Hi Folks.
Welcome to the first post-August forecast (well, technically Sunday is in August but we won't talk about that) and I for one am pretty happy about it, although in all honesty, I'm on a terrific winning streak that started 2 weeks ago, yes, in mid-August. So crappy price action aside, it really wasn't bad at all. I plan on telling you all about it in another email later today or tomorrow.
Here's the forecast.
SUNDAY: Kind of in keeping with the idea that things will pick up, trading-wise, in September, we get some support for that idea by the fact we have what, 7? 8? news entries on the Sunday night calendar. The fact that most of them are trash should not deflect from the recognition we start the new month (almost) firing on all cylinders. This actually looks good, from a karma standpoint. Actual tradeable numbers are a different story, however. You can safely ignore most of them. The one that might be worth a bet is the Capital Spending q/y number out of Japan at 7:50 p.m. Two of the last three numbers have landed in the 25 pip range (the last entry 3 months back dropped to about 13 pips for no rhyme or reason.) If you have a reasonable shot at 25 pips you should take it, so see what happens after this one drops. Ignore the rest.
MONDAY: Asian/London Session: We start "real" September trading with the Swiss Retail Sales number at 1:30 a.m. my time. Normally a 2:30 a.m. number, not sure if the one hour advance on the release means anything or not. I do know that the previous 3 reports posted anywhere from 7 to 10 pips in the 30 minutes after release. So look elsewhere for something to trade. Pass. At 2:00 a.m. the Brits release a Nationwide Housing Number that posted (barely) 20 pips three months ago (but in the middle of a big move up on the GBPUSD) and barely 10 pip the last 2 months. Housing numbers do seem to have the same effect in the UK they do in the US, which means a safe pass. Australian Commodity Prices is typically a 10 pip mover. Pass. Then we come to the Manufacturing PMI numbers from across the continent: Spain 3:15; Switzerland 3:30; Italy 3:45; France 3:50; Germany 3:55; Euro Zone 4:00; Great Britain 4:30...it's highly unlikely this secondary release (preliminary numbers dropped a couple of weeks back) will do much but if you start seeing a trend either up or down based on constant good or bad numbers (green or red) then jump on the trend and see how far you can ride it. Along with the PMI number, the Brits also release their Money Supply/Mortgage Approval/Net Lending triumvirate of numbers that historically only show around 10 pips of price action in the 30 minutes after release, and last month kept up that tradition nicely, so no reason to think we'll see anything different here today. 5:00 a.m. brings us the Eurozone Unemployment rate, which routinely stays below 14 pips after release. Pass. The evening portion of the session gives us the New Zealand Overseas Trade Index q/q which posted 3,6 and 7 pips the last 3 times it dropped. Pass. 7:50 p.m. brings us the Japanese Monetary Base y/y number, which has typically been a number that fails to inspire, but last month popped off a 25 pip move both down and back. One good number does not a trend make, but they all have to start somewhere, so keep an eye on this one as well. Maybe. At 9:30 Australia releases their Current Account number, which also fails to motivate traders across the board. Pass. Finally at 11:35 p.m. Japan has their 10 year Bond Auction and the 30 minute candle after the number drops generally moves 10-13 pips. Pass.
USA Session: Today is Labor Day in the USA and the markets are closed (along with the reporting agencies that provide us with these spurious numbers). But don't worry. They'll all be open for business tomorrow morning.
TUESDAY: Asian/London Session: The first two entries for this evening, the French Government Budget Balance at 2:45 and the Spanish Unemployment Change at 3:00 a.m. will likely come and go without any chart impact. Pass. At 5:00 a.m. the Eurozone releases their Flash CPI Estimate (Core and Overall). Normally a small chart response when this one drops. Two months back we saw 20+ but that was at the tail end of a much larger move that started an hour earlier, so it's hard to say how much the CPI contributed at the end. Pass. Because of the Monday holiday, Canada is a day late releasing their Manufacturing PMI number at 9:30, and they are sporadic about releasing it in the first place (some months yes, some months no). So Pass this one just on general principles. Nagel from the German Buba speaks at 10:00 a.m. and there is a Tentative GDT Price Index out of New Zealand that lands in the later session (and typically in the middle of the US session) but with little to no impact. We close out the evening with the New Zealand ANZ Commodity Prices m/m which does about 6-8 pips in the half hour after release, so Pass, and at 9:30 p.m. we get the Aussie GDP q/q which rarely moves more than 10 pips. Yet another in a long line of Pass(es).
