Other markets followed suit, with FTSE falling particularly hard, down 0.85%, following profit warnings from CNA.L and BA.L The German Manufacturing PMI miss (47.6 vs 49.7) had relatively little effect on DAX or EUR, in fact it was yet another flat day for DXY (up 0.10%) with EUR and GBP hardly moved, although JPY and Gold were up, and AUD and CAD were down in line with the risk-off mood, the former losing 1% after a dovish report from Westpac and news of Chinese restrictions on Australian coal. Oil gave up a little of yesterday’s gains. Yields were surprisingly up 4bp.

Friday February 22

Today President Trump said it was “more likely than not” that a China trade deal would happen, and this was enough to reverse Thursday’s decline. All equity markets were up, although non-US markets came off a little after their cash sessions closed. USD was down today, but again it was slight with DXY only down -0.13% due to another flat day on EURUSD. Other currencies, Gold, Oil and bond prices (inverse to yields) were up in line. 

WEEKLY PRICE MOVEMENT

NKY was the strongest index this week, adding 2.51%. In a reversal of last week where GBPNZD was the weakest pair, this week it was the strongest. It was a strong week for cryptos after months in the doldrums. Given the 0.50% gain in NDX, it was no surprised that FANGS were directionless.

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)

• Powell Humphrey-Hawkins Testimony
• Trade war deadline approaches
• Another key Brexit debate and vote
• Delayed US Q4 GDP released
• 
  

Monday February 25

As earnings season winds down, we have TCEHY (one of the Chinese ‘BAT’ tech stocks) and Dow component HD reporting before the bell. Fed Kaplan (dovish, 2020 voter) and Vice-Chair Clarida (centrist, 2019 and 2020 voter) are on a panel at 1500. There is little in the way of economic news, so as ever, macro focus will be on the China trade talks and Friday’s deadline.

21:45 NZD NZ Retail Sales (Sunday)

05:00 JPY Japan Leading Economic Index

13:30 USD Chicago Fed National Activity Index 

Tuesday February 26

After BoE Governor Carney testifies at the UK parliament inflation report hearings, and embattled UK PM May gives her latest speech on Brexit progress with the EU (not much, we expect), we have Fed Chair Powell giving his semi-annual Humphrey-Hawkins testimony to the House today.

07:00 EUR Germany Gfk Consumer Confidence Survey

10:00 GBP UK Inflation Report Hearings (time approx.)

12:30 GBP UK PM May speech (time approx.)

13:30 USD US Building Permits/Housing Starts

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

14:00 USD Fed Powell Humphrey-Hawkins Day 1 Testimony

15:00 USD US Consumer Confidence

21:30 WTI API Stock Report

21:45 NZD NZ Imports/Exports/TB

Wednesday February 27

Today President Trump starts a two-day meeting with DPRK leader Kim Jong-Un in Hanoi. The Senate have their turn with Jay Powell, with an unscripted Q&A. There will be yet another vote on Brexit, based on any changes reported by PM May the day before. The EIA stock report returns after several weeks.

10:40 EUR DE10Y Bond Auction

13:30 USD US Durable Goods

13:30 CAD Canada CPI

14:00 USD Fed Powell Humphrey-Hawkins Day 2 Testimony

15:00 USD US Pending Home Sales (MoM)

15:00 USD US Factory Orders (MoM)

15:30 WTI EIA Stock Report

18:00 GBP UK Parliamentary vote on Brexit

23:50 JPY Japan Industrial Production (YoY)

23:50 JPY Japan Retail Trade

Thursday February 28

The main release of the day, if not the week is the delayed preliminary 18Q4 US GDP report. Three Fed speakers today, Bostic (dovish, non-voter) at 1350, Harker (dove, 2020 voter) at 1715, and Kaplan again at 1800.

