While the negative correlation between the DXY and risk appetite as waned recently, an encouraging sign for the bulls, it does clearly show that the “carry trade” has had a large part in fueling the gains in risk oriented markets. It feels to me like it’s been much more laborious for the US markets to make a new high, given that important sectors such as the financials are seriously lagging and risk averse industries such as health care being being rotated into as a defensive stand.
What we are seeing now is the market trying to ride the bike now that the training wheels are coming off. Will it fall? I think so at the end.
Note, the Aussie dollar has been trading more in lockstep with the risk trade so I am focusing on this pair. Given the ugly cockroaches we’ve uncovered recently in the form of Greece, and Dubai, I think there are other roaches out there. We are already in a very fragile situation and any adverse or negative global surprise could just be too much for the risk markets to handle.
Proceed with Caution
Upcoming Key Macro Events
- Target for UK Triggering Article 50 March 29, 2017
- Senate Intelligence Committee Public Hearing March 30, 2017
- (TENT) Tarullo, Fed Governor set to resign April 5, 2017
- NATO foreign ministers meet April 5, 2017
- (TENT) Trump meets with Jinping at Mar-a-Lago April 6, 2017 Mar-a-Lago
- Confirmation vote for Neil Gorsuch April 7, 2017
- Eurogroup Summit (Greek bailout resolved?) April 7, 2017
- Target date to have AHCA passed the Senate April 7, 2017 at 5:00 pm – 6:00 pm
- Tillerson meets G7 foreign ministers in Italy April 10, 2017 Italy
- Target date for approval of ACA from both Houses April 14, 2017
- US: Budget resolution technically due. April 15, 2017
- (TENT): G7 Foreign Ministers meet in Tuscany April 15, 2017 Tuscany
- (TENT): Duterte visits Moscow (April or May) April 15, 2017
- Turkish Constitutional Referendum (Erdogan enhanced powers) April 16, 2017
- French Presidential election (1st round) April 23, 2017
- Spending bill deadline April 28, 2017 Republicans and Democrats agreed in late 2015 on a budget deal to increase some spending for two years to fund the government and avoid a shutdown and debt default. However Congress still needs to come up with a spending bill within those parameters by April 28
- Treasury Semiannual report on on International Economic and Exchange Rate Policies April 28, 2017
- EU summit to discuss Brexit April 29, 2017
- FOMC meets on interest rate policy May 2, 2017 – May 3, 2017
- French presidential election (run off) May 6, 2017
- (TENT): G7 finance ministers meet in Puglia May 15, 2017 Puglia
- OPEC meeting in Vienna May 25, 2017 Vienna
- 43rd G7 Summit in Sicily, Italy May 25, 2017
- (TENT) Article 50 negotiations to begin June 1, 2017 Mrs. May’s letter will pave the way for Britain to leave by March 2019
- D-day anniversary June 4, 2017 at 3:30 pm – 4:30 pm 1944
- FOMC meets on interest rate policy* June 13, 2017 – June 14, 2017 Summary of Economic Projections and a press conference by the Chair.
- (TENT): Deadline for Greek debt payment (IMF review) July 1, 2017
- TENT Thaad deployed in South Korea?? July 1, 2017 South Korea??
- G20 Summit in Germany July 7, 2017 – July 8, 2017 Do Trump and Putin meet?
- FOMC meets on interest rate policy July 25, 2017 – July 26, 2017
- (TENT) Xiangshan military forum August 31, 2017
- (TENT) Catalan Referendum for independence August 31, 2017
- FOMC meets on interest rate policy* September 19, 2017 – September 20, 2017 Summary of Economic Projections and a press conference by the Chair.
- German Bundestag elections September 24, 2017
- FOMC meets on interest rate policy October 31, 2017 – November 1, 2017
- China's Singles Day November 11, 2017
- FOMC meets on interest rate policy* December 12, 2017 – December 13, 2017 Summary of Economic Projections and a press conference by the Chair.
- (TENT) Italian National Elections January 1, 2018
- Chair Yellen's term ends (if not reappointed) February 3, 2018
- Fed: Yellen's term expires February 3, 2018
- Fed: Lockhart (Centrist to slighly dovish) retires? February 28, 2018
- Fed: Fischer's term expires June 12, 2018
- Austrian general election due by Sept 2018 September 1, 2018