Week to July 8th

DAX underperformance

MY CALL THIS WEEK : SELL EURUSD

LAST WEEK

In a shortened week due to Independence Day, European divergence and underperformance came to a head on Tuesday’s re-open as DAX dropped 3% to take out its March low and EURUSD dropped through 1.035 support, reaching 1.007 on Friday. Meanwhile, the SPX easily held last week’s low. Tuesday also saw the peak of the recent recession scare, with commodities down heavily and oil lower by 11%. The data highlight of the week came from the NFP, which with a solid beat and print of +372k, tells us the US economy is holding up extremely well despite all the recession talk. Expect the Fed to raise 75bps again in July.


WEEKLY PRICE MOVEMENT

The biggest index mover this week was NDX, up 4.66%. The top forex mover was EURNZD down 2.32%. Crypto recovered sharply again, and FANG outperformed NDX.

My EURCAD long lost 1.89% this week, meaning I am now ahead 2.91% with 13/25 (52%) wins. This week I have thrown in the towel and am shorting EURUSD.

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

NEXT WEEK

Each month in the past the main focus was on NFP week or Fed week, but these days the most importantly monthly print is CPI, due on Wednesday. The raw figure is estimated to increase yet again to 8.7% from 8.6%, but core inflation (stripping out food and, particularly, energy) is thought to fall again as it has done since the April peak of 6.5%. If this doesn't happen it could be bad for equity markets, whereas a miss (lower) on the headline rate would imply a Fed slowdown and boost recovery.

Earnings season for Q2 also starts next week, with, as always JPM first out of the gate, reporting on Thursday with MS, followed by WFC and C on Friday (GS report the following Monday to complete the opening quintet). UNH, at nearly 11% the largest component of DJIA also report on Friday. After the worst Q1 for decades, these releases will also be key, so overall, strong moves are possible ahead.


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

Monday, July 11
01:00 BoJ Gov Kuroda speech
18:00 US Monthly Budget Statement

Tuesday, July 12
09:00 Germany ZEW Sentiment
17:00 BoE Governor Bailey speech

Wednesday, July 13
00:30 Aus Westpac Consumer Confidence
02:00 China Imports/Exports/TB
06:00 UK GDP MoM
06:00 UK Ind/Mfr Production
06:00 Germany CPI (e8.7% p8.2%)
12:30 US CPI (Core e5.9% p6.0%)
14:00 BoC Rate Decision/Statement (e2.25% p1.5%)
15:00 BoC Press Conference
18:00 US Fed Beige Book

Thursday, July 14
01:00 Aus Consumer Inflation Expectations
01:30 Aus Jobs/UnEmp (Jobs e25k p60.6k)
04:30 Japan Ind Production
12:30 US Jobless Claims
12:30 US PPI

Friday, July 15
02:00 China GDP (QoQ e0.6% p1.3%)
02:00 China Ind Production
02:00 China Retail Sales (YoY e-7.1% p-6.7%)
12:30 US Retail Sales (MoM e-0.8% p-0.3%)
13:00 US Fed Index of Common Inflation Expectations (time approx.)
14:00 Michigan CSI (e58 p50)

Week to Jun 3rd

Rally stalls in stocks and bonds

MY CALL THIS WEEK : BUY EURJPY

LAST WEEK

The week started with Memorial Day and a hawkish speech from known Fed hawk Christopher Waller, talking about 50bp hikes at every meeting until inflation is tamed, even running past the ‘neutral rate’ of 2.5%. Following that, just as last week’s poor data was read by the market as potentially delaying tightening, this week a run of good data, including Tuesday’s Chicago PMI (60.3 vs 55!) and Wednesday’s ISM PMI (56.1 vs 54.5), led to a small reversal of last week’s rally, but overall a much less volatile week that we have seen recently.

A similar theme from the even more hawkish (so therefore you’d expect 75bp or something, which he didn’t say) James Bullard temporarily arrested the decline, and Thursday’s misses on ADP and Factory Orders, following the bad=good theme helped SPX add 2.73% from the double-bottom low of the week, but still close 1.20% down on the week. NFP was a beat which fuelled the decline further, and as we predicted last week, did not essentially alter the trend.