00:01 GBP UK Gfk Consumer Confidence

00:30 AUD Aus HIA New Home Sales (MoM)

01:00 CNY China NBS PMIs

13:00 EUR Germany CPI

13:30 CAD Canada Current Account

13:30 USD US Jobless Claims

13:30 USD US Preliminary GDP/PCE

14:45 USD Chicago PMI

21:30 AUD Aus AiG Performance of Mfg Index

21:45 NZD NZ Building Permits s.a. (MoM)

23:30 JPY Tokyo CPI/Unemployment Rate

Friday March 01

Today is the first day of the new month, and of course the end of the 90-day trade truce, and the date China tariffs are increased from 10% to 25% on $200 billion of goods. The shutdown-delayed December US PCE report (the Fed’s preferred inflation proxy) is released. Fed Bostic (dovish, non-voter) speaks at 1815. Italy presents its latest budget at 1000, which may result in a fresh row with Brussels. Markets in South Korea are closed.

01:45 CNY China Caixin Manufacturing PMI

08:30 GBP UK Markit Manufacturing PMI

08:30 EUR Germany Markit Manufacturing PMI

08:55 EUR Germany Unemployment Change/Rate s.a.

10:00 EUR Eurozone Unemployment Rate

10:00 EUR Eurozone CPI

13:30 USD US Core PCE Price Index/Personal Spending

13:30 CAD Canada GDP

14:45 USD US Markit Manufacturing PMI

15:00 USD Michigan Consumer Sentiment Index

15:00 USD US ISM Manufacturing PMI/Prices Paid

18:00 WTI Baker Hughes Rig Count

23:30 JPY Japan Jobs/applicants ratio

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 them interest you, please click the links. If you want notification when the blog is updated, please follow me on Twitter, Facebook, Stocktwits or Linkedin (all open in separate windows). Details of how I compile the report are here

Week to Feb 15th

Possible China tariff extension, Second shutdown averted, Big miss on US Retail Sales

Mon Feb 11

The threat of another government shutdown and President Trump confirming no meeting with his counterpart in China before the Mar 1 tariff deadline led to caution in the US equity market today, with SPX and NDX closing flat, although non-US markets were comfortably up, after last week’s Thursday/Friday pullback, following a bid in China markets as they reopened. DXY—which likes trade war tension—added 0.45% and broke 97 to make a new 2019 high. All currencies, Gold, Oil and 10-year bond price (inverse to yields) were down in line.

Tuesday February 12

A possible deal to avert the shutdown (despite Trump being “unhappy”) was enough to rally markets today with SPX up 1.3%. NDX and DJIA did even better. The story was the same in Europe and Asia, with NKY sharply up at the open after Monday’s holiday in Japan. FTSE could only break even on a stronger GBP. The dollar had a ‘Turnaround Tuesday’ and lost ground against all currencies. Gold and Oil were up in line, but bond yields carried on rising, up 2bp today, the same as yesterday. Fed Chair Powell’s speech had little effect.

Wednesday February 13

Global stocks continued upwards, as President Trump hinted at an extension (to the Mar 1st China tariff hike from 10% to 25%) if a “real deal” was close, although the gain (SPX up 0.3%) was muted after Senator Rubio tweeted that buybacks should be taxed. Buybacks are of course a major reason for market strength.

USD was strong overall after the CPI beat at 1330, with DXY up 0.53%. However (only) NZD bucked the trend, adding 1% after RBNZ said there would be no rate cuts for two years. GBP had a brief 70 pip spike on chatter about an Article 50 (Brexit) extension but this soon faded, and all currencies except NZD, and Gold were down. Oil was up again after comments from the Saudi energy minister, and evidence that cuts were being adhered to.

