Feb 21, 2017 - Market Update

Short recap

Asian stocks mixed despite some speculations about China getting back on track

EU to open lower with some caution ahead of Flash PMIs and after day off in US/CA

Volatility staying extremely low (as mentioned yesterday), no trigger in sight yet (may be Trump before Congress on Feb 28)

Difficult to time as the substantial rise in VIX is always steep

Oil supported by substantial jump in long speculative positions from managed accounts reaching record highs

Difficult to imagine what will happen if we experience sudden unwinding of positions

Seeing battle between OPEC cuts, higher demand from China vs rising US production

Iron ore higher today as per increased demand for higher graded steel from China

US homebuilders experiencing shortage of skilled workers

BHP Billiton reported higher profit on commodities rally

Warned about risks for metals and iron ore rally in the short term

HSBC disappointed as it struggles in its core markets, had a one off write-down, pre-tax profit down 62%

EM and China hitting the results

More and more speculative longs in Rubble sound like speculative accounts betting on rising oil

10 yr US Trys yield at 2.44%, we may see some selling pressure as US comes back

2 yr auction ahead of us can be a good gauge

Bunds range bound 164.07/164.94

GE-FR spread was widened again yesterday on Le Pen advance in polls

But new polls show Macron winning in 2^nd round (this one counts)

Some progress on Greece – bailout auditors coming to Greece again

But nothing else as EU officials do not want to irritate EZ public with Greece write off headlines ahead of crucial elections this year

Data

EZ: Composite PMI – expected slightly lower but still reaffirm the growth

US: Manufacturing PMI – expected higher

Will have FOMC Minutes and some Fed officials speaking this week but it shouldn’t be that relevant to the market after Yellen last week

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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Sept 11, 2016 - Weekly Macro Outlook W37

The central banks last week have chosen a passive approach with no changed in their monetary policies. The surprise drop in oil inventories this week caused the return of oil bulls however the rally stalled at 47.50 and WTI closed around $46/barrel and Brent after testing $50 dollars returned to $48/barrel. In the stock market Eric Rosenberg caused a sell off on Friday by backing the rate hike later this year. Next week we have BoE and SNB rate decisions.

Last week’s summary:

The USD fell against most of its peers on Tuesday after disappointing ISM Non-Manufacturing PMI. The biggest blow to EURUSD however came from Draghi on Thursday when EURUSD tested 1.1325. Market expected at least some expansion of the monetary easing and the unchanged policy added momentum to the euro bulls. It seems that central banks are running out of ammunition and it may signal the end of the era of loose monetary policies. Cable had a good start to the week after strong services PMI confirming last week’s surprise in manufacturing PMI, the cross tested 1.3450 levels after US ISM figures but during the Asian session lost the momentum and  the disappointing UK Manufacturing production and the mixed mood after inflation hearing caused the GBPUSD gave up its early gains. The diary price index in New Zealand was positive again third month in a row and this gave further boost to the kiwi. USDJPY bounced back from the downtrend line and tested 101 after ISM. The Crude oil gained on supplies concerns as Oil inventories fell dramatically last week. The reason however had nothing to do with fundamentals rather with bad weather which slowed down the unloading of tankers in the gulf. We may see a sharp change to the upside in inventories soon. At the end of the week everything changed however as Rosenberg on Friday seemed to be very confident regarding rate hike this year. The result dollar up against all its peers and stocks, commodities down. The criticism of Greece from Eurogroup also added to the downside for EURUSD weakness. The country accomplished only 2 out of 15 goals set by creditors and even the finance ministers backed the country by saying there is still enough time… they stressed Greece needs to speed up reforms… well we all know all the goals will not be achieved. In response Tsipras hosted a ClubMed meeting of South European countries to unite them in response to the austerity pressures from Germany. Draghi also joined the meeting adding more importance to the event. After the Brexit vote in June it could be seen as an extremely destabilizing step and could mean further pressure on EUR at Monday open.

Next Week Macro Outlook / we will have a pretty busy week ahead

Monday:

As there won’t be any big data released the first day of the week, the markets will have some time to digest the events of the weekend regarding Greece. FOMC and RBA speakers will also take the stage later the day. Before midnight the Japanese manufacturing index may add some volatility to the jen crosses.

Tuesday:

We will start the day with Chinese data, especially industrial production may move the markets, watch AUD and NZD primarily after midnight. The GBPUSD traders will have some rock’n’roll caused by UK inflation which started to pick up this year. Just half an hour later Draghi speaks after the German and EZ ZEW index is published. Look for some hints about the Club Med meeting in Athens during the weekend. In the evening the API will release the US crude inventories which after the last week’s weak data will be more important than usually. The New Zealand Current account balance will be released as last data of the day, the CA was last month in the biggest surplus since Jun 2014.

Wednesday:

We start with the UK employment data and no big changes are expected in the job market given it’s close to maximum employment. Also the oil inventories will attract more attention as usually due to last weeks weak figures and slowing exports. There could be a dramatic change to the upside I oil inventories after the tropical storm passed. Later the GDP figures from New Zealand will be released, which seems to be trending down.

Thursday:

The day is packed with important data. After midnight the Australian employment figures will bring some action to the Aussie traders. With unemployment rate at 5.7% the market expects a little increase in number of employees as the spring/summer gold rally allowed to reopen some mines. The situation in the mining sector is however still very difficult due falling imports to China. In the morning the Swiss and followed by UK rate decision and Monetary policy statement will bring some vols to the market, even booth are expected to keep their MPs unchanged. In the afternoon we have a flood of US figures, Retail sales, PPI and Unemployment claims in the same time. However if one looking for a hint when the rate hike will happen, should keep an eye on Capacity Utilization Rate. Stanley Fisher, deputy head of Fed said two weeks ago that the efficiency of the US economy is the key problem which the Fed can’t really influence. When the rate hike cycle started under Greenspan, this indicator was above 76% (in august 75.9%), when they finished it was over 82%...

Friday:

After a busy Friday we will have the sales figures in the Canadian manufacturing sector and sae time US inflation data. While the Core CPI is already at 2.2% and we know the Fed is looking at Core PCE index (1.6%). A big surprise could be the factor that influences the sentiment in a visible way. Also keep an eye on preliminary University Michigan Consumer sentiment (already at pre crisis level) and inflation expectations (currently only half of the pre-crisis expectations around 5%). 

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice.

All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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