HYCM Market Insights & Trading Tips

Bank of Canada preview: Time to taper?
by Giles Coghlan, Chief Currency Analyst, HYCM

The Bank of Canada has developed a more optimistic outlook regarding its economic outlook. Heading into the latest meeting there were rumours of a very small rate cut mooted by market participants. However, these rumours were off the mark and rates were not only kept unchanged at 0.25% but the Bank of Canada updated growth forecasts.

Growth forecast revised

The end of 2021 growth was last seen at +4.6% vs +3.8% previously and Inflation was revised up as well to +1.5% vs +1.3%. The higher oil prices have also been helping the Canadian oil export economy and the latest OPEC decision means that oil should remain supported in the near term. Canada’s balance of international payments dropped for Q4 2020, but the way the data was calculated was impacted by COVID-19 as Statistics Canada mention on their site. GDP m/m was as expected at 0.1% vs 0.1% expected. New building permits came in very strong rising to 8.2%. The majority of these gains were for a single-family home.

Canada’s inflation in focus

Inflation is a little strange out of Canada too. In last month’s CPI report Statistics Canada changed the way they calculated CPI (inflation). They then had a further tweak of these changes and upgraded the inflation readings:

1. CPI common unchanged at 1.3%
2. Trim 2.0% vs 1.8% reported last week (and 1.6% exp)
3. Median 2.0% vs 1.4% reported last week (and 1.8% exp)

The bottom line is the picture about CPI is hazy in Canada right now and the next reading is March 17. Watch out for any further explanation on inflation this week.

Macklem was concerned about CAD strength, but not about inflation

In the last press conference, Governor Macklem was concerned about the rise in strength of the CAD. So, that will be an area to watch. When Macklem spoke on February 23 he brushed aside the rising housing market, downplayed the methodological change to the CPI data, and anticipates strong growth through H2 and into 2022.

Risks

There is a risk that the BoC gives a more optimistic outlook and that strengthens the CAD out of the meeting. Economists expect no change in rates this year or next. The next move is tapering of bond purchases for the BoC. Will they give any hints about that this week? EURCAD short could be a good expression of benefiting from that weakness, but the ECB is meeting this week too, so one for a hit and run.

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Market Mood WTI Crude Oil 09.03.21
by Giles Coghlan, Chief Currency Analyst, HYCM

Will we see oil sellers this week? Listen on Youtube.

Attached Image (click to enlarge)

Oil prices have been supported higher after last weeks OPEC meeting kept production levels from rising. This has ensured oil has seen some bids. However, US oil has now moved higher into a key overhead resistance level. Furthermore, according to Bloomberg, Chinese storage facilities are nearly full. On top of this, the rising USD is a further headwind for US oil gains.

There is also a strong seasonal pattern for oil prices to fall in the coming days. There has been an annualised fall in oil prices of over 70% if you had sold oil every year between 09 March and 15 March.

There is the potential for more selling this week, so it is one instrument to watch out for.

Trade Risks:

1. Any drop lower in US CPI data on Thursday will weaken the USD and provide relief for oil.
2. Any surprise draw in inventory levels for oil will support prices.
3. Any strong risk on tones will also support oil.

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Medium term BTCUSD dip buyers will eye $40,000
by Giles Coghlan, Chief Currency Analyst, HYCM

Bitcoin bulls may be encouraged to see that assets at Crypto funds are approaching almost $1 billion of inflows this year according to Bloomberg. This came from a ‘functions for markets’ article written by portfolio and equity specialist Jamie Douglas Coutts. Some of this extra involvement means that the GrayScale Trust has lost its premium appeal as alternative ways of investing in cryptocurrencies have emerged. GrayScale Trust is the world’s largest bitcoin fund and the first investment vehicle to report to SEC.