Thursday February 14

A miss on the final German Q4 GDP QoQ and working day adjusted figures at 0700 (although YoY beat, oddly), followed by a severe miss on the shutdown-delayed December US Retail Sales print (Core -1.85% vs +0.10% est) at 1330 (coupled with a Jobless Claims miss), was enough to send SPX sharply down over 20 handles at the US open, and to finish down 0.3% on the day. Global indices went the same way.  The Retail Sales miss also cause an instant spike down in yields and DXY. The basket finished 0.19% down. AUD joined EUR and JPY in appreciating, but GBP was weak all day, after the UK 10-year bond auction only fetched 1.16% (prev 1.27%). CAD was unusual. The relatively unimportant Manufacturing Shipments (MoM, Dec) print missed badly (-1.3% vs 0.2%), but this was enough to soften it by 0.5% (and 0.9% against JPY). Gold was up in line with the weaker dollar, but although Oil continued upwards. DJIA component KO matches EPS estimates, but reduced forward guidance by 1%, shares dropped 7.5% on the news.

Friday February 15

After falling in the European futures pre-market, DJIA soared on Friday, up 1.74% on trade war hopes, as President Xi said the two sides would meet again next week in Washington. The effect was more muted in NDX which is not as trade war sensitive, but global markets rose on the news, with DAX up nearly 2%. The effect was also helped by the Michigan Consumer Sentiment beat at 1500 (95.5 vs 93). After a brief spike up on the Michigan release, DXY ended slightly down as EUR and JPY were for once flat, but less components GBP and CAD rose. AUD was also sharply up on the trade news, helped by an $8 rise in Gold, and oil continued upwards. Yields were up on stock-bond rotation. At the end of the day President Trump decided he would use emergency powers to get his wall money. Markets were not affected.

WEEKLY PRICE MOVEMENT

After being the weakest last week, DAX was the strongest index this week. DXY was only slightly up, with Brexit-troubled GBP the weakest currency. The reversal also applies in currencies, with last week’s loser NZD being the strongest, therefore shorting GBPNZD would have been the best trade. Another quiet week for cryptos and FANGs as the January volatility fades.

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)

• Four day week in US markets
• FOMC minutes hawkish risk
• Wal-Mart completes Dow earnings
• Knife-edge German PMIs

Monday February 18

US Markets are closed for President’s Day (George Washington’s birthday). Asia and Europe are of course open, but as always with US market holidays, a quiet day is expected. There is no significant news.

23:50 JPY Japan Machinery Orders

Tuesday February 19

China Trade talks resume and traders will be looking for soundbites. The earnings season is pretty much over now, but we have the final DJIA component (2.62% weight) China-sensitive WMT reporting before the bell (after last week’s fall in Retail Sales, WMT is the biggest bricks-and-mortar retailer in the world). Fed Mester (hawk, 2019 voter) speaks at 1350.

00:30 AUD RBA Meeting's Minutes

09:30 GBP UK AHE/UnEmp/Claimant Count Change (UnEmp e 3.9% p 4.0%)

10:00 EUR Germany ZEW Sentiment Surveys

14:00 NZD NZ GDT Milk Index

21:30 WTI API Stock

21:45 NZD NZ PPI

23:50 JPY Japan Imports/Exports/Trade Balance

Wednesday February 20

The most important day of the week, when we read the Fed minutes from their January meeting, where they calmed the market. The risks are to a less dovish internal discussion, which could be bearish for equities, ie neutral could be seen as hawkish. Fed Bullard (dove, 2019 voter) speaks in New York today, as does Kaplan (dovish, non-voter) at 1810. Again there is no EIA Oil stock print this week.

00:30 AUD Aus Wage Price Index (QoQ)

07:00 EUR Germany PPI

19:00 USD FOMC Minutes

23:50 JPY Foreign investment in Japan stocks

Thursday February 21 

The German and Eurozone Markit PMIs are more important than usual because the German estimate of 49.9 is just on the wrong side of contraction/expansion, a move back over 50 would be bullish for DAX. Chinese ‘BAT’ company BIDU reports after the bell. Fed Bostic (dovish, non-voter) speaks today at 1250.