In Europe, inflation data was worse than expected with Germany reporting 8.7% vs 8%, and Eurozone 8.1% vs 7.7% (core 3.8% vs 3.5%). Nevertheless DAX and FTSE closed flat on the week, the latter only trading for three days.

Currencies were fairly flat, except for JPY which fell again as US yields started to climb again. USDJPY had its highest weekly close for 20 years. Oil rallied again by 4.69% to its highest weekly close since 2008. Fed Williams speech and SEC consumer video about cryptocurrencies led to a 7.7% drop in BTC, back under $30,000. It had not recovered by the end of the week.


WEEKLY PRICE MOVEMENT

The biggest index mover this week was NKY, up 3.66%. The top forex mover was again USDJPY up 2.94%. Crypto had a volatile week ending slightly up, and FANGs notably outperformed NDX as a whole.

Last week's USDJPY short was the worst trade I could take, losing 2.94%, which means I am ahead 5.58% this year, with 11/20 (55%) wins. This week I am buying EURJPY on the hope of a hawkish ECB, and that JPY must pull back eventually.

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 key release next week is the US inflation print on Friday where a slight but welcome reduction from 8.3% to 8.2% and core 6.2% to 5.9% is expected. Markets will definitely move whatever the print is, even coming as estimated would be a fillip to equities.

Otherwise the main events are outside the US with the RBA and ECB rate decisions. The RBA is expected to hike by 25bp, with some forecasters predicting a 40bp increase (meaning 25bp could depress AUD). The hawkish bar is also high for the ECB, the only currency area not to have raised rates or terminated QE yet. The single currency has come off multi-year lows recently, but this recovery could threatened unless the ECB take some action. The ECB has previously said it will not raises until it has ended bond buying.


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

Monday June 6
01:00 Aus TD Securities Inflation
01:45 China Caixin Services PMI
23:30 Japan Overall Household Spending

Tuesday June 7
04:30 RBA Rate Decision/Statement (e0.60% p0.35%)
06:00 Germany Factory Orders
12:30 US Trade Balance
12:30 Canada Trade Balance
14:00 Canada Ivey PMI
23:50 Japan Q1 Final GDP (e-0.2% p-0.2%)

Wednesday June 8
09:00 Eurozone Q1 Final GDP (QoQ e0.3% p0.3%)
09:30 DE10Y Auction

Thursday June 9
02:00 China Imports/Exports/TB
11:45 ECB Rate Decision/Statement (e0% hold)
12:30 ECB Pres Lagarde Presser
12:30 US Jobless Claims

Friday June 10
01:30 China CPI (p2.1%)
12:30 US CPI (Core e5.9% p6.2%)
12:30 Canada NFP/AHE/UnEmp (NFP p15.3k)
14:00 Michigan CSI (e56.9 p58.4)
18:00 US Monthly Budget Statement

Week to Feb 18th

Ukraine uncertainty abounds. Gold makes 9-month high

MY CALL THIS WEEK : BUY AUDNZD

LAST WEEK

Markets wobbled this week on Ukraine fears and but only ended up slightly down in inverted V-shaped pattern. USD made a V-shape but ultimately consolidated. The dollar consolidated and ended the week flat. After weeks of rising, 10-year yields pulled back in an inside week. Oil, affected by Ukraine tensions, was slightly more volatile and made a brief new high a few cents shy of $94 before pulling back. The only notable risk-off move was Gold which broke $1,900 for the first time since May 2021. The FOMC minutes did not reveal anything new, and there was no reaction from traders.

WEEKLY PRICE MOVEMENT

The biggest index mover was Ukraine-sensitive DAX, down 2.48%. The top forex mover was EURNZD down 1.07%. Bitcoin and Ethereum fell moderately, and FANG was fairly flat, except for beleaguer FB, down 6.1% and now at May 2020 lows, 46% off its September 2021 high.