Institutional investment still has plenty more room to go

A JP Morgan survey from last week revealed that 78% of institutional investors are not planning to invest in cryptocurrencies. However, over half of the respondents believe that crypto is here to stay. The respondents were representing around 1500 different institutions. Only 21% of those surveyed thought Bitcoin was a ‘temporary fad’. As more and more Bitcoin ETF’s become available that will mean that retail investors will have more and more options to express their interest in cryptos. Also, as long as companies like PayPal and Tesla keep showing their interest and involvement dip buyers can still be expected. This recent rally in Bitcoin has more sense of staying power about it. However, in the markets, no investment is ever completed certain.

One key area that medium-term dip buyers will be looking at is any retest of the 100 EMA on the daily chart. That is around the $40,000 mark and stops can be placed below the 200EMA. Any break of the 200EMA and the next major support would be at $20,000.



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Seasonal Insights S&P500 10.03.21
by Giles Coghlan, Chief Currency Analyst, HYCM

Is the S&P500 set for gains again this year? Listen on Youtube.

Attached Image (click to enlarge)

The S&P500 is entering into a strong time of year where it tends to see seasonal gains. Over the last 21 years, the S&P500 has risen a total of 17 times between March 12 and April 30, The average return over the last 21 years has been +3.60%. The maximum profit was a large +17.41% last year. The largest loss has been -7.61% in 2002.

Will the stimulus package out of the US of $1.9 trillion support the S&P500 higher again for this upcoming period Or are stocks markets overbought as it is?

Trade Risks: The current sell-off on rising US 10 year bond yields could accelerate moves to the downside in global stocks and remains a risk going forward.

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Seasonal Insights CAC40 11.03.21

Is the CAC40 set for gains over the next 6 weeks? Listen on Youtube.



The CAC40 is entering into a strong time of year where it tends to see seasonal gains. Over the last 33 years, the CAC40 has risen a total of 25 times between March 11 and May 01, The average return over the last 33 years has been +3.97%. The maximum profit was +21.08% in 2009. The largest loss has been -7.56% in 2012.

Stock markets are rising higher on low-interest rates, high levels of QE, and large amounts of fiscal stimulus This has been ensuring the dips lower keep finding buyers. Is this now a great time to buy the CAC 40? You can search the data here.

Trade Risks: There is a risk that investors consider equity markets overbought and that could see a correction. It is hard to know when that correction will come, so investors need to be aware.

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Have you heard about the TINA effect?
by Giles Coghlan, Chief Currency Analyst, HYCM


So, have you ever heard about TINA? This acronym stands for There Is No Alternative (TINA). It is TINA that is currently driving stocks higher.

Why is there the TINA effect?

There is a huge US stimulus package due to be signed off today, low rates, a dovish Fed (how dovish to be seen next week), and high levels of QE driving stocks higher. However, the lack of alternatives is meaning the dip keeps getting bought. That pattern is likely to continue.

More support to come?

There is talk of a further $2.5 trillion package for the US due over the next 4 years. Spend, spend spend. Great news for the short term, more questionable for the longer term, but that is Keynesian economics for you. When you hit a wall, spend your way out. I will leave the pros and cons of such an approach for others today, but in the short term, it does mean stocks should gain.

FTSE100 should gain from a buy the dip mood

The FTSE 100 is looking really good right now. Firstly, the general backdrop for the UK is more stable. Yes, there are some issues post Brexit for UK manufacturers in terms of their exports. However, the UK has finished Brexit and the rest of the EU will slowly come to terms with it. All the pent up demand for things the UK can be released as the doomsday ‘no deal Brexit’ scenario was avoided.

The UK is ahead of the curve in its vaccination program with around 1/3 of the population being vaccinated. Vaccination wise the UK is ahead of both Europe and the US, so that should mean the UK sees demand return more quickly.


Pent up savings

The UK has, like much of the developed world, pent up savings to spend. A return to normal social interaction should release that pent up demand into the economy.


The Bank of England’s Governor Bailey has noted the market’s optimism this week on improving conditions, but sounded a note of warning saying that the economy is, according to its forecasts, ‘starting at a lower level of activity’. However, as long as the UK continues with its vaccination program, and there are no major hurdles from a strong COVID-19 variant. The FTSE 100 should gain.