00:30 AUD Aus NFP/UnEmp (NFP e 15k p 21.6k)

04:30 JPY Japan All Industry Activity Index

07:00 EUR Germany CPI (e 1.7% p 1.7%)

08:30 EUR Germany Markit PMIs

09:00 EUR Eurozone Markit PMIs

09:30 GBP UK PSBR

13:30 USD Jobless Claims

13:30 USD Philly Fed Manufacturing Survey

13:30 USD Durable Goods

14:45 USD US Markit PMIs

15:00 USD Existing Home Sales (MoM)

23:30 JPY Japan National CPI

Friday February 22

A Fitch credit rating for Italy is expected today, and the risk is to the downside (which may already be priced, you may remember when S&P didn’t change their outlook a few months ago, the MIB soared). Fed Bullard speaks again at 1830, as do Harker (dove, non-voter) and Quarles (hawkish, voter) at the same time. There are rate decisions on COP and LKR.

07:00 EUR Germany GDP

09:00 EUR Germany IFO Sentiment Surveys

10:00 EUR Eurozone CPI

13:30 CAD Retail Sales

18:00 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 them interest you, please click the links. If you want notification when the blog is updated, please follow me on Twitter, Facebook, Stocktwits or Linkedin (all open in separate windows). Details of how I compile the report are here

Week to Feb 8th

Inverted-V week for US equities, European growth downgrade, Dovish RBA

Mon Feb 04

The week opened on subdued note due to the almost complete absence of Asian trading due to the Chinese new Year of the Pig. Japan was open, but NKY was flat on the day,  as were DAX and FTSE, and trading was light generally. Nevertheless Friday’s momentum continued when the US opened, and SPX added 0.7%. on the day. Yields were down on stock-bond rotation, despite a firmer dollar which was up across the board, with currencies and Gold down. Oil was down on the day after briefly touching a two-month high. GOOGL beat on EPS and revenue after the bell, but the stock fell 2%

Tuesday February 05

The buoyant mood continued for another day, with all indices up. FTSE was particularly strong up 2% after an earnings beat from BP (8% of the index), and a sharp drop in sterling following the UK Services PMI miss (50.1 vs 51.0 est) at 0930. This is particularly worrying as the UK prides itself on being a service (ie skills) economy, and the print is only just above the 50 level, the difference between expansion and contraction. So not everything is Brexit, it seems. NKY had faded in the cash session, but was pulled up in futures. DXY was up 0.25% as EUR also faded (on a German PMI miss). CAD was down slightly, whereas JPY was flat. AUD was up after the RBA rate hold, and surprisingly Gold was up $3. Bond yields pulled back 2bp.

Wednesday February 06

The rally ran out of steam today, after mixed earnings reports, and nothing particularly helpful in President Trump’s State of the Union address the previous evening, but it was probably just fatigue after the 16% gains in the last six weeks. Indices were down across the board with SPX off 0.2%. DXY continued to rise, adding 0.32% with all currencies moving down. Gold followed AUD sharply down (the second day that this proxy relationship worked), after a dovish speech from the RBA Governor. Mr Lowe said that “policy was more evenly balanced” (meaning cuts were as likely as hikes). AUDUSD fell 0.5% instantly and 1.92% on the day. NZD fell 1.74% following Australia, and more severely after the jobs report miss at 2145. Oil and JPY were flat. Yields slipped another 1bp. 

Thursday February 07

The mood changed today at 1000 as EC Commissioner Moscovici reported a downgrade of EC growth to 1.3% (from 1.9%) and said that Europe ““does seem to be more affected than other areas by the slowdown in global trade”. Later in the day it was reported that President Trump is not likely to meet Chinese President. Markets were down across the board, around 1% generally, but 2% on DAX on the Europe news.

DXY moved up 0.18%, but there was some variance in currencies. EUR fell on the growth news, and the usual risk-off effects happened, Gold and JPY up, AUD and CAD and yields down. GBP was marginally up. After falling in early trading, it caught a bid on the BoE rate hold, despite a gloomy forecast from Governor Carney. Sell the rumor, buy the news, it seems. Oil fell sharply in line with equities.