Last week's EURGBP long position lost 0.48%, which means I am ahead 2.83% this year, with 3/6 (50%) wins. The trend is difficult to read this week, so I will fall back on my reserve AUDNZD, as a buy. It's won't make much, but it's safe.

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

NEXT WEEK

Next week is a foreshortened four day week after Presidents Day on Monday when the markets are closed. There is little significant scheduled news, most important print is US GDP on Thu estimated at 7%, equal to the inflation figure which indicates no growth. With that, the primary focus will be on the tensions in Ukraine.


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

Monday February 21
22:00 Commonwealth Bank PMIs (Sun)
01:15 PBoC Rate Decision/Statement (e3.7% hold)
07:00 Germany PPI
08:30 Germany Markit PMIs (Mfr e59.4 p59.8)
09:00 Eurozone Markit PMIs (Comp e52.7 p53.8)
09:30 UK Markit Svcs PMI (e55.2 p54.1)

Tuesday February 22
09:00 Germany IFO Sentiment Indicators
10:45 BoE Ramsden speech
14:00 US Housing/Home Price Indices
14:45 US Markit PMIs
15:00 US Consumer Confidence

Wednesday February 23
07:00 Germany Gfk Consumer Confidence
10:00 Eurozone HICP (CPI)

Thursday February 24
13:30 Chicago Fed National Activity Index
13:30 US PCE (QoQ)
13:30 US Q4 GDP (e7.0% p6.9%)
13:30 US Jobless Claims
15:00 US New Home Sales
23:30 Tokyo CPI

Friday February 25
07:00 Germany Q4 GDP
10:00 Eurozone Business Climate
10:00 Eurozone Consumer Confidence
13:30 US PCE (MoM & YoY)
13:30 US Durable/ND Capital Goods (DG e0.6% p-0.7%)
15:00 US Pending Home Sales
15:00 Michigan CSI

Week to May 22nd

Opening surge on vaccine hopes, Ranging all week, US-China tensions

MY CALL THIS WEEK : SELL EURJPY

The week started with a strong gap up ad surge on hopes of a potential COVID-19 vaccine from MRNA (whose stock gapped up 30%), and positive comments from Fed Chair Powell but failed to advance much further as poor data (including another new 2.5m Jobless Claims) and rising US-China tensions tempered enthusiasm.  However, Monday’s gains were not lost, and Gold and the yen fell, showing some degree of positive sentiment.

Monday is Memorial Day, and also a holiday in the UK shortening the final week of May which has been more flat than bearish this year. Earnings season is over,  and there isn’t much news other than another preliminary read of US GDP (QoQ est -5%). Look out for any further war of words between the US and China, and of course any COVID-19 second wave effect as many people exit lockdown.

Mon May 18

Markets gapped up hugely over the weekend on new of a potential COVID-19 vaccine from MRNA (whose stock gapped up 30%), and carried on rising all day after Fed Chair Powell told CBS 60 Minutes “there’s a lot more we can do to help the economy”. SPX closed at a two-month high. Oil rose sharply in line with equities. The haven trio bonds, gold and JPY were sharply down, the latter even against an otherwise falling dollar, following the dovish Fed remarks. A classic risk-on day. 

Tuesday May 19

Initially, markets held Monday’s gains as TreasSec Mnuchin confirmed the governments commitments to COVID-19 bailouts. However we had turnaround Tuesday into the US close, as some profit was taken. (Non-US indices were still up, as they close earlier). MRNA stock had been falling since the gap up. Gold and Bonds also reversed back up, although JPY continued to fall, again the only currency to do so, which can also be put down to forex being mainly traded in London hours.