Seasonally strong

Have an explore of the seasonals for the FTSE 100 here. You can see that this is a great time of year for the index.

Technically simple

Well, it is just a case of going with the break of the recently broken trend line. Hard to get any simpler than that.



You can read about our new partners Seasonax here.

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Market Mood AUDNZD 12.03.21
by Giles Coghlan, Chief Currency Analyst, HYCM

AUDNZD sellers at market? Listen on Youtube.

Attached Image (click to enlarge)

Governor Lowe was very bearish during his most recent speech this week. In his speech, he pushed back against the market expectations of rate rises in 2022 and 2023. Governor Lowe maintained that the RBA’s path is set on no rate rises until 2024 at the earliest. Furthermore, he made it clear that the RBA could consider further bond purchases.

In contrast, the RBNZ now has enough vaccinations for its entire country. The GDP data out next week should show the New Zealand economy on a firm footing as the Q4 data comes. Remember that New Zealand has been one of the best nations in handling COVID-19 infection rates.

This means that the next week could see AUDNZD sellers as a potential divergence opens up between the RBA and the RBNZ.

Trade Risks:

1. Any significant improvement in the outlook for Australia will invalidate this outlook.
2. Any positive comments from the RBA about earlier interest rates rises will also invalidate this outlook.

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Week Ahead 15.03.21
by Giles Coghlan, Chief Currency Analyst, HYCM

This week saw continued focus on the rise of global bond yields as US 10 year yields were rising again. However, the flat US CPI data midweek stopped the rapid rise in yields. The headline came in at +1.7% y/y which was in line with expectations but was enough to give the USD a break from its recent run higher. Next week there will be an intense focus on the Fed. Global stocks found dip buyers this week as the ‘TINA’ stock option played out. This is the ‘There Is No Alternative’ (TINA) trade. This keeps equity markets rising for now on easy monetary conditions.

Other key events from the past week

1. CAD: Interest rate, Mar 10. Interest rates (0.25%) remained unchanged & the pace of bond purchases will be adjusted as required. The BoC meeting was as expected and this just shifts extra focus onto the Fed’s rate decision next week.
2. Global stocks: ‘buy the dip’, Mar 11. Low-interest rates, high levels of quantitative easing, and large amounts of fiscal stimulus are keeping global stocks bought on dips lower. The FTSE 100 looks set to gain in a risk on environment.
3. ECB: Interest rate, Mar 11. The ECB accelerated the pace of PEPP purchases, but Christine Lagarde denies that the ECB is doing Yield Curve Control (YCC). The Interest rate and the size of the PEPP program were kept unchanged.

Key events for the coming week

1. USD: Interest rate, Mar 17. The focus next week will be on the Fed. Will they bring forward interest rate rises from 2024? Will the Fed maintain a very dovish outlook? Expect a big week for the USD! See what the Fed said at their last meeting here.
2. GBP: Interest rate, Mar 18. The Bank of England is expected to keep interest rates unchanged next week. However, the UK has now vaccinated 1/3 of its population. Will that lead to a more optimistic outlook for the Bank of England?
3. NZD: GDP Q4, Mar 18. New Zealand’s economy should show gains from New Zealand’s low COVID-19 infection rates. Will this open up a central bank divergence between the RBA & the RBNZ favouring AUDNZD selling?

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What did we learn from Governor Lowe’s speech last week
by Giles Coghlan, Chief Currency Analyst, HYCM

The main takeaway from the RBA is that they are not wanting to raise interest rates sooner than 2024. The RBA were explicit in this by saying that they do not share the market expectations of rate increases in 2022 and 2023. The RBA added that the board will consider the case for extending bond purchases later in the year.

Move on the 3-year yields

The RBA had a repo tweak last week that some may have missed. In a nutshell, they have announced that the borrowing of the 04/2023 and 04/2024 bonds will be done by their own facility. The kicker here is that their facility jas a fee of 100bps vs the usual 25bps fee. The prospect of shorting these 3-year yields bonds, to much rates above 0.10%, looks very unlikely.