Friday February 08

US stocks were more or less flat today, after early selling was followed by a late rally, despite President Trump confirming he would not be meeting his Chinese counterpart before the Mar 1 deadline when Chinese import tariffs rise from 10% to 25%. Other markets were closed when the rally started, and so ended down on the day. DXY was flat. The trend was generally upward, but a surge following the Canadian jobs report (and rise in Oil) left CAD up 0.25%. JPY was surprisingly flat, and yields were down.

WEEKLY PRICE MOVEMENT

DAX was the weakest index this week, clearly diverging from the US. The dollar was up against all currencies, with NZD the biggest casualty. Shorting NZDUSD would have been the best trade. Cryptos staged something of a recovery after several down weeks. The FANG picture was very mixed.

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)

• European Q4 growth preliminaries
• Earnings season coming to a close
• Multiple Fed speakers
• US, UK and China inflation

Monday February 11

Markets re-open in China and Taiwan today after the New Year week-long holiday. The only news of note is the UK preliminary Q4 GDP report.

00:00 EUR Eurogroup meeting (all day)

09:30 GBP UK Preliminary GDP 18Q4 (QoQ est 0.2% prev 0.6%)

09:30 GBP UK Manufacturing/Industrial Production

13:30 USD US Unit Labor Costs

21:45 NZD NZ Electronic Card Retail Sales

Tuesday February 12

With a main session again devoid of news today, Fed Chair Powell’s speech at the ‘Economic Development in High Poverty Rural Communities’ conference in Missouri is the top-billed item. Also on the Fed roster are the two most hawkish members, Mester (2020 voter) at 2330 and George (2019 voter) an hour later. After the bell, earnings are reported from ATVI, which was suggested as an acquisition target for AAPL in a JPM note last week.

00:30 AUD Aus Home Loan/ Home Investment Lending

02:15 CNY China FDI

15:00 JOLTS Jobs Openings

18:45 USD Fed Chair Powell speech

21:00 NZD RBNZ Press Conference

21:30 WTI API Stock

23:30 AUD Aus Westpac Consumer Confidence

Wednesday February 13

An important day with both UK and US inflation figures. There may be another debate today or tomorrow in the UK parliament on Brexit process. More Fedspeak from Bostic (dovish, non-voter) and Mester again, both at 1350. NDX heavyweight CSCO reports after the bell. There is a rate decision on EGP and SEK, the latter is 4.2% of DXY and exceptionally, fell 1.6% last week. There is no EIA oil stock report this week.

01:00 NZD RBNZ Rate Decision/Statement (est 1.75% hold)

09:30 GBP UK CPI/RPI/PPI (CPI YoY est 2.0% prev 2.1%)

10:00 EUR Eurozone Industrial Production

13:30 USD US CPI (Core YoY est 2.1% prev 2.2%)

19:00 USD US Monthly Budget Statement

23:50 JPY Japan GDP

Thursday February 14

USTR Lighthizer and TreasSec Mnuchin resume talks today with China. The Retail Sales print for December, delayed from 16 Jan by the shutdown is released. The German GDP print is important, as a further contraction (not likely) would put the country into a technical recession (two consecutive quarters of falling GDP). DJIA stalwart KO reports before the bell, and crypto-mining vendor NVDA after the close.

00:00 AUD Aus Consumer Inflation Expectations

02:00 CNY China Imports/Exports/Trade Balance

07:00 EUR Germany GDP Q4 (QoQ est 0.1% prev -0.2%)

10:00 EUR Eurozone GDP Q4 (QoQ est 0.2% prev  0.2%)

13:30 USD US Retail Sales Dec (Core estimate 0.0%, prev 0.2%)

13:30 USD US PPI

13:30 USD US Jobless Claims

21:30 NZD Business NZ PMI

Friday February 15

Today is monthly opex day, so expect additional volatility.  KO’s eternal competitor PEP reports before the bell and Chinese ‘BAT’ stock BIDU comes in after the close. The most important print of the day is the Michigan Index at 1500.