Wednesday May 20

Markets were back up again today, although only matching Tuesday’s high, following positive Fed minutes indicating further support for the economy, which of course means printing more money, and the dollar was down again everywhere except GBP, following the UK inflation miss at 0600. The equity push was led by FB and AMZN which made new all-time highs. Oil was up in line. Oddly Gold and bonds continued upwards, the latter possibly on the new US 20-year bond auction

Thursday May 21

Pessimism started in Asia, with HSI down 3.4% on news of a new Chinese ‘national security’ law in Hong Kong, aimed at quelling protest, and Donald Trump claimed China was behind a disinformation and propaganda attack on the US. This was followed by another depressing Initial Jobless Claims report of 2.4 million, just one of many bad reports, for example New Home Sales hit a 10-year low. Markets were down everywhere. Oil ignored all this, and was up following the EIA stock report beat.

The dollar broke its three-day losing snap, and rose against all currencies (although it was practically flat against JPY). Bonds were flat as well, although Gold, reacting to the dollar reversal, was down 1.46%.

Friday May 22

US and European markets initially dipped on Friday but ended the day roughly flat going into the long weekend. By contrast the HSI was down 5.6%, its worst day in five years on China’s new laws. SecState Pompeo called the plans a “death knell” for autonomy in the territory, and this was reflected in Gold and bonds, both up. Oil also pulled back after gaining all week. USD was again up across the board, except for JPY which was flat, in line with the earlier dips.

WEEKLY PRICE MOVEMENT

Indices had a strong week, although all the beginning, and the biggest riser was DAX. NZDJPY was the strongest performer up 3.31%. Crypto had a fairly flat week, and FANGs were rather variable swinging from a 5.48% loss on NFLX to a 11.4% gain on FB.

My choice last week of NZDCAD paid off, up 2.04%. 16 weeks, 7 wins, net profit 6.45%. I am still bearish about equity markets, so I will sell EURJPY this week, also considering the new EU pandemic plan, which will be expensive. (My other choice was to sell EURUSD, but you can never tell with USD when markets fall).

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. Recoveries in line were seen in most FANGs, but not NFLX, which has not really fallen like the others.

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

• Memorial Day 4-day week
• US and Canada GDP
• Expect more China tension
• End of month

Monday May 25

Markets are closed today in the US and the UK, so forex will be calm as well as equities, unless of course something happens in Asia. Ramadan ended this weekend, so there may be increased activity from Islamic countries. There are rate decisions in Romania and Israel.

06:00 EUR Germany Q1 Final GDP

08:00 EUR Germany IFO Business Sentiment

17:30 CAD BoC Governor Poloz speech

22:45 NZD NZ Imports/Exports/TB

Tuesday May 26

A quiet day on news, so COVID-19 and China will drive the markets. There is a rate decision in Hungary. Markets are closed in Indonesia.

06:00 EUR Germany Gfk Consumer Confidence Survey

12:30 USD Chicago Fed National Activity Index

13:00 USD US Housing/Home Price Indices

14:00 USD US New Home Sales/Consumer Confidence

14:30 USD Dallas Fed Manufacturing Business Index

21:00 NZD RBNZ Financial Stability Report

Wednesday May 27

The EU presents a continent-wide pandemic recovery plan today. Remember that most of Europe is borderless. The debate will be, as ever, whether richer countries should support poorer ones.

Here is a useful chart from Reuters showing the effect of COVID-19 policies on EURUSD, both from the Fed and ECB.

There is little scheduled news.

08:00 EUR EU Financial Stability Review

14:00 USD Richmond Fed Manufacturing Index

Thursday May 28

Today is the heaviest news day, with the 1230 batch of US data, the Jobless Claims being the most important. There are rate decisions in South Korea and Poland.

12:00 EUR Germany Prelim CPI (YoY e0.6% p0.8%)

12:30 USD US ND Capital Goods (p-0.8%)

12:30 USD US Prelim PCE QoQ

12:30 USD US Initial Jobless Claims (May 22) (e2.0M p2.4M)

12:30 USD US Q1 Prelim GDP (Annualised e-5.0% p-4.8%)

12:30 CAD Canada Current Account

14:00 USD US Pending Home Sales

15:00 USD US EIA Oil Stocks

23:30 JPY Tokyo CPI (Core YoY e0.1% p-0.1%)

23:30 JPY Japan Jobs/Unemp

23:50 JPY Japan Industrial Production (p-5.2%)

Friday May 29

The last trading day of the month may bring volatility, especially as “Sell in May” does not appear to have happened this year. There are rate decisions in Colombia and Chile.

