Hi Folks.
I cannot even begin to tell you how much joy it brings me to be able to say Welcome to the Final Econ Forecast for the Summer Doldrums. By the end of this week we will be in September and staring down an 8:30 a.m. eastern time Non-Farm Payroll number, and I expect even more good things to follow the week after.
I mentioned last week that this hasn't exactly been the worst summer trading I ever saw, but it was nowhere near the best either. So now that we have it in the rearview mirror, it's time to get serious about trading because we have about 3 months ahead of us before the Thanksgiving/Christmas holidays arrive, and that's the second biggest slowdown period of the year.
Last year you may recall the US Government chose the month of October through the end of the year to have a contest between Democrats and Republicans over who could be the biggest %$#!@ about shutting down the government and throwing a large wet blanket over trading until well into January. There does not seem to be anything like that on the horizon this year, so fingers crossed we are about to enter a very profitable 3 month period of trading.
So get ready.
Now on with the show.
SUNDAY: A busier evening than most Sundays with 6 entries on the calendar, with 3 from AUD, 2 from JPY and one from NZD. But as is always the case on Sunday nights, quantity does not equal quality. So don't bother looking toward the calendar for any help. Tonight is designed to be a snooze-fest. Pass.
MONDAY: Asian/London Session: 10 entries, and none of them are going to do anything one way or the other for price action. Great Britain takes a day off today for Summer Bank Holiday (which sounds suspiciously like that holiday one state in Australia took off a couple of weeks ago), and the G20 is in Day 3 of one of their meetings. These guys gab a lot less than the Fed does at Jackson Hole (where they just wrapped their annual Spa Weekend) so don't expect much until they wrap it all up and issue some generic press release. In any event, nothing is likely to really move any prices around today, so Pass on the lot of them.
USA Session: Not a single entry on the calendar today. So it looks like it will be two Mondays in a row of nothing.
TUESDAY: Asian/London Session: A grand total of 40 entries on calendar today across all 3 sessions, and aside from a couple of smaller items that don't really translate into tradeable signals, it was a lot of work collating these items for nothing. We do get those country-specific Manufacturing PMI numbers where I used to list times for each country and tell you to look out for a trend. After going back through about a years' worth of charts it's become obvious there are no trends to be found, and the grand pip total after about 2 straight hours of trading rarely gets above 20 pips. Last month's mind-boggling 11 pip high to low move after 2 hours is sort of a classic results of what those numbers generate. So you can safely ignore about 8 of the 40 numbers right off the bat. The Core CPI numbers out of the EU are also part of the sub-sub-20 club in terms of pip results, and that pretty much leaves us with the Australian GDP q/q at 9:30 p.m. and the New Zealand Interest Rate decision at 10:00. The last three Aussie GDP numbers checked in at 14, 8, and 4, so those are an easy Pass, and the New Zealand Interest Rate decision, in which the RBNZ is expected to raise rates from 2.50% to 2.75% probably won't do much, if anything. The last 3 numbers were 7, 7, and 22, and last month the RBNZ raised rates a quarter point from 2.25% to 2.50% and only generated 7 pips of movement in an hour. So don't be fooled by the 22 pip move 6 months ago. This one isn't likely going anywhere near that big a pip response.
USA Session: Fed Speak at 9:05 a.m. (ignore) and the generic Manufacturing PMI at 9:45 (also ignore), followed at 10:00 a.m. by the ISM Manufacturing PMI, along with the JOLTS Job Openings number. Several months back these two were paired each month and the result was usually at or above 20 pips. Then they went their separate ways during the spring and neither did a whole lot on their own. But they are back together again, like Martin and Lewis, and maybe they can get a little of that old magic back for us today. Don't bet the farm on it happening, but don't just automatically dismiss either. In other words, maybe keep an eye on this one at 10:00. After the ISM/Jolts combo, things head downhill in a hurry. That "tentative" RCM/TIPP Economic Optimism report is an automatic pass for the "tentative" nature of the report. Same goes for the Omdia(formerly Wards) Auto Sales number, set to come out "all day". G20 is on Day 4 of their meetings, and the API Oil Report drops at 4:30 after all the oil traders are done for the day. So an extraordinarily busy day, from a quantity of numbers standpoint, but maybe the only thing worth watching out of the entire mess is JOLTS/ISM.