01:30 CNY China CPI YoY (est 2% prev 1.9%)

04:30 JPY Japan Industrial Production

09:30 GBP UK Retail Sales

14:15 USD US Industrial Production

14:55 USD Fed Bostic speech

15:00 USD Michigan Consumer Sentiment Index (est 94.5 prev 91.2)

18:00 USD 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 them interest you, please click the links. If you want notification when the blog is updated, please follow me on Twitter, Facebook, Stocktwits or Linkedin (all open in separate windows)

Week to Feb 1st

Mon Jan 28

The rally on Friday was retraced today in equities, as the market started on a sombre note with guidance cuts from CAT and NVDA, and Apple supplier Japan Display (6740.TO) warning that the trade war would affect them “harshly”. SPX fell 0.8% and NDX 1.3%. Non-US indices were likewise down. DXY had a flat day, with slight upward movement in EUR after ECB President Draghi spoke at 1400, and of course JPY (and Gold) being balance by softening elsewhere, particularly in GBP. Oil followed equities down, and US 10-year yields were 1bp lower. A textbook risk-off day.

Tuesday January 29

A second weak day in the markets, although not as bad as Monday saw most indices flat with a little softening. NDX however fell considerably, as tech traders worried about AAPL, which reported after the bell. The big story of the day was another Brexit session in the UK parliament. The defeat of a motion to extend the exit deadline caused a sharp 0.85% drop in GBP, which benefited FTSE. The British index was up 1.29%. Other than sterling, the dollar hardly moved all day, although surprisingly Gold was up $8 to a seven-month high of $1,311. Oil was also sharply up, putting on nearly 3% in an hour in early US trading, as the US imposed sanctions on Venezuela. Yields were down 3bp.

Wednesday January 30

The mood changed on Wednesday. Markets were buoyed initially by AAPL EPS of $4.18, a beat, and a record level, and then, after a dovish statement from the Fed at 1900, markets accelerated further. Oil was up in line with the mood. The clear Fed signal of a pause in the rate hike cycle caused an instant sharp drop in USD and yields. All currencies and Gold were well up on the day, particularly commodity currencies AUD and CAD which had already been rising on the risk-on mood. FB reported a beat after the bell and the stock rose 11% in AH trading. MSFT also beat, but fell 2%, Given their net weights, that was only barely positive for NDX.

Thursday January 31

The buoyant mood continued today after the Fed statement and the FB beat. SPX and NDX were up, although DJIA was flat. DAX had a very unusual and independent day, driven for once by the German finance sector. After an early morning rally, worries about the proposed DB/Commerzbank merger sent both stocks down sharply, and then competitor Wirecard fell 25% on reports of fraud in their operations. The German index recovered after the cash close, but still ended down on the day.  FTSE was up as GBP fell again.

The poor Eurozone preliminary Q4 GDP figure sent EUR down, retracing most of its Wednesday gains, although other currencies were fairly static, as was Gold. However as EUR is the largest component of DXY, the basket advanced by 0.16%. Yields continued to fall in line with the Fed policy. Oil was flat on the day. AMZN reported record EPS and revenue, but reduced forward guidance caused the stock to drop 5% overnight.

Friday February 01

Another outstanding NFP (304k vs 168k) at 1330 had surprisingly little effect on the market, but this was partly due to a sharp (222k vs 312k reported) downward revision of the December print, a miss on unemployment, and general defocusing on the result because of the shutdown. The ISM PMI beat at 1500 also failed to register. There was a brief rally on reports that Robert Lighthizer and TreasSec Mnuchin were considering another trip to China, but other than FTSE (up on weak GBP), indices ended the day flat.