06:00 EUR Germany Retail Sales

09:00 EUR Eurozone CPI (Core YoY e0.9% p0.9%)

12:30 USD US Prelim PCE (MoM and YoY)/Personal Income

12:30 CAD Canada Q1 Final GDP (Annualised p0.3%)

13:45 USD Chicago PMI

14:00 USD Michigan CSI

Week to Nov 15th

RBNZ surprise hold, Powell rules out more cuts for now, Trade war ups and downs

Mon Nov 11

US markets were closed for Veteran’s Day, but US futures fell in sympathy with China and Hong Kong after another weekend of protests, which are now reported as seriously affecting HK business. Also depressing the market were President Trump’s weekend comments pouring cold water on early tariff removal rumors, and the effect of retail money coming out of Asian and other markets to spend on Singles Day in China. In currencies, USD was down against most currencies, although AUD was down and CAD finished flat. Gold and JPY were down, the first quite sharply, suggesting the weekend concerns were short lived. Oil rose and yields fell in line with equities (ie bonds were up)

Tuesday November 12

Turnaround Tuesday saw equities rally today as the US returned and the weekend was forgotten. Surprisingly Gold, JPY and bonds were also up. Otherwise it was a clean sweep for USD, up across the board against currencies. Oil was up in line with equities. An interesting feature of today was that DJIA closed absolutely flat, at 27691, the same figure as Monday. This has not happened for over five years.

Wednesday November 13

Today, President Trump threatened to raise China tariffs if no truce was reached, and the market took that badly, and pulled back, although it made some recovery after the European close, and NDX even finished green. It was a very flat day in currencies, the notable exception being NZD which was up 1.24% on a surprise hold from the RBNZ (a 25bp cut had been expected).

Thursday November 14

In Chair Powells second day of testimony, he indicated that the 75bp cuts this year were enough for now, and this was enough to depress markets slightly in the US and a bit more severely elsewhere as DXY fell on the testimony not being hawkish enough. DAX, FTSE etc fall when their denominated currency rises. Most currencies and Gold rose. Only the antipodean pair faded, AUD on the severe jobs miss (-91k vs +15k) and NZD pulling back after the sharp Wednesday rise. Oil and yields were down in line with equities.

Friday November 15

On Thursday night White House adviser Kudrow said about the China deal that “we are coming down to the short strokes” and today CommerceSec Ross confirmed that the China “Phase One” deal would be made “in all likelihood”. US markets broke out of the weekly range and soared to new highs. The effect was seen in NKY but not in the European indices, but this was largely due to a further leg down in USD after the poor Retail Sales figures. Gold and JPY were of course down, but all other currencies rose, as did Oil in line with the risk-on day.

WEEKLY PRICE MOVEMENT

The top index this week was the DJIA up 1.17% to break the psychological 28000. The top forex trade would have been, unusually, shorting AUDNZD, yielding 1.91%. Another quiet week on cryptos, and FANGs generally outperformed the NDX as a whole, as often happens in strongly risk-on periods.

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)

Monday November 18

Sometime this week, the final USMCA (NAFTA 2) bill could be ratified. Fed Mester (hawk, non-voter) speaks today. There are no significant economic releases

09:00 EUR ECB De Guindos speech

13:05 EUR ECB Lane speech

22:05 AUD RBA Kent speech

Tuesday November 19

The House Intelligence Committee impeachment hearings continue today, but our opinion is that this will not affect markets, as everyone knows a House indictment will result in a Senate acquittal. Fed Williams (voter) speaks today. The final DJIA component HD reports before the bell, as do department store KSS. There is a rate decision on HUF (hold expected)

00:30 AUD RBA Meeting Minutes

13:30 USD US Building Permits/Housing Starts

14:30 NZD NZ GDT Milk Index

18:15 CAD BoC Wilkins speech

23:50 JPY Japan Imports/Exports/TB

Wednesday November 20

The minutes of the 30 October rate cut meeting may well show that 75bp is 'enough' which would be bearish for stocks and bullish for USD, although this is probably priced in from Chair Powell’s testimony last week.

