Archives of “December 2019” month

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How the major currencies performed this week

  
Analysis, Forex

USD/JPY was entirely unchanged

USD/JPY was entirely unchanged
USD/JPY closed last week at 109.44 and closed today at 109.44. The week before was essentially flat as well.
However elsewhere there were some decent-sized moves in a week that’s normally a dud but has included some big moves for the second year in a row.
On Friday it was the euro that led the way, stealing the top spot from the pound with a late-day rally. The US dollar was the laggard.

S&P 500 edges higher by the slimmest of margins but gains for the week were solid

  
Analysis, US Market

Closing changes

The S&P 500 was up 0.07 points to 3239.98 on the day. The Nasdaq was down 0.17% and the DJIA up 0.08%. The decline in the Nasdaq snapped an 11-day winning streak.
The larger action was outside of equities with some substantial moves throughout FX and a decent rally in fixed income.
On the week:
  • S&P 500 +0.58%
  • DJIA +0.67%
  • Nasdaq +0.92%

A look at some of the worst market calls of 2019

  
  Analysis
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We all had a few, here are some big ones

The FT takes a look at a few big global trade ideas that were popular at the start of 2019 and turned out to be far off the mark. One that isn’t on the list is cash. I can’t count how many analysts were saying to be in cash for early 2019 and had anyone followed that advice, they would have missed out on rallies in bonds and stocks.
At the start of this year, one of the most popular calls in currency markets was for the Norwegian currency to climb. The country’s central bank was set for multiple rate rises, the economy was performing well and the krone was cheap. Bank of America Merrill Lynch analysts predicted that it would appreciate more than 7 per cent by December 2019.
That one didn’t turn out so well with NOK falling to a record low against the euro.

Novak: Russia will need to raise oil output at some point

  
  Analysis

Comments by Russian energy minister, Alexander Novak

Russia OPEC
  • OPEC+ deal is positive for the market but it can’t last forever
  • Next year we will discuss raising oil output
The oil market is going to be a really interesting one to watch next year. The whole deal with the latest OPEC+ pact is that Saudi Arabia has said that they will deliver extra cuts but that will be contingent on other members complying with their own output quotas.
I highly doubt Russia will play ball – or at least consistently – and that could be an issue that will plague the oil market in due time.
Besides that, there is also the case that perhaps most market participants are overestimating the supply glut next year. We’ve already seen signs of US shale companies struggling in recent months and if that blows up into something bigger down the road, perhaps the oil market isn’t as flooded with supply as what many would think.

Nikkei 225 closes lower by 0.36% at 23,837.72

  
Analysis, Global Indices

A bit of a mild retreat for Japanese stocks to end the week

Nikkei 27-12

Asian markets are a bit mixed today as trading remains rather light towards the end of the year. Despite the struggle to firmly sit above the 24,000 level, the Nikkei is still having a stellar year as the index is up by 19.1% in year-to-date trading.
Overall, it’s been a great year for equities in general and most Asian indices are able to partake in those gains. The only ones with less impressive returns are Hong Kong – due to the social unrest – and emerging markets – owing to sluggish global growth:
  • Nikkei +19.1%
  • Hang Seng +9.0%
  • Shanghai Composite +20.9%
  • CSI 300 +34.1%
  • Kospi +7.8%
  • STI +5.1%
  • Jakarta Composite +2.0%
  • FBM KLCI -5.1%

A light data docket in the European morning today

  
  Analysis

Not much on the agenda as we wind down towards the last few days of 2019

Major currencies have been somewhat active since overnight trading with dollar weakness being a bit of theme and that is carrying over to today as well.

If you recall at the start of this year, the greenback also found itself on the losing side during the first few days so it could be attributed to light flows for the time being.
That said, the typical year-end dollar demand rush this year isn’t as prevalent and obvious as per what we have seen in previous years:
EURUSD 3M cross
Last year, those in need for the greenback did their “shopping” a little earlier and the most noticeable rush also came during a similar period around late September/early October.
Anyway, back to the agenda today. There isn’t much to shake things up as we’ll have:
  • 0900 GMT – Credit Suisse December investor sentiment survey
  • 0900 GMT – ECB publishes its economic bulletin
  • 0930 GMT – UK Finance November mortgage approvals, credit data

Asian markets return today, but holiday mode will persist – here is what’s on the calendar

  
  Analysis
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Coming up today on what will be a lower than usual liquidity session:

2330 GMT Tokyo inflation data for December – Tokyo area CPI (national level CPI for the month follows in three weeks). The y/y rate has received a wee boost from the October 1 sales tax hike. But not much.

  • Tokyo CPI y/y, expected 0.9%, prior was 0.8%
  • Tokyo CPI y/y excluding Fresh Food, expected 0.6%, prior was 0.6%
  • Tokyo CPI excluding Food, Energy y/y, expected 0.7%, prior was 0.7%

Also at 2330 GMT Japan Jobless (Unemployment) rate for November

  • expected 2.4 %, prior 2.4%

and Job to applicant ratio for November

  • expected 1.57, prior 1.57

2350 GMT Bank of Japan monetary policy meeting ‘Summary of Opinions’ of the December meeting

  • this precedes the minutes of that meeting by many, many weeks.

2350 GMT Japan Retail sales for November

expected 5.0% m/m, prior -14.2% (the huge drop was helped along by that sales tax hike I mentioned above)

  • expected -1.7% y/y, prior -7.0%

2350 GMT Japan Industrial Production for November (preliminary)

  • expected -1.0% m/m, prior -4.5%
  • expected -8.1% y/y, prior -7.7% (trade wars have weighed on exports which in turn have impacted IP)

0130 GMT China Industrial Profits for November % y/y

  • prior -9.9% (trade war and negative PPI big factors in this)

The market has that loving feeling for commodities (and commodity currencies)

  
  Analysis

A theme for 2020?

The ceasefire in the US-China trade war has everyone thinking about global growth and reflation in 2020.
The winners in that trade will be commodities, emerging markets and commodity currencies. The low yielders and US dollar will be on the defensive. That’s exactly what’s happening today in what’s usually one of the quietest days of the year but has included some decent-sized moves today.
At the top of the heap is the commodity bloc.
A theme for 2020?
What’s especially notable from the trio of commodity currencies here is the AUD/USD chart and its continued break above the 200-day moving average.
I’m skeptical of technical breakouts at this time of year but the rise today also breaks the December high of 0.6939 and there isn’t much in the way of resistance.
AUDUSD 200dma
On the commodity side it’s energy that’s leading the way higher with natural gas bouncing back from a Christmas Eve beating but a bit further down the list, crude is now creeping towards $62. A level to watch there is $62.90, which was the closing level after the Saudi attack.
Commodities
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