JPY followed EUR on Thursday in retracing its Fed gains. Yields similarly turned up to erase their Thursday losses. A decline in CAD and EUR matched the JPY move, and DXY ended the day flat, as did Gold. Oil was up again to close 3.5% up on the week.

WEEKLY PRICE MOVEMENT

The FTSE was by far the strongest index this week as GBP fell after the latest Brexit failure. The weakest currency was Brexit-plagued GBP and the strongest was CAD. Selling this pair would have made you 1.72% on the week.  Cryptos fell again, about twice as much as last week. FANGs were mixed, with FB outperforming.

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 February 04

Chinese markets are closed all week for the lunar New Year, as is Vietnam. South Korea is closed for three days. Malaysia and Singapore close early. NDX giant GOOGL reports after the bell.

01:45 CNY China Caixin Services PMI (Sunday)

21:45 NZD Building Permits (Sunday)

00:30 AUD Aus Building Permits

09:30 GBP UK PMI Construction

15:00 USD US Factory Orders (MoM)

Tuesday February 05

The calendar is mostly PMIs but we have the hawkish FOMC George (voter) at 0030. DIS (3.01% of DJIA) and SNAP report after the bell. China  and Taiwan for closed for the rest of the week. Malaysia, Singapore and South Korea are closed until Thursday. Hong Kong is closed until Friday.

00:01 GBP UK BRC Like-For-Like Retail Sales

00:30 AUD Aus Retail Sales

00:30 USD FOMC Member Mester speech

00:30 AUD Aus Imports/Exports/Trade Balance

03:30 AUD RBA Rate Decision/Statement (est 1.5% hold)

08:55 EUR Germany Markit Services PMI

09:00 EUR Eurozone Markit Services/Composite PMIs

09:30 GBP UK Markit Services PMI

14:45 USD US Markit Services/Composite PMIs

15:00 USD US ISM Non-Manufacturing PMI

21:30 WTI API Stock

Wednesday February 06

President Trump will be giving his State of the Union address after markets close on Tuesday. You never know what this president might say, but commentators are looking for something on North Korea.  There are rate decisions on THB, BRL, PLN and ISK. New Zealand is closed for Waitingi Day.

01:30 AUD RBA Governor Lowe Speech

02:00 USD President Trump State of the Union address

13:30 USD US Trade Balance

13:30 USD US Nonfarm Productivity/Unit Labor Costs

13:35 CAD BoC Gov Council Member Lane Speech

14:00 NZD NZ GDT Milk Index

15:00 CAD Canada Ivey PMI

15:30 WTI EIA Stock

21:45 NZD NZ NFP/Unemp/Participation Rate/Labor Cost (est 0.5% prev 1.1%)

23:30 AUD Aus AiG Performance of Construction Index

Thursday February 07

The BoE are expected to hold rates today, but any new comments by the Bank on Brexit will interest traders. TWTR reports before the bell. There are rate decisions on INR, MXN, PHP, RON and RSD. South Korea, Singapore and Malaysia reopen.

05:00 JPY Leading Economic Index

07:00 EUR Germany Industrial Production

09:00 EUR Eurozone Economic Bulletin

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

13:30 USD US Jobless Claims

20:00 USD US Consumer Credit Change

23:30 JPY Japan Overall Household Spending (YoY)

Friday February 08

The Canadian jobs reports comes one week after the US. There is a rate decision on RUB. Hong Kong reopens. Taiwan and China remain closed.

00:30 AUD RBA MPC Statement

07:00 EUR Germany Trade Balance

13:15 CAD Canada Housing Starts s.a (YoY)

13:30 CAD NFP/Unemp/Participation

18:00 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. This blog is supported solely by advertising, so if any of them interest you, please click the links. If you want notification when the blog is updated, please follow me on Twitter, Facebook, Stocktwits or Linkedin (all open in separate windows)