WEDNESDAY: Asian/London Session: Neither session, morning or evening, has anything of note aside from the Canadian Interest Rate Decision at 9:45 a.m. And I'm only mentioning it because FF still has it listed as a Red Folder report. With the last three pip counts coming in at 8, 11, and 5 pips, the only red I can envision is the blood leaking from the traders who thought this would be a good number to trade. They found out otherwise. The only good news from that scenario is when your entire move is only 5 pips after the number drops, your loss exposure is pretty much at zero on that trade. And that's pretty sad when that's the best you can say about an Interest Rate Decision.
USA Session: Because it's Wednesday and Friday is NFP Day, it can only mean one thing: the 8:15 ADP Non Farm Employment Change number. And the market will in all likelihood ignore this one the same way it ignores it each and every month. But at least we get a hint (good or otherwise) at what to expect 2 days hence. After the ADP we get Factory Orders at 10:00 (no one is getting out of bed early on the West Coast for that one), Crude Oil at 10:30 and the Fed's Beige Book at 2:00. Given the complete lack of trader response, the Beige Book now shows up on calendar as a Yellow Folder, meaning it just doesn't do much for anyone any longer.
THURSDAY: Asian/London Session: So early session brings us the Swiss CPI m/m number, which pretty consistently lands in the 12,12, and 13 pip range it's landed in the last 3 months. So Pass unless you like high risk, low reward trading. Then we get all the Services PMI numbers, that are just as pathetic as the Manufacturing number, if not worse. So just pass on the lot. None of the rest of the A/L session numbers are designed to move prices even a little, so you can skip the session entirely and get rested up for tomorrow.
USA Session: The same holds true for the US session. Unemployment is still showing up as a Beige Folder number, but 5, 12, and 19 pips don't really inspire a lot of risk taking, especially when the 19 was likely mostly/entirely due to the PPI coming in at the same time and showing inflation at 0.00%. The rest of the numbers, including the ISM Services PMI, can be safely ignored.
FRIDAY: Asian/London Session: Early Euro/GBP numbers are trash, although Bailey from the Bank of England, is speaking at 4:50 a.m. at some little soiree at the London School of Economics, so if you have open trades at 4:50 a.m. my time, be aware he's speaking and could torpedo an otherwise perfectly good trade. After that it's all about the Payroll. Canadian Unemployment Change at 8:30. This is generally a good time to be trading the USDCAD, which has posted 29 and 60 pips the last two times it dropped simultaneously with the US Non-Farm Payroll, as it is doing right this very second. So don't miss out on a chance at some decent pips out of the CAD for a change. And the Ivey PMI drops at 10:00, but compared to the NFP at 8:30, nobody cares. It's not a terrible report and sometimes manages a +20 response, but the Payroll number will be where all the action will be found in this session today.
USA Session: If you happened to skip the A/L session writeup for earlier today, you'll be pleasantly surprised to learn today is NON-FARM PAYROLL day today. One of the 3 High Holy Days and the one closest to Christmas in September, since the CPI has been underperforming lately and the Fed Interest Rate Decision can be a little like trying to catch a very sharp falling knife with your bare fingers. So today is the big day, as it is most 1st Fridays in a new month. So don't pass on this one because if you do, you're done for the day. Nothing else on calendar as traders prep for their last 3 day weekend for a while.
Welcome to the beginning of the return of "normal" trading, whatever that actually means. No more Summer Doldrums for another 9 months.
See you back here next week.
Jeff