USA Session: Today is a sort of typical Tuesday for US based numbers, with the more basic Final Manufacturing PMI set for 9:45 a.m. where it will be universally ignored, followed by the ISM Manufacturing PMI and ISM Manufacturing Prices at 10:00, along with Construction Spending. When the ISM numbers are grouped with something like the JOLTS Job Openings, we tend to see some decent price moves. As a standalone set of numbers (I don't count Construction Spending as anything) it usually has a little less impact, but today might be different after the long weekend and the fact August is over and the mindset of traders magically changes seemingly overnight. So be ready for some possibly decent trading as a result. We close with that floating RCM/TIPP Economic Optimism report which is labeled as Tentative but usually (lately) comes out around 10:06 or so. No guarantees at all with this one and I have made it a point to keep an eye on the actual release time when it does drop as this is during my prime trading hours, and it comes and goes without as much as a whimper on the charts. So another very safe Pass.
WEDNESDAY: Asian/London Session: A day late but we finally get to those pesky Services PMI numbers (normally they are a day behind the Manufacturing PMI numbers) dropping as follows: Spain 3:15; Italy 3:45; France 3:50; Germany 3:55; Eurozone 4:00; Great Britain 4:30; so watch for a trend to develop. No trend, no trade. Quite a bit of Fed Speak this morning with Lagarde from the ECB at 3:30, Bullock from the RBA at 4:00, Breeden from the MPC at 4:15, and since we're on the subject, Hauser from the RBA at 9:00 p.m. The Eurozone drops the PPI at 5:00 a.m. and if history means anything you won't see more than 10 pips in movement, maybe 15 if the number is a complete surprise. Pass. At 8:30 a.m. Canada releases a Labor Productivity number, and while many lesser Canadian numbers will move the USDCAD around some, this really isn't one of them, and in fact, I don't remember ever even seeing this one on the calendar before. But that may say more about my memory than the consistency of the Canadian bean counters. The Brits are holding a hearing on the release of their Monetary Policy Report (their Interest Rate decision from a few days back) and while it's not a number, hearings can make trading the GBP pairs very rough while it is ongoing, so be careful all you GBP traders. Finally we get the Australian Goods Trade Balance number at 9:00. This one is all over the board. 3 months ago it posted a 20+ pip result. Last month it was 7 pips. Maybe, but don't count on it. And you can ignore the Japanese Bond Auction at 11:30. These rarely, if ever, move the JPY around at all.
USA Session: So we start with Fed Speak at 9:00 a.m. which we will ignore for all the usual reasons, because at 10:00 we get the Jolts Job Openings, along with Factory Orders. I've mentioned many times that Jolts isn't the greatest Red Folder report, but when paired with the ISM Manufacturing number, we tend to see some decent price action. When paired with lesser numbers, not so much. So the last three months this one dropped at 10:00 a.m. and the 30 minute candle showed moves of 25, 17 and 29 pips. For those same three months JOLTS was paired with Factory Orders (25 pips), the Conference Board Consumer Confidence number (29 pips) and the ISM Manufacturing number (17 pips). Just goes to show you that you never really know what's going to happen until it does. Today JOLTS' partner is Factory Orders once again. Will we see another 25 pips? I hope so. But no promises. The rest of the day is not spectacular at all. The floating Wards Total Vehicle Sales number (floaters are automatic Passes); Fed Speak at 1:30 p.m. is also an automatic Pass with a Be Careful attached as a warning if you're trading the afternoon US session. The Fed's Beige Book is released at 2:00 p.m. which will be of interest to traders but lately hasn't made any real price action impact, and finally at 4:30 p.m. it's the weekly API Oil Bulletin, released when the Oil markets are effectively closed.
