Axi | Jul 02, 2018 09:46
Originally published by AxiTrader h2 Market Summary
/h2
Friday’s trade in markets was a maelstrom of political deals, rumours, data flow, and end of quarter positioning, and Chinese market recovery which saw the US dollar come under heavy selling pressure, sterling surge, stocks find a bid, and oil continue its march higher.
Starting in Asia the news that Europe had agreed an immigration deal, one that looks very much like Australia’s “Pacific Solution”, somehow set the robots' hearts aflutter and saw a buying frenzy in the euro mid-morning my time which then fed on itself as Chinese markets recovered and the euro ended the week at 1.1683 up a full percent on the previous days close 7am Friday morning my time.
That the euro could ignore the 2.1% fall in German retail sales for May, and the lift in US PCE price index to 2.3% yoy (spending did miss at 0.2% though) is a testament to the change in tone the ability of EUR/USD to hold 1.15 over the past few weeks has ushered into forex markets and the US dollar. Or was it just quarter end?
Given the Citi Eco Surprise Index for the US slipped further below zero Friday, this week and the data flow – global PMI’s, German factory orders, and US non-farm payrolls – will inform markets if the US dollar's rally is over or just in hiatus. Whatever Larry Kudlow said about “slow” Fed rate hikes Friday – and the impact it had – Jerome Powell is pretty clear it’s all about the economy.
In the meantime, it wasn’t just the euro that ripped higher. The pound fed of some better than expected GDP revisions with the pound shooting back above 1.32 for a GBP/USD close at 1.3209. Likewise the Canadian dollar benefitted from the weaker tone in the US dollar and also some surprisingly strong PPI data (+1% mom in May, 3.1% yoy) which suggests the hawkish read on governor Poloz’s press conference this week might be the right one. USD/CAD fell from a high at 1.3269 to close at 1.3131.
The kiwi climbed off the mat to finish at 0.6764 while the Aussie closed back above 74 cents at 0.7402. Can we pencil in a run back to 0.7445/50? Probably. USD/JPY held a lot firmer than the other pairs (suggesting some quarter end shenanigans in other pairs) and closed at 110.66.
To stocks now, and even though the big three indexes closed in the black on Friday, they were in the red for the week. Friday saw the S&P 500 rise 0.1% to 2,718 – 25 points off the high of the day and right on its low at the close. DANGER WILL ROBINSON! The Dow closed 0.23% higher at 24,271 and the Nasdaq 100 finished at 7040 up 0.13%.
Globally it was the worst first half for stocks since 2010.
In Asia and Europe stocks were buoyed by the bounce in China which saw the Shanghai comp rise 2.2%, the CSI rise 2.6% and the FTSE China A 50 lift 1.6%. At the close in Europe this helped the DAX rise 1.1%, the CAC lift 0.9%, and the FTSE in London increase 0.3%.
Naturally, SPI traders exercised their inner bull and added 23 points to Friday’s close after the ASX 200 fell 21 points to close out the financial year at 6,194.
On commodity markets oil was higher again with WTI closing above $74 a barrel for the first time since December 2015. It’s at $74.15, up 1.1%. Brent too was higher at $79.23. Gold was a little higher too ending the week at $1252 and copper is largely unchanged at $2.95.
NB: On Saturday President Trump send a tweet that is likely to rock oil markets this morning. Trump said he’d asked and the Saudi King had agreed to increase Aramco production by 2 million bpd. Iran is not happy.
Today kicks of the start of a new trading month and with it comes a raft of manufacturing PMI’s across the globe. Over the weekend China’s NBS (official) PMI’s were released roughly in line with expectations with Mfg at 51.5 down 0.4 from last month and 0.1 below expectations. Non-Mfg was in line with expectations at 55.0 and 0.1% higher than last month.
The Caixin private sector PMI is out in China today, as is the AiGroup’s Mfg PMI in Australia, Markit PMI’s across the globe and the big daddy ISM in the US is also out. Japanese Tankan and Euro Area PPI are also out.
Have a great day – I’ll be out for Mrs McK’s 50th
h2 Here's What I Picked Up (with a little more detail and a few charts)/h2 h2 International – /h2
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h2 Forex/h2
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Have a great day's trading.
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