Not before the Fed

Despite the threat of further bond purchases potentially coming Governor Lowe said that the RBA is already doing a large amount of QE and it is ‘sensible to see how the economy develops’ before deciding on further QE. The way to read the RBA is still that they don’t want to move before the Fed. Governor Lowe’s speech just puts more focus on the Fed’s meeting this week. If the Fed starts talking about earlier rate rises than the RBA will likely start to follow suit. They just don’t want to be the first to declare a coming rate rise.

RBA vs RBNZ

Although Governor Orr is trying to signal stimulatory policy investors have been giving a 29% chance of the RBNZ hiking rates this year. This percentage can grow as NZ has already purchased enough vaccines for the whole country and Q4 GDP data out this week may signal the economy is on a sure footing. This should open up an AUDNZD sell bias, but keep an eye on the bond yield spread.


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Seasonal Insights Amazon 16.03.21
by Giles Coghlan, Chief Currency Analyst, HYCM

Is Amazon set for gains over the next few months? Listen on Youtube.

Attached Image (click to enlarge)

Amazon is entering into a strong time of year where it tends to see seasonal gains. Over the last 10 years Amazon has risen a total of 09 times between March 17 and July 19, The average return over the last 10 years has been +24.81%. The maximum profit was +76.83% in 2020. The largest loss has been -4.07% in 2012.

Is now a good time to buy Amazon? Or have the recent gains been too much, too fast?

Trade Risks: There is a risk that investors consider equity markets overbought and that could see a correction. It is hard to know when that correction will come, but investors need to be aware of the risk.

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Which COVID-19 vaccine is the best one to use?
by Giles Coghlan, Chief Currency Analyst, HYCM

The short answer that is being encouraged by Gov’t’s is this: ‘whichever one you can get’. One of the issues that Governments are facing that multiple vaccine options may mean that some are waiting for the ‘better’ vaccine to become available. So, which one is the ‘best’?

It comes down to efficacy

What is the efficacy? if a vaccine has a 70% efficacy rate it means there is a 70% reduction in the chance of an immunised person becoming ill vs a non-immunised person.

Efficacy on different levels

The ‘efficacy’ measurement can also be applied to different questions. So, for example, some vaccines appear to have a 100% efficacy rate in averting hospitalisation and death. Pretty useful.

So, what’s the current range of efficacy data?

For vaccines that prevent COVID-19 case the two leaders are Pfizer and BioNTech:

1. Pfizer Inc: 95%
2. BioNtech SE: 94%
3. Novavax: 89.3%
4. Johnson & Johnson: 66.9%
5. AstraZeneca: 66.7%

Chinese, India and Russian vaccines: Efficacy range from 50% to 91%. See table from Bloomberg below:

How reliable are the ‘efficacy’ levels

Hard to say as the different studies had different selection criteria. Where some sick patients allowed to take part in the trial l(like those with underlying health conditions) or where only ‘healthy’ individuals selected for the trials? When was the ‘efficacy’ result gathered as vaccines take time to develop? What exact symptoms were being monitored? What exactly constitutes a severe Covid-19 case. You see the point. The trials were not all conducted the same way. Also, a serious response to COVID-19 is comparatively infrequent, so a smaller pool makes it harder to assess. Especially as their trials are understandably being pushed through at a much quicker speed than normal.

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What did we learn from the BoC last week?
by Giles Coghlan, Chief Currency Analyst, HYCM

Rates were unchanged at 0.25% and bond purchases are set to continue at least at $4billion per week. However, the Bank of Canada still doesn’t want to bring rate hikes forward and the Governing Council expects that economic slack will not be absorbed until into 2023. The economy is 1% higher then the BoC had anticipated.

Inflation

To move above 2% towards 3% temporarily over the coming months. This inflation is to be driven by the prices of numerous goods and services that fell sharply during the pandemic and rising oil prices.

Employment among young is key

One of the concerns of the BoC at the rate meeting was over job losses being concentrated among low age workers, you people and women. This theme was picked upon by Deputy Governor Schembri the day after the rate meeting who said that the labour market remains a long way from a full recovery. You can read his statement here.