HD competitor LOW reports before the bell, as does general retailer TGT. ECB Lane speaks again today at 1700. Markets are closed in Brazil and Mexico.

01:30 CNY PBoC Interest Rate Decision (e4.2% hold)

07:00 EUR Germany PPI

13:30 CAD Canada CPI (BoC Core YoY e1.9% unchanged)

19:00 USD FOMC Minutes

Thursday November 21

Fed Mester and ECB De Guindos speak again today, as does Fed Kashkari (dove, non-voter) and ECB Mersch. There are rate decisions on ZAR and IDR (holds expected)

09:30 GBP UK PSBR

12:30 EUR ECB MPC Minutes

13:30 USD Philly Fed Manuf Survey

13:30 USD US Jobless Claims

15:00 USD Existing Home Sales

23:30 JPY Japan National CPI

Friday November 22

Christine Lagarde gives her first important speech today, the keynote to the Frankfurt European Banking Congress. She has spoken before, but this venue will expect some insight into her thoughts on the euro. Markets are closed in Japan for their Thanksgiving.

07:00 EUR Germany 19Q3 final GDP

08:30 EUR ECB President Lagarde speech

08:30 EUR Germany Markit PMIs (Manuf e43.0 p42.1)

09:00 EUR Eurozone Markit PMIs (Composite e50.9 p50.6)

13:00 EUR ECB Weidmann speech

13:30 CAD Canada Retail Sales MoM Sep (e0.0% p-0.1%)

14:45 USD US Markit PMIs

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 Jun 7th

‘Sell in May’ sentiment evaporates, Powell confirms rate cuts on the table.

Mon Jun 03

Almost like clockwork, the ‘Sell in May’ sentiment turned on a dime for the new month, but was spoiled by a report that the tech giants may be subject to anti-trust scrutiny. The market liked the Chinese PMI beat at 0145, and shrugged off the various US misses. As you know FB, GOOGL etc. have ‘natural monopolies’ but so did Standard Oil in 1911 (which ultimately became XOM and CVX). AMZN joined these two in tumbling, shaving over 2% off NDX, whereas DJIA was slightly up. Other world indices were comfortably ahead.

The dollar turned on Friday, and continued down (DXY -0.40%) today on Fed Bullard’s comments that a rate cut “may be warranted soon”.  Bullard is, of course the most dovish 2019 FOMC voter, but the remark was enough to send yields down and all other currencies (and Gold) up against US. Oil was up in line with industrials and the weaker dollar.

Tuesday June 04

Bullard is a dove, but Chair Powell by definition is centrist, and when he confirmed the potential cut theme today stocks soared (in all countries), with tech stocks recovering as well, as a rumor of antitrust was trumped by a certainty of fiscal easing (if needed).

USD was flatter today, with the dollar basket only down 0.1%, as JPY (and Gold) faded in line with the risk-on mood. EUR failed to benefit (ending flat) after the key Eurozone CPI miss at 0900, but the other currencies advanced. Oil was up slightly in line with stocks, and yields moved back up as bond money rotated into stocks. The AUD rate cut to 1.25% was widely expected and priced in, and AUDUSD joined the other currencies in advancing.

Wednesday June 05

Equities advanced again today, but more slowly. Positive comments from the Senate Finance committee about the Mexico tariff issues were overshadowed by a very weak ADP jobs report (27k vs 180k best), a nine-year low. The dollar was up slightly (DXY +0.18%) after the ISM PMI beat at 1400, evenly advancing across the board, although Gold and Bonds finished up after both spiking on the ADP report. Oil fell sharply on the EIA miss, and finished 2.31% on the day. It did however fall as low as 50.58, 4.37% down, a four month low, and crucially, a technical bear market (over 20% down from the Apr 23 high). 

