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
- 43rd G7 Summit in Sicily, Italy May 25, 2017
- OPEC meeting in Vienna May 25, 2017 Vienna Saudi Arabia has expressed support for maintaining production cuts.
- NATO summit (Trump/Macron to meet) May 25, 2017 Brussels, Belgium
- Montana Special Election 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
- Deadline for U.S. Mexican sugar dispute June 5, 2017
- Brazilian Electoral Court rules on Dilma-Temer ticket June 6, 2017
- UK general election June 8, 2017
- 1st Round French Parliament vote June 11, 2017
- Phillippines Independence Day June 12, 2017 Does Rodrigo Duterte visit one of the disputed South China Sea islands, Pag-asa, to celebrate?
- FOMC meets on interest rate policy* June 13, 2017 – June 14, 2017 Summary of Economic Projections and a press conference by the Chair.
- 2nd Round French Parliament vote June 18, 2017
- Brexit talks begin? June 19, 2017
- Georgia's 6th District special runoff election June 20, 2017
- Deadline for notification of participation in Obamacare exchanges in 2018 June 21, 2017 Obamacare exchanges in 2018
- TENT: U.S. Commerce Department Trade deficit report June 30, 2017
- TENT: Deadline for National Security review on core industries June 30, 2017 Ross, the US commerce secretary, promised to wrap up the special investigation by the end of June.
- (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?
- TENT: 100-day trade investigation China/U.S. due July 20, 2017 During their visit at Mar-a-lago, Chinese officials instigated a “100-day plan” on trade between it and the U.S. to include “way-stations of accomplishment.”
- FOMC meets on interest rate policy July 25, 2017 – July 26, 2017
- Last Congressional Business day before August Recess July 28, 2017
- TENT: Decision to proceed on suit regarding legality of Obamacare Gov't Subsidies August 21, 2017
- (TENT) Catalan Referendum for independence August 31, 2017
- (TENT) Xiangshan military forum 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
- (TENT) U.S. Gov't Spending Bill due September 30, 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
- Fed: Yellen's term expires February 3, 2018
- Chair Yellen's term ends (if not reappointed) 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