E Markets: Pendulums

Foreign Exchange:

The US dollar index fell 0.5% to 95.68 on the week. The 94.50-96.80 levels look important into the week ahead. In Emerging Markets, the USD was mixed with LATAM leading – EMEA: ZAR up 1.05% to 13.809, RUB up 1.1% to 66.902, while TRY fell 2.05% to 5.4405 with oil key; ASIA: CNY rose 1.5% to 6.76, KRW fell 0.3% to 1118.90, INR fell 1.2% to 70.365; LATAM: MXN rose 1.5% to 19.13 on reform, BRL rose 2.1% to 3.7105 on pension reform, ARS rose 1% to 36.97. 

  • EUR: 1.1465 up 0.65% on the week with 1.13-1.15 broken but not sustained leaving many wondering if 1.1350-1.1635 is the larger prison.
  • JPY: 108.45 flat on the week with 107.50-109 the keys and EUR/JPY up 0.7% to 124.40.  BOJ policy and the data key vs. US rates/risk mood.
  • GBP: 1.2835 up 1% on the week with EUR/GBP .8930 off 0.2%. The multiple scenarios for Brexit and politics next week leave many thinking its overdone and overpriced with data supporting 1.29 before 1.26. 
  • CHF: .9835 off 0.25% on the week with EUR/CHF up 0.4% to 1.1350. Safe-havens dwindling with equity rebound but 1.14 and .9880 look important. 
  • AUD: .7215 up 1.5% on the week. NZD .6830 up 1.5% on the week. More about China hopes and commodities than domestic data or rates. .7050-.7350 key. 
  • CAD: 1.3265 off 0.8% on the week. BOC on hold but sounding hawkish enough, oil and data helping but still lags A$ gains and 1.32-1.34 looks key. 

Commodities:

GSCI total return index rose 4.04% to 2,369.53 on the week. Beyond energy gains last week, commodities focused on Palladium, Rice and Coffee bouncing while Orange Juice, Corn, Soybeans lagged. The trade hopes don’t translate into confidence as supply persists globally. 

  • Oil: $51.59 up 7.6% on the week (Feb futures) with $52 tests and $50 break key opens $55 target again. Brent up 6% to $60.48 (Mar futures) with $60 break and $62 keys – US inventory build offset on global trade/growth hopes/OPEC output cuts. 
  • Gold: $1289.50 up 0.3% on the week (Feb futures) with $1300 in play but holding and $1382-$1368 base. USD weakness vs. equity bounce driving. Palladium led the precious metals with auto link – up 3.6% to $1278.70 on the week. Silver fell 0.8% to $15.65 failing at $15.85 resistance. Platinum fell 1.1% to $818. 
  • Corn:  $378.20 off 1.25% on the week (Mar) with Soybeans off 1.2% to $910.20 – talks better not enough, weather and other suppliers driving.  Wheat up 0.5% to $519.40 (Mar futures). 
  • Copper:  $2.7085 up 2.09% on the week- with March futures $2.6620 up 0.55% on the week – tracks equities/China hopes. The iron ore futures (Feb) $72.33 up 2.4% on the week.  Trade supported but other data mixed and outlook less supportive. 

Calendar for the Week Ahead:

China trade and M2, Brexit vote, Draghi speech, US industrial production, Michigan survey, and Philly Fed; Eurozone HICP final and industrial production, Sweden CPIF, India WPI, UK CPI/PPI/Retail Sales, central bank decisions for Turkey, Indonesia, South Africa;  OPEC and IEA monthly reports on oil, 

Monday, January 14: China trade, M2, Sweden CPIF, India WPI

  • 0700 pm Australia Jan Consumer CPI expectations 4%p 3.9%e
  • 1000 pm China Dec Trade surplus $44.7bn p $51.5bn e / exports 5.4%p 3%e / imports 3%p 5%e
  • 0130 am India Dec WPI (y/y) 4.64%p 4.42%e
  • 0200 am Germany Dec WPI (y/y) 3.5%p 3.4%e
  • 0330 am Sweden Dec CPIF (y/y) 2.1%p 2.1%e (m/m) -0.1%p +0.4%e / CPI 2%p 2%e
  • 0400 am China Dec M2 8%p 8.2%e / New CNY loans 1.25trn p 800bn e / TSF CNY1.5trn p 1.2trn e
  • 0500 am Eurozone Nov industrial production (m/m) 0.2%p -1.3%e (y/y) 1.2%p -2.1%e
  • 1100 am US Dec NY Fed CPI expectations 2.97%p 2.9%e

Tuesday, January 15: Brexit vote, Draghi speech, US PPI, German budget and 2018 GDP

  • 0100 am Japan Dec machine tool orders -16.8%p
  • 0245 am French Dec final HICP (m/m) -0.2%p 0.1%e (y/y) 2.2%p 1.9%e / CPI 1.9%p 1.6%e
  • 0300 am Spanish Dec final HICP (m/m) -0.2%p -0.5%e (y/y) 1.7%p 1.2%e / CPI 1.7%p 1.2%e
  • 0400 am German 2018 GDP 2.2%p 1.5%e / Budget 1%p 0.6%e
  • 0500 am Eurozone trade surplus E14bn p E13.7bn e
  • 0830 am US Dec PPI (m/m) 0.1%p -0.1%e (y/y) 2.5%p 2.5%e / core PPI 2.7%p 3.0%e
  • 0830 am US Jan NY Empire Manufacturing 10.9p 12e
  • 1000 am ECB Draghi speech 
  • 1000 am US Jan IBD/TIPP economic optimism 52.6p 51.8e
  • 1130 am Minn Fed Kashkari speech
  • 0100 pm Kansas Fed George speech
  • 0200 pm UK parliament Brexit vote
  • 0430 pm US weekly API oil inventories -6.27mb p

Wednesday, January 16: UK CPI/PPI, final German HICP, Turkish rate decision, Fed Beige Book

  • 0650 pm Japan Nov machinery orders (m/m) 7.6%p 3.5%e (y/y) 4.5%p 0.4%e
  • 0650 pm Japan Dec PPI (m/m) -0.3%p -0.3%e (y/y) 2.3%p 1.8%e
  • 0830 am China Dec house prices (y/y) 9.3%p 8.1%e
  • 0200 am German Dec final HICP (m/m) 0.1%p 0.3%e (y/y) 2.2%p 1.7%e / CPI 2.3%p 1.7%e
  • 0430 am UK Dec CPI (m/m) 0.2%p 0.2%e (y/y) 2.3%p 2.2%e / core 1.8%p 1.8%e / RPI 3.2%p 2.9%e
  • 0430 am UK Dec output PPI (m/m) 0.2%p 0.1%e (y/y) 3.1%p 2.9%e / core output 2.4%p 2.4%e / input PPI 5.6%p 3.5%e
  • 0500 am Italy Dec final HICP (m/m) -0.3%p -0.1%e (y/y) 1.6%p 1.2%e
  • 0540 am German 30Y Bund sale
  • 0600 am Turkish central bank rate decision – unchanged at 24% expected.
  • 0830 am US Dec import prices (m/m) -1.6%p -1.2%e / exports -0.9%p -0.6%e
  • 1000 am US Jan NAHB housing index 56p 56e
  • 1030 am US weekly EIA oil inventories -1.68mbp
  • 0200 pm US Fed Beige Book
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