THURSDAY: Asian/London Session: We start with Swiss CPI at 2:30 a.m. my time, which usually isn't a big mover (2-3 months ago you were looking at moves in the 10-12 pip range) but last month threw off a surprising 30+ pip move both down and right back up on the 30M candle for the USDCHF. The number had been expected to come out at -.2% but instead came out flat at 0.00%. There were no other reports hitting the wires at the same time in any of the last 3 months so I guess the surprise 0 Inflation number was behind it all. Will we see an instant replay this month? Probably not. The Swiss also have an Unemployment number out at 3:00 a.m. (Pass) and the Brits have a Construction PMI number at 4:30 a.m., also a Pass. The Eurozone has their Retail Sales number at 5:00 a.m. and this one has been a sub-10 pip mover for a while now. Pass. Ignore the bond auctions (everyone else will). Canada has a Trade Balance number out at 8:30 a.m. Three months ago it was released with the same US numbers as today and posted 11 pips. Two months back it came out with the US NFP package of numbers and posted 40 (remember, we use the USDCAD as our measurement tool so major US numbers are the driver behind this one) and last month it came out with just the US trade Balance as a companion and posted 15 pips. With no NFP helping push things along, today's number should be sub-20 pips as well. Pass. Finally, at 7:30 p.m. Japan releases a pair of numbers, Average Cash earnings and Household Spending. Both of these numbers have been coming out the last 3 months mostly as standalone numbers and a few times between them have flirted with 20 pips after release. Tonight they are paired together and perhaps the synergy of the pairing will be enough to see a 20+ pip move. Don't brush these off. They may be worth a look.
USA Session: We start early with the Challenger Job Cuts at 7:30 a.m., and like most numbers that drop very early or very late, they tend to have little or no impact on the market. I expect the same here. Pass. 8:15 brings us the ADP Non-Farm Payroll number, which still isn't prompting a lot of price action but it gives us an idea of what we might be seeing tomorrow, and reminds us tomorrow is one of the High Holy Days of trading. At 8:30 we get the Weekly Unemployment number along with a bunch of lesser ridealongs. Last week in Wyoming, Powell made it a point to mention he was thinking about cutting rates in a couple of weeks because of the "curious kind of balance" (whatever the hell that means) in the employment sector. What it probably means is he's taking a longer look at the Weekly Unemployment number, so be ready for some fireworks no matter how this one comes out. The other 8:30 numbers won't matter. After this we get the Final Services PMI at 9:45 (no one trades this one) and the Final ISM Services PMI at 10:00 (everyone trades this one, at least to some extent). NatGas at 10:30 and Crude Oil at 11:00, closing with Fed Speak at 12:05 and 7:00 p.m.
FRIDAY: Asian/London Session: We open with one of those goofy Leading Indicator numbers from Japan at 1:00 a.m. This particular one generates about 10 pips worth of price action on a good day. Pass. Eurozone gets the German Factory Orders at 2:00 a.m. and like the previous Japanese number, mostly sees about 10 pips in price action after release. Pass. Also at 2:00 a.m. is the British Retail Sales m/m and Halifax Housing Price Index. We can ignore Halifax, but the Retail Sales number has been back and forth over my 20 pip Red Line several times, and the under-20 times have been barely under (by like half a pip or so). So this one is likely worth a shot. The French Trade Balance at 2:45 can be safely ignored, while the 3:00 a.m. Swiss Foreign Currency Reserves and SECO Consumer Climate numbers. whether released alone or paired up as they are today, neither of these do much at all to generate any price action. Double Pass. Italian Retail Sales at 4:00 a.m. can be safely ignored, while the Eurozone's Final Employment Change q/q and Revised GDP q/q numbers at 5:00 a.m. (which commonly come out paired together) is one of those times where it looks good on paper but in reality has failed to crack 10 pips in price action the last three times these numbers were released. A most definite Pass. Finally, Canada releases their version of the NFP at 8:30 a.m. followed by the Ivey PMI at 10:00. Since we look at the USDCAD for our clues and the US releases their NFP at 8:30 as well, this one is all but guaranteed to move around noticeably for at least a few minutes after release. The Ivey number, on the other hand, has a history of sub-20 pip moves. Last month it did manage to barely crack 20, but this was at the tail end of a price run up that began earlier in the session so how much Ivey contributed to this is debatable. If you already made your bundle on the Employment numbers at 8:30, go ahead and shut down for the day and get a head start on your weekend.
USA Session: NFP at 8:30. That's all there is and all there needs to be.
See you back here next week.
Jeff
