This week saw more moves higher in the US yield space which strengthened the USD. The tail end of the US yield curve is at risk of bear flattening as fears grow that quick interest rate hikes will only stagnate growth medium term. Watch out for yields to pull back sharply lower next week if the Fed start pushing back against these sharp moves higher in bond markets. The US oil market was pressured into mid-week on fears of a coordinated US emergency reserve release. In the end, the impact of the US announcement was minimal and oil rallied higher after the announcement. How will OPEC respond next week?

Other key events from the past week

NZD: Interest Rate Hike? Nov 24: The RBNZ hiked their interest rates to 0.75% as expected this week from 0.50%. The hike was expected, but the RBNZ were more hawkish in their forward guidance. They now see the official cash rate at 0.94% in March 2022 (vs 0.86% previously). Medium-term NZD gains to come?

USD: Dollar strength, Nov 24: The strong rise higher in US yields is on expectations that the Fed may start tapering more quickly in order to have the option to hike rates. If this sentiment continues then the USDJPY pair may continue to move higher above 115.00.

US oil: Emergency reserves released, Nov 24: The US put pressure on OPEC announcing a 50 mln bbls release from the US SPR (emergency reserves). The release is quite small (The US consumes 20 mln bbls per day) & oil markets were unfazed on the release.

Key events for the coming week

US oil: OPEC meets, Dec 02: The US worked at coordinating a series of emergency oil reserve releases this week pressuring oil prices. All eyes are now on OPEC+ to see how, or indeed if, they will respond. Check out the oil seasonals heading into December.

Seasonal trades: NZDJPY, Nov 29: NZDJPY has some very strong seasonals heading into the end of the year. Over the last 15 years, the NZDJPY pair has risen 86.67% of the time on tax-loss selling behaviour. Will this strong seasonal pattern repeat again this year? Check out the seasonal pattern here.

CAD: GDP, Dec 03: The last Bank of Canada meeting saw a hawkish shift from the BoC. The risk now is that if Canadian GDP disappoints we could see a correction lower in the CAD if investors think the Canadian economy is heading for a dip lower.


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