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Weekly Market Briefing
Dolla’ Dolla’ Bull Y’all

Karl Schamotta March 20, 2017

As we cautioned last Monday, fragile speculative positioning made a post-announcement market quake more likely to occur, but a different word of warning is in order today. A short squeeze like the one that shook markets through the latter half of last week is often a technical phenomenon that only briefly obscures more deeply-held investor beliefs. While the Federal Reserve’s cautious tone should be heeded, there is little indication that it will be – instead markets are likely to remain convinced that growth and interest rate differentials will continue to widen between the United States and its major counterparts.

With very little in the way of hard data releases scheduled for the days ahead, bulls could use what may be a series of relatively positive speeches from Federal Reserve officials to begin rebuilding positions. Speculators keying off a more hawkish communications strategy could help to unwind some of the sell-off that occurred last week, and ride the momentum trade that has lifted the greenback higher for several years.

For now, the trend is the dollar’s friend – but prepare for the bend at the end. It will come…

 

Catalysts 

Potential Volatility Triggers:

MON
20:00                JPY Holiday
0:00                  MXN Holiday
03:00    *          EUR German Producer Prices, February
08:30    *          CAD Wholesale Sales, January
13:10    *          USD Federal Reserve Evans Speech
20:30    **         AUD RBA March Rate Meeting Minutes

TUE
0:00                  ZAR Holiday
05:30    ***       GBP Consumer Price Index, February
06:00    *          USD Federal Reserve Dudley Speech
08:30    ***       CAD Retail Sales, January
08:30    **         USD Current Account Balance, Q4
12:00    **         USD Federal Reserve George Speech
18:00    **         USD Federal Reserve Mester Speech
19:50    **         JPY Bank of Japan Meeting Minutes, January
19:50    *          JPY Trade Balance, February

WED
05:00    *          EUR Euro-Zone Current Account, January
10:30    **         USD Department of Energy Inventories
16:00    ***       NZD Reserve Bank of New Zealand Rate Decision

THU
05:00    *          EUR European Central Bank Economic Bulletin
05:30    **         GBP Retail Sales, February
08:00    ***       USD Federal Reserve Yellen Speech
08:30    **         USD Initial and Continuing Jobless Claims
11:00    *          EUR Euro-Area Consumer Confidence, March
14:00    **         USD Fed’s Kashkari Speech
17:45    *          NZD Trade Balance, February
19:00    **         USD Federal Reserve Kaplan Speech

FRI     
03:45    *          EUR French Gross Domestic Product, Q4
04:30    *          EUR Euro-Area Markit Manufacturing Purchasing Manager Indices, March
08:30    ***       CAD Consumer Price Indices, February
08:30    ***       USD Durable Goods Orders, February
09:00    **         USD Federal Reserve Bullard Speech
10:00    **         USD Federal Reserve Dudley Speech
13:00    *          USD Baker Hughes U.S. Rig Count

 

Counterparties

Background Reading:
VoxEU: The Great Chinese Inequality Turnaround
Council on Foreign Relations: Capital Is No Longer Flowing Uphill
CityLab: The Economic Power of Cities Compared to Nations
Worthwhile Canadian Initiative: We Are Adding Less to Housing Supply
National Bureau of Economic Research: Intangible Capital and Measured Productivity
Financial Times: A Visual history of Fed Sentiment
1843: Escape to Another World
Bloomberg: Trump’s Lesson from Trudeau: Infrastructure Is No Quick Fix
City Building Institute: In High Demand

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