Similarly to New Zealand, the housing market has seen strength in Canada. So far, the BoC is not going to step into cool the housing market by rising interest rates. Remember this is a pressure the RBNZ has to deal with. See here for a reminder on that issue.

GDP

Grew by +9.6% in 2020 and GDP growth in Q1 2021 now expected to be positive.

Savings are up

Household savings have risen by about $5800 per Canadian.



However, the BoC are unsure exactly how these savings will be spent in the future. There is obviously a more cautions tone around, so people will be slower to spend savings for sure. The three things most people seem to be doing with their savings now in Canada according to the BoC is: putting it in the bank as deposits (personal deposits up by $150 billion), paying off debt, buying houses (fuelling the strong housing market), and buying financial assets and retirement plans. What happens with the excess savings is important as it is enough to impact the direction of the Canadian economy. So this is why the BoC asked respondents what people would do with their savings. 5% plan to spend it all in 2021 and 14% plan on spending some. This survey was conducted in November. See here. The BoC are working on a boost per capita to consumption of $500.

Attached Image (click to enlarge)

The takeaway

The BoC are optimistic, but recognise risks. Oil prices are supportive and the economy is not expected to shrink now for Q1. All in all interest rates are expected to rise in 2023 and the market is pricing in a 2022 hike. For now, expect CAD buyers on dips. The next move from the BoC will be mentioning tapering of bond purchases as long as there are no further negative surprises.

You can read the full statement here. The next meeting is on April 12.

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Week Ahead 22.03.21
by Giles Coghlan, Chief Currency Analyst, HYCM

This week’s key focus was on the Federal Reserve rate decision and whether there would be a shift in the dot plot. The FOMC median dot plot still sees no US interest rate hikes coming through 2023. This decision supported stocks and other risk positive assets higher in an immediate reaction to the decision. However, four FOMC officials do see a hike in December 2020 and this supported the USD as the decision was digested by the market. Some very strong US seasonal periods were highlighted for Coca-Cola and Amazon this week on our blog which are well worth checking out. The strong seasonal data comes from Seasonax.

Other key events from the past week

1. USD: Interest rate, Mar 17: The Federal Reserve kept to a dovish tone on Wednesday and are still not forecasting rate hikes until 2024. However, growth was revised upwards. The initial dovish reaction in the USD was reversed in early European trade on Thursday as the US shows signs of a faster recovery. You can read the Fed’s statement here.
2. GBP: Interest rate, Mar 18: The Bank of England kept rates unchanged at 0.10% and votes were 0-0-9. The policy statement was fairly neutral with some positive notes, but no near term interest rate hikes are expected from the UK de-spite the fast vaccine roll out with nearly 2/5 of all UK citizens vaccinated.
3. CAD: CPI data, Mar 17: The Bank of Canada was cautiously optimistic at their last interest rate meeting. However, weaker than expected inflation readings this week have pushed back expectations of immediate bond tapering from the Bank of Canada which limited further CAD upside on Wednesday.

Key events for the coming week

1. EUR: PMI data, Mar 24: Europe is currently behind the US in its vaccination program and weak PMI readings will further open up a recovery gap between the US and the Eurozone potentially supporting EURUSD sellers.
2. CHF: Interest rate, Mar 25: The Swiss National Bank has the lowest interest rates of all the major central banks. No changes are expected this week to the very low -0.75% base rate.
3. USD: US 10 y, Mar 26: US 10 year yields will remain in key focus this week. If the yields start rising higher remember that the 2.00% level is key. If yields do rise to that level the question is how much negative impact will this have on global stocks?

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Seasonal Insights BMW 19.03.21
by Giles Coghlan, Chief Currency Analyst, HYCM

Is BMW to gain as it enters a seasonally strong time of the year? Listen on Youtube.


