Don’t Cry For Me Argentina

Monday is likely to be Asia’s quietest day this week, with Singapore, India and New Zealand on holiday and a relatively slow news weekend from a financial markets point of view. My beloved New Zealand’s unceremonious manhandling out of the Rugby World Cup by England on Saturday ensures that it will now have my full attention. The week includes a monsoon of tier 1 data, US earnings, Brexit, an election with a Federal Reserve rate decision thrown in.

Moving to the most odious part of today’s note, politics. Argentina voters went to the polls to elect a new president yesterday. A victory by the left-leaning Peronist candidate, Alberto Fernandez, looks almost guaranteed over the incumbent Mauricio Macri. The result is likely to send cold shivers through Latin American financial markets. Latin America is a much more unstable place now than just a few months ago when Argentina’s initial presidential contagion was isolated to Argentina itself. Violent protests in Ecuador and Chile, the election of Jair “Burn Baby Burn” Bolsonaro in Brazil have shifted the dynamics on the continent as people push back against grinding inequality. The overflow this time has the potential to spill into other emerging markets outside of the region.

Brexit developments this week may, or may not, see an election voted for and passed by Westminster today, or not, or amended. The European Union may, or may not, announce an extension to the Brexit deadline until January 31st. They may be waiting for election clarity from Britain before announcing any deadline extension though, or not. Sterling should continue to benefit; however, as a no-deal Brexit looks very remote now. Election uncertainty, will conspire to cap gains for now above 1.3000. I hope this clarifies Brexit for readers.

The Bank of Japan(BOJ), Bank of Canada(BOC) and the Federal Reserve all announce rate decision this week. The BOJ and BOC on Thursday should be no change non-events. The picture though is much more cloudy with the Fed. The street has priced in a 90%+ chance that the Fed will cut by 0.25%. In my opinion, this is erroneous, with markets fitting the rate decision to the narrative that they want to hear. At best the odds are 50/50 with the Def unwilling to squander the fruits of its hard-won partial rates normalisation on panic rate cuts. Slowing data in the United States has yet to see the previous two cuts flow through and the US data itself is still doing quite nicely thanks.

The key will be in the wording of the statement with a stubborn FOMC likely to see a retracement higher in US bond yields, a higher dollar and some heat coming out of stock markets that are on record highs. There is no truth to the rumour that the President is going to send Delta Force to the Federal Reserve if they don’t cut.

US earnings become seriously busy this week with Alphabet, Apple and Facebook all announcing along with unicorns Uber and Beyond Meat. Old school stalwarts General Electric, General Motors, Pfizer and Exxon Mobile also announce. In total, some 160 companies will announce this week. I won’t speculate on the results themselves I do note, however, that companies that miss earnings or growth forecasts have been severely punished thus far. I expect that trend to continue as investors remain nervous on global growth and with stock markets at record levels.

The packed data calendar for the week started yesterday with China’s Industrial Profits YTD falling a more than expected 2.1%. That may give mainland stock markets food for thought before pushing the buy button today. China releases official Manufacturing PMI on Thursday and Caixin PMI on Friday.

US GDP is released on Wednesday ahead of the FOMC decision. US Personal Income and Spending is released Thursday before the Non-Farm Payrolls followed by the ISM Manufacturing round out Friday. The Non-Farms are expected to fall to 90,000 but may be distorted by the General Motors strike. My feeling is that poor data prints will send the clamour for the Federal Reserve to move in December into overdrive.

Overall it is hard to know where to start with what must be one of the most substantial data and event risk weeks of the year. Stock markets and energy will likely be punished should earnings or data from the US or China disappoint. Today in Asia is likely to be the quietest day of the week, but one thing is for sure, we won’t be bored this week.


Wall Street finished within whispering distance of record highs on Friday, spurred higher on positive talk from the US-China trade talks and expectations of an FOMC rate cut this week. The S&P 500 rose 0.41%, the Nasdaq rose 0.70%, and the Dow Jones rose 0.56%. Trade deal or not; rate cut or not; stocks are now at heady levels, and remain vulnerable to poor results from the avalanche of Q3 earnings announcements this week.

The fall in China Industrial Profits is likely to take the edge of the Asian market’s bullish sentiment after Friday’s Wall Street advances. That caution has seen the Nikkei and ASX 200 rise only 0.20% in early trading.


With Singapore on holiday today, currency trading will be muted somewhat. The dollar rose on Friday as US Treasury yields moved higher. The dollar index rising 0.21% to 97.84. The Euro eased to 1.1070, and the GBP eased to 1.2820 as Brexit and election uncertainty weighed on both.

Asia is off to a quiet start after little news of note over the weekend. The majors are almost unchanged across the board. Currency markets are likely to hold their fire until later this week awaiting the FOMC and Non-Farm Payrolls, happy to let equities do the FOMO tail-chasing intra-day.


Oil edged higher on Friday concluding a strong week as trade-talk progress continued to bolster prices. Brent crude rose 0.70% to $62.00 a barrel and WTI rose 1.0% to $56.50 a barrel.

Oil’s rally has been driven by optimism and not reality, and thus it remains vulnerable to a potentially ugly downside correction. Soft data from the US or China, a no-cut Fed this week or a speed bump on trade talks, could all quickly derail the recent rally. Traders should tread carefully as the week begins.

Both contracts are lower by 0.20% after China Industrial Profits data showed a more significant than expected fall.


Gold spiked to $1517.00 an ounce on Friday on what looked like a sizeable one-off transaction. It failed ahead of resistance and just as quickly fell back to be almost unchanged at $1504.00 an ounce.

Resistance remains intact at $1520.00 an ounce with longer-term support at $1475.00. Gold’s fate is intrinsically intertwined with the FOMC rate decision and Friday’s US data rather than its own fundamentals.

Gold has started quietly unchanged from Friday and will likely stay that way as it awaits the main events from North America this week.

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Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was OANDA’s Senior Market Analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV and Channel News Asia as well as in leading print publications such as The New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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