Review of the past week
and the week ahead


What mattered last week:

  • The S&P500 fell for the third straight week after soft economic data in China and Germany triggered fresh signals from the U.S. bond market that a recession is becoming more likely.
  • Specifically, the yield on the 10-year Treasury rate fell below the 2-year rate for the first time since 2007, joining the 3 month – 10-year spread in inversion territory.
  • While an inverted yield curve does not guarantee recession, it has been reasonably accurate in the past and a reflection of the current state of uncertainty caused by the trade war.
  • Attempting to counter economic weakness, the National Development and Reform Commission in China announced it intends to roll out a plan (no details yet) to boost China’s disposable income and spur consumption.
  • In Europe, an interview with ECB policymaker Olli Rehn has created expectations that a “significant and impactful” stimulus package will be unveiled at the ECB’s meeting in September.
  • In Australia, a stronger than expected jobs report could not prevent the ASX200 from falling -2.72% for the week to close at 6405.5.
  • As disappointing earnings results from companies including Blackmores, Telstra and Woodside added to the prevailing offshore gloom.
  • In FX, the AUDUSD closed the week unchanged as the better Australian jobs report helped to counter a generally stronger U.S dollar.

For the week ahead, the key events are:

Australia: RBA meeting minutes (Tuesday).

The earnings season continues this week with reports from 115 companies including BlueScope BHP, Brambles, Amcor, Qantas, Origin and South 32.

New Zealand: NZ Services PSI (Monday), Global Dairy Auction (Wednesday), retail sales (Friday).

China: Nothing of note.

Japan: Reuters Tankan index, balance of trade (Monday), flash PMI (Thursday), inflation (Friday).

U.S.: Existing home sales, FOMC meeting minutes, Markit flash PMI (Thursday), Jackson Hole Symposium.

  • Jackson Hole Symposium:  The subject of this year’s annual central bankers’ Jackson Hole Symposium (22-24 August) is “Challenges for Monetary Policy”, which is likely to include a robust discussion on the threats to growth from the trade war and how best to respond.

Canada: Inflation (Wednesday), retail sales (Friday).

Euro Area: German PPI (Tuesday), German and EA Markit flash PMI (Thursday),

UK: Nothing of note.

About TECHFX TRADERS

The session will be run by Tony Sycamore founder of TECHFX TRADERS. Tony has over 20 years’ experience trading primarily at Goldman Sachs and he also worked in senior Institutional roles at Commonwealth Bank and BNP Paribas. His experience has allowed him to see and work with some of the biggest global traders.

Finalist – Best Bank FX Research & Strategy
Tony was the only Australian finalist nominated for Best Bank FX Research & Strategy at the 2016 Technical Analyst awards.

Finalists: Commonwealth Bank of Australia – Tony Sycamore, Director Institutional FX • Banque Pictet & Cie • Credit Suisse RBC Capital Markets • Royal Bank of Scotland • Scotia Bank

Tony Sycamore

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