Thursday June 06

Further reports on Mexican tariff delays gave US markets some more risk appetite, which was repeated elsewhere, the only laggard being DAX, held back by a sharp EUR increase, as ECB President Draghi, speaking at 1330, was dovish, but not as dovish as expected. DXY fell 0.32%, the only loser being JPY as you would expect. Gold rose in line. Oil bounced back, recovering Wednesday’s losses. Yields closed flat after dipping throughout the day.

Friday June 07

We have had a willingness to cut rates and a poor ADP report this week. It therefore followed that a poor NFP (which it was, 75k versus 185k estimated) would be seen as ‘bad news is good news’, ie, the poor report suggested a rate cut. The evidence was clear, a sharp and instant move down in yields and DXY (down 0.44% on the day), and an even move up in currencies and Gold. The standout was CAD, whose NFP figure beat. Equities in this situation always rise, and so it was seen today. Oil and Gold were both up on the weaker dollar.

WEEKLY PRICE MOVEMENT

‘Sell in May’ is over and markets rallied, with DJIA the overall winner. NZDUSD was the strongest currency. Cryptos had a pullback after several weeks of gains. A huge variation in the FANGS, with the ‘monopolies’ well down, but AAPL and NFLX well up.

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 for the DAX
• Key US, China and Germany inflation reports
• Fed blackout period starts
• Low estimate for Michigan Sentiment

Monday June 10

The main news over the weekend was the suspension of Mexican tariffs, which should lift equities. The JOLTS jobs report is due at 1400. Markets are closed in Australia, Germany and much of Europe (although not the UK) for Whit Monday.

23:50 JPY Japan 19Q1 GDP (Sunday) (QoQ e0.4% p0.5%)

02:00 CNY China Imports/Exports/TB

08:30 GBP UK Industrial/Manuf Production (MoM)

08:30 GBP UK GDP (MoM)

17:00 GBP BoE Saunders speech

Tuesday June 11

The US PPI figure comes ahead of CPI this week and may give some indication. The most important news is the UK jobs report. The Average Hourly Earnings is expected to remain unchanged at 3.3%.

08:30 GBP UK AHE/UnEmpl (UnEmp e3.9% p3.8%)

12:30 USD US PPI

22:45 NZD NZ Electronic Card Retail Sales

23:25 AUD RBA Kent speech

Wednesday June 12

Chinese and US inflation prints make this the most important news day of the week. There is a rate decision on TRY at 1100 (est hold 24%). Markets are closed in Russia, Nigeria and the Phillippines.

00:30 AUD Aus Westpac Consumer Confidence

01:30 CNY China CPI (YoY e2.7% p2.5%)

08:15 EUR ECB President Draghi speech

09:00 AUD RBA Ellis speech

09:00 EUR ECB De Guindos speech

12:30 USD US CPI (Core YoY e2.1% p2.1%)

18:00 USD US Monthly Budget Statement

Thursday June 13

There is a rate decision on CHF (est hold -0.75%) at 0730 with a press conference half an hour later. Otherwise German inflation is the key print of the day.

00:00 EUR Eurogroup Meeting (all day)

00:00 AUD Aus Consumer Inflation Expectations

01:30 AUD NFP/Unemp (NFP e17.5k p28.4k)

06:00 EUR Germany CPI YoY (e1.3% p1.3%)

09:00 EUR Eurozone Industrial Production (MoM)

12:30 USD US Jobless Claims

22:30 NZD Business NZ PMI

Friday June 14

The Michigan CSI estimate is surprisingly moderate, after the last two stellar releases. There is a rate decision on RUB (est 25bp cut to 7.50%). 

02:00 CNY China Retail Sales/Industrial Production

02:00 CNY China NBS Press Conference

12:30 USD US Retail Sales (Control Group p0.0%)

13:15 USD US Industrial Production (MoM)

14:00 USD Michigan CSI (prelim) (e98.1 p100.00)

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 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

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