From the desk of Joe Rios
Last week we noticed the correlation between the bond market and the US dollar to be outside of its historical norm. The US dollar usually trades in same direction as the bond yield, not bond price. None the less, bonds traded down with the US dollar for most of the week. However, after the US employment data release, the US Dollar reversed as unwinding of recent positions became evident.
This decoupling between these markets should provide an interesting week ahead in the financial markets. Will commodities continue to take its cue from the US dollar? Will gold trade with the bond or currency market? Will the commodity currencies lead the way? In the week ahead I will continue to focus on the intermarket relationships and the direction of the US dollar.
The commodity markets provided trading opportunities with grains outperforming led by wheat gaining 8.44% and corn 2.63%. The velocity leaders to the downside was silver -3.63%, crude oil -2.35% and natural gas -1.87%. I will also pay close attention to the technicals of the market including recurring patterns and key breakpoints. There is also plenty of potential market moving data releases from China, New Zealand and Australia.
– Joe Rios
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8:30 AM CAD Building Permits
9:30 PM AUD NAB Business Confidence
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10:00 AM USD JOLTS Job Openings
10:50 PM AUD RBA Gov. Stevens Speaks
4:30 AM GBP Manufacturing Production
10:30 AM CL Crude Oil Inventories
4:00 PM GBP Gov. Carney Speaks
5:00 PM NZD RBNZ Rate Statement
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1:30 AM CNY Industrial Production
8:30 AM USD Retail Sales And Unemployment Claims
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10:00 AM USD Preliminary UoM Consumer Sentiment
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