Archives of “May 2020” month

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US Indices take a Friday fall to finish the week slightly lower

  
Analysis, US Market
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On the day:
  • S&P 500 down 2.8%
  • DJIA -2.6%
  • Nasdaq -3.2%
  • TSX -1.0%
On the week:
  • S&P 500 down down 0.2%
  • DJIA -0.2%
  • Nasdaq -0.3%
  • TSX +1.4%

Here is a look at the weekly S&P 500 chart. That latest candle isn’t a pretty one:

A look at US and Canadian markets

CFTC commitments of traders: EUR net long position remains the largests speculative position

  
Analysis, Forex

Forex futures positioning data for the week ending April 28, 2020

  • EUR long 80K vs 87K long last week. Shorts trimmed by 7K
  • GBP short 7K vs 1K short last week. Shorts increased by 6K
  • JPY long 32K vs 26K long last week. Longs increased by 6K
  • CHF long 6K vs 5K long last week. Longs increased by 1K
  • AUD short 38k vs 35K short last week. Shorts increased by 3K
  • NZD short 14K  vs 14K short last week. Unchanged
  • CAD short 29k vs 24K short last week. Shorts increased by 5K

Highlights from the CFTC commitments of traders:

  • EUR shorts remain the largest speculative position, but investors trim position by 7K.  It is the largest position trim.
  • AUD shorts increased and is the second largest position
  • CHF, GBP, NZD net positions remain small

The big names have now reported earnings, but what is expected for the May4/8 week

  
Analysis, US Market
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Key earnings for the week of May 4 to May 8

This week we had the likes of Alphabet, Facebook, Microsoft, Tesla, Visa, Starbucks, Apple all release.  That takes a lot of fire power out of next weeks potential.
Nevertheless, there are some interesting companies reporting. Disney, Paypal, T-Moibile, GM are some of the bigger, more notable names on the list.. Below is a list of those earnings:
Monday, May 4th
  • Cirrus Logic
  • Pitney Bowles

Tuesday May 5th

  • Allegan
  • Electronic Arts
  • Beyond Meat
  • Disney
  • Sprint
  • Cheesecake Factory
  • Planet Fitness
Wednesday, May 6
  • Marathon oil Corporation
  • Hyatt hotels
  • Wendy’s
  • General Motors
  • T mobile
  • PayPal holdings
  • Lyft
  • Square
  • Peloton
Thursday, May 7
  • Bristol-Myers Squibb
  • Raytheon technologies

ECB: Euro area GDP could shrink by 5% to 12% this year

  
  Analysis
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ECB notes in a pre-release of its economic bulletin

ECB
  • Euro area real GDP could fall by around 5% (mild scenario), 8% (medium scenario), and 12% (severe scenario) this year
  • Under the severe scenario, Q2 quarterly real GDP growth could be -15%, followed by a protracted and incomplete recovery; +6% in Q3, +3% in Q4
  • Under the severe scenario, real GDP is expected to remain well below the level observed at the end of 2019 until the end of 2022
The headline isn’t so much of a surprise since it is the same as what Lagarde has already highlighted in her press conference yesterday. This just adds more colour to it. In case you missed Lagarde’s remarks, you can check them out here and here (Q&A).

AUDJPY Shorts: Is there a balm in Gilead?

  
Analysis, Forex
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Well, sort of.

AUDJPY

After Wednesday’s initial enthusiasm for the pharmaceutical company Gilead’s COVID19 treatment, Remdesivir, the market returned back to risk off yesterday lunchtime. The ECB’s actions, or rather lack of action, left investors selling European stocks. That negative sentiment shortly flowed through into the US cash open and the previous gains were quickly replaced by yesterday’s losses. We also saw downside in copper prices, gold, silver, and platinum prices. the pitch was skewed by some pretty heavy month end flows into the JPY and the USD. However, when the dust has settled AUDJPY shorts look attractive.

Weak

The AUD is falling as US and European equity markets have fallen. As a high beta currency we can expect the AUD to lose value in line with the risk tone tilting off. As long as equity markets remain pressured then we can expect further AUD selling.

Strong

The JPY is receiving bids due to its safe haven status alongside the CHF and the USD.

Therefore, expect AUDJPY sellers on any rallies higher. The AUDJPY is at an interesting point technically. With price sitting underneath the 100EMA and in the daily gap from 06/09 March the AUDJPY has reached a natural infection point from its move higher. Stops can be places above the high of the 200EMA to limit risk and the Daily pivot point underneath at 66.00 make a fair place for a daily target.We expect this trade to play out over the next 2 or so weeks.

Gilead

Trade Risks

The main risk to this outlook:

Any positive news on COVID19 in relation to treatment/cure. Also, if Australia’s COVID case load continues to fall and this opens up Australia’s economy more quickly than others we can expect that to support the AUD.

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