Jul 18 • Morning Roll Call • 1903 Views • Comments Off on MORNING ROLL CALL

U.S. markets close flat, E.U. markets fall, with the exception of the FTSE, euro and Swissie provide price action

There is a legendary phrase, regarding not trading in the markets over the summer months, that traders are fond of repeating; “Sell in May and go away, don’t come back ’til St. Leger day.”

The St. Ledger’s stake is a horse race that takes place in September in Doncaster, England. The phrase refers to the custom of aristocrats, merchants and bankers (in previous centuries), who liked to leave the city of London and go to the country, to escape the oppressive heat of the City during the summer months. American traders are more likely to spend time away between Memorial Day and Labor Day, they’ve adopted this English phrase as an investing adage. And the actual trading numbers (historically) support this bit of folklore wisdom.

Sadly, most of us can’t afford the luxury to take four months off, but what a civilised picture the phrase paints. At times, when the markets appear to be in the doldrums and stuck in a range, you may begin to wonder if this phrase still has some value, particularly as the volume of trades in the equity markets have fallen off considerably and the currency markets also appear to be stagnating, with very little price action trading available.

In terms of USA economic calendar events, only the Empire manufacturing reading was published, falling dramatically from 19.8 to 9.8, missing the forecast of 15. From Canada existing home sales have fallen, by -6.7% YoY in June. In the USA, both the DJIA and SPX closed effectively flat, down marginally, by only 0.04% and 0.01% respectively. EUR/USD was flat at circa 1.1476. USD/JPY was also flat at 112.60. GPB/USD ended the day at 1.3053, down circa 0.2% on the day. USD/CHF fell by circa 0.3% on the day, to 0.9625. WTI oil slumped to S1, closing the day out down circa 1%, at $46.12 per barrel. Gold rose on Monday, by 0.3% to settle at approx. $1233 per ounce.

The other main economic calendar news, in a relatively quiet news day, came early Monday from China; industrial production at 7.6% YoY and GDP at 6.9%, both came in ahead of forecasts. As did retail sales growth, at 11% YoY. Naturally the chatter in investment circles moved onto; “how reliable is the Chinese data?” An arrogant question that (ironically) is never posited towards the USA, or European economic data.

As focus moved to the European open, Europe’s CPI fell to the forecast of 1.3% YoY, and coming in at zero for the month of June. Euro STOXX 50 closed down 0.27%, DAX down 0.35%, CAC down 0.10%, with the UK’s FTSE breaking the European mould, with a rise of 0.35% on no news, other than vague optimism that the latest round of Brexit talks may lead to what’s termed a “soft Brexit”.

Economic calendar events for July 18th, all times quoted are London GMT time

01:30, currency impacted AUD. RBA July Rate Meeting Minutes. The Australian central bank will release the minutes, explaining why they kept interest rates unchanged.

04:00, currency impacted JPY. Tokyo Condominium Sales (YoY) (JUN). The forecast is for an improvement from the -13.3% figure, recorded for May.

08:00, currency impacted EUR. ECB Bank Lending Survey. This survey will be monitored carefully for any clues as to forward guidance, in terms of future interest rate rises.

08:30, currency impacted GBP. Consumer Price Index (YoY) (JUN). The forecast is for no change, from the 2.9% figure registered on May.

08:30, currency impacted GBP. Retail Price Index (YoY) (JUN). Retail prices are forecast to fall to 3.6%, from the 3.7% figure registered in May.

08:30, currency impacted GBP. House Price Index (YoY) (MAY). The UK’s house price inflation is predicted to fall sharply to 3.0%, from the 5.6% level recorded for April.

09:00 EUR Euro-Zone ZEW Survey (Economic Sentiment) (JUL). A similar reading, to the 37.7 registered in June, is expected.

09:00, currency impacted EUR. German ZEW Survey (Economic Sentiment) (JUL). The expectation is for a fall to 18, from the 18.6 figure in June.

12:30, currency impacted USD Import Price Index ex Petroleum (MoM) (JUN). The forecast is for the flat reading of 0.0% recorded in May, to remain unchanged.

12:30, currency impacted USD. Export Price Index (YoY) (JUN). The prediction is for a reading of 1.4%.

14:00, currency impacted USD. NAHB Housing Market Index (JUL). The reading of 67 from June, is forecast to be repeated.


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