A review of the week past
and the week ahead

Welcome to City Index with Tony Sycamore

Monday 15th October 2018


What mattered last week:

  • The month of October again lived up to its a reputation for being a challenging month for equity markets.
  • In the U.S., the S&P500 Index suffered its largest two day drop since early February and closed the week -6.0% below its recent high.
  • The ASX 200 fell over -4.5% and is now -7.5% from its highs in August.
  • Rising U.S. Treasury bond yields, a result of strong U.S. economic data and a more hawkish Fed as well as the deepening U.S.- China trade conflict were the main catalysts for the rout in stocks.
  • FX traders responded to the increased equity market volatility by reducing their FX positions whether long or short.
  • With the market positioned short AUDUSD and NZDUSD at the beginning of last week, the bounces in both currencies is explained by traders “de-risking” as the AUDUSD closed the week above .7100c and NZDUSD back above .6500c.
  • The same could be said for Gold. With a large short position in Gold, the fall in equities resulted in traders reducing shorts as well as some “safe haven” type buying taking place, Gold closed the week back towards U.S. $1220.00.

For the week ahead, the key events are:

Australia: RBA meeting minutes (Tuesday), labour force data (Thursday).

  • The September labour market report is expected to show job growth of +15k after the economy added +44k new jobs in August. The unemployment and participation rates are both expected to remain stable at 5.3% and 65.7%, respectively.

New Zealand: Q3 inflation data (Tuesday) followed by the Global Dairy Trade auction (Wednesday).

  • The market is looking for a rise in the Q3 inflation rate to 0.7% which takes the YoY rate to 1.7% from 1.5% in Q2.

China: CPI, PPI (Tuesday) followed by retail sales, industrial production, fixed asset investment and Q3 GDP (Friday).

  • The Chinese economic data will again be closely watched for the impact of U.S. tariffs on the Chinese economy. Q3 GDP data is expected to slow to 6.6% YoY (from 6.7% in the June quarter), while retail sales growth is forecast to remain stable at 9.0% and IP to also fall marginally to 6.0%.

Japan: Balance of trade (Thursday) and nationwide CPI (Friday).

  • Core inflation (ex food and energy) is expected to rise by +0.4% YoY, still well short of the 2% inflation target.

U.S.: Retail sales, Empire state survey (Monday), industrial production, building permits and housing starts (Wednesday), FOMC minutes, Philly Fed manufacturing (Thursday) and existing home sales (Friday).

  • Retail sales are expected to rise by +0.6% in September following a soft number (+0.1%) the previous month.
  • On the other hand, housing data is expected to continue to soften. Following a flat reading in August, existing home sales are expected to fall -0.3% in September which would be the lowest reading since the early months of 2016.

Fed speakers include Brainard, Bullard, Quarles and Bostic.

September quarter earnings reports continue with corporate tax cuts and strong economic conditions expected to see solid earnings growth.

Canada: BoC business outlook survey (Tuesday), manufacturing sales (Wednesday) followed by CPI and retail sales (Friday).

  • A gain of +0.1% m/m in headline CPI is expected for September, which would result in the YoY rate falling back to +2.7%.
  • The market is looking for a fall of -0.2% in retail sales in August, driven by falls in both gasoline station receipts (on lower prices) and auto sales.

Euro Area: German ZEW business survey, EA balance of trade (Tuesday), final inflation data (Thursday) and current account data (Friday).

UK: Labour market data (Tuesday), CPI, PPI (Wednesday) retail sales (Thursday).

  • The unemployment rate is expected to remain stable at 4.0%, at near to 40-year lows.
  • After a stronger CPI number in August fuelled by one-offs and stronger than usual seasonal factors, the market is looking for a rise of +0.2% in September which will see a fall in the annual rate to 2.6% YoY.

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

Disclaimer

TECH-FX TRADING PTY LTD (ACN 617 797 645) is an Authorised Representative (001255203) of JB Alpha Ltd (ABN 76 131 376 415) which holds an Australian Financial Services Licence (AFSL no. 327075)

Trading foreign exchange, futures and CFDs on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange, futures or CFDs you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss in excess of your deposited funds and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange, futures and CFD trading, and seek advice from an independent financial advisor if you have any doubts. It is important to note that past performance is not a reliable indicator of future performance.

Any advice provided is general advice only. It is important to note that:

  • The advice has been prepared without taking into account the client’s objectives, financial situation or needs.
  • The client should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation or needs, before following the advice.
  • If the advice relates to the acquisition or possible acquisition of a particular financial product, the client should obtain a copy of, and consider, the PDS for that product before making any decision.

From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

Ready to trade?
Open a live account in minutes