The motor manufacturer (BMW) Bayerische Motoren Werke Aktiengesellschaftis is entering into a strong time of year where it tends to see seasonal gains. Over the last 22 years, BMW has risen seventeen times between March 18 and May 01. The average return over the last 22 years has been +7.31%. The maximum profit was +31.77% in 2020. There have been five losses in the last 10 years with the largest being -7.89% in 2015.

Is this a perfect time to see gains BMW gains on global recovery hopes and electric vehicle demand hopes?

Trade Risks: There is a risk that investors consider equity markets overbought and that could see a correction. It is hard to know when that correction will come, but investors need to be aware of the potential risk.

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Six reasons to buy corn
by Giles Coghlan, Chief Currency Analyst, HYCM

According to Bloomberg, corn has seen its best performance against commodity peers for 40 years over recent trade in line with the strong run in commodities on re-opening hopes. There are six other reasons for further corn strength over the medium term. They are as follows:

1. China wants to hold back food inflation and is starting to repair ties with the US post-President Trump. A new Biden era should be far more constructive for trade.
2. Corn imports from the US have increased, but shipments from Australia have dropped off due to the worsening diplomatic relations between Australia and China.


3. China’s hog herds are being built up again after they have shrunk due to the outbreak of the African swine flu.
4. Corn makes a good biofuel feedstock, so will benefit from Biden’s policy to reduce carbon emissions.
5. Corn futures market is in backwardation (indicating strong present demand) and expectations are that strong demand will sustain until mid-2022.
6. The seasonally selling for Corn does not come in strongly until June.
7. The above makes a case for buying corn on the dips.

A major risk to this outlook would be anything that rapidly alters the supply of corn and brings more supply into the market. As long as this condition remains it is reasonable to anticipate dip buyers in this market. Another risk is if we see a sudden sell-off in equity markets on concerns over an overbought market. Many anticipate a stock correction at some point and that would drag commodity prices lower should that happen, so another obvious risk to keep in mind.

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Seasonal Insights VISA 22.03.21
by Giles Coghlan, Chief Currency Analyst, HYCM

Time for VISA dip buyer? Listen on Youtube.



The financial company VISA is entering into a strong time of year where it tends to see seasonal gains. Over the last 12 years, VISA has risen 10 times between March 22 and July 27. The average return over the last 12 years has been +13.83%. The maximum profit was +45.31% last year in 2020. There have been 2 losses in the last 12 years with the largest being -13.64% in 2010.

Visa’s shares fall on the news last week of a US Justice Department investigation. However, is any dip lower a perfect time to see VISA gains on global recovery hopes?

Trade Risks: There is a risk that investors consider equity markets overbought and that could see a correction. It is hard to know when that correction will come, but investors need to be aware of the potential risk.

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Seasonal Insights Adidas 23.03.21
by Giles Coghlan, Chief Currency Analyst, HYCM

Time for Adidas buyers? Listen on Youtube.

Attached Image (click to enlarge)

The sportswear company Adidas is entering into a strong time of year where it tends to see seasonal gains. Over the last 15-years Adidas has risen 12 times between March 23 and April 22. The average return over the last 15 years has been +5.71%. The maximum profit was +18.67% in 2009. There have been 3 losses in the last 15 years with the largest being -5.79% in 2013.

Trade Risks:

1. There is a risk that investors consider equity markets overbought and that could see a correction. It is hard to know when that correction will come, but investors need to be aware of the potential risk.
2. There is a risk that further slowdowns in the EU vaccine roll out drag on German stocks and pressure them lower.

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What did we learn from the Fed last week?
by Giles Coghlan, Chief Currency Analyst, HYCM

The rate was unchanged 0.25% and QE was unchanged at $120 billion per month. Here were the key takeaways:

1. The dot plot changed slightly with more board members seeing sooner interest rate rises. However, the crucial point is that the median dot plot still sees no interest rate rises until 2024. See here to understand how the Fed uses the dot plot. Although the continued rise higher in yields post FOMC is showing the market is focused on sooner than expected rate hikes for now.


Still no rate hike until 2024.

2. Some upward projections for growth and inflation and reductions in unemployment expected. The main message from Powell was that ‘the very worst economic outcomes had been avoided’.

1. GDP for 2021 revised UP to 6.5% from 4.2%
2. Unemployment for 2021 revised DOWN to 4.5% from 5.0%
3. Inflation revised up to 2.4% from 1.8%

3. Fed rejected calls to start to talk about tapering.

In summary, the Federal Reserve stuck to the dovish script. Still, no rates expected until 2024. That’s what the Fed think.

However, the market is not so convinced. Eurodollar futures see a rate hike on March 2023 and three rate hikes for that year. See Justin’s post here the morning after the FOMC. Also, US 10 year yields shot higher the next day and the rise has continued. So, the market is pushing ahead with the ‘coming interest rate rise’ story.

The USD should find buyers again on pullbacks lower as the outlook for a faster US recovery is still underway. It’s just that the Fed is wanting to not see US 10 year yields rise too fast, too quickly.

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Bank of England: Holding steady with signs of hope
by Giles Coghlan, Chief Currency Analyst, HYCM

At the last Bank of England meeting, the Monetary Policy Committee (MPC) voted unanimously to keep interest rates at 0.10% and bond purchases unchanged at £20 billion per month.

Vaccine progress

There had been thoughts that perhaps the BoE would be more positive as the UK’s vaccination program is coming along well. Over half of the UK adult population has now received at least one dose. Furthermore, the latest US phase III AstraZeneca trial shows that the vaccine has a 100% efficacy in preventing severe disease.

Bank of England see hopeful signs ahead for the globe

1. Global GDP growth stronger than expected
2. US fiscal stimulus package should provide further global support. The BoE report had considered only around a $1 trillion package according to their minutes. See here at the top of page 5 (confusingly labelled page 2, but is actually page 5 of the PDF). So, this much larger than expected package was expected to boost the UK’s economy as well as the globe.
3. Longer-term yields have been rising across the world reflecting the above.
4. There was also a note about the cost of shipping containers rising, but that prices had somewhat stabilised recently.

Bank of England see hopeful signs ahead for the UK

1. UK GDP which fell by 2.9% was less weak than expected, but GDO Is still around 10% below its 2019 Q4 level.
2. 2021 Q2 could see ‘slightly stronger’ consumption growth, but unsure if this will impact the medium-term forecast. (so this is being downplayed).
3. CPI expected to turn to around 2% in the Spring as the impact of lower oil prices fall away.
4. Non-essential retail and outdoor hospitality to open no earlier than April 12 and entertainment and non-self-contained accommodation no easier than May 17.
5. A Bank of England survey saw that 15% of households would be spending more after restrictions eased and 40% said they would spend less.
6. UK redundancy numbers as measure by HR1 notifications continued to be relatively muted through the first quarter.
7. UK trade in goods volumes has fallen substantially in January. Exports and imports fell around 19% and 21% respectively. (Some disruption around the UK-EU transition period end were cited).

The takeaway of this report is that the Bank of England is pretty neutral, but with signs of hope on the horizon. If they start to materialise then that should support the GBP against weaker currencies like the Euro with present market conditions. You can read the full statement here.

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Seasonal Insights Volkswagen 24.03.21
by Giles Coghlan, Chief Currency Analyst, HYCM

Can Volkswagen take on Tesla? Listen on Youtube.



The German motor company Volkswagen is entering into a strong time of year where it tends to see seasonal gains. Over the last 10 years, Volkswagen has risen 9 times between March 24 and April 27. The average return over the last 10 years has been +7.61%. The maximum profit was +13.93% in 2020. There has been 1 loss in the last 10 years in 2013 with a drop of -1.32%.

Earlier in March Volkswagen are projecting 450K electric cars delivered to customers, which is double that of 2020. Will strong electrical vehicle sales allow Volkswagen to take on Tesla and boost shares again?

Trade Risks:

1. There is a risk that investors consider equity markets overbought and that could see a correction. It is hard to know when that correction will come, but investors need to be aware of the potential risk.
2. There is a risk that further slowdowns in the EU vaccine roll out drag on German stocks and pressure them lower.

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