Hi Folks.
Here is this week's forecast (for what may be the best week of trading we have until after Labor Day, and please believe me when I say "That Ain't Sayin' Much!")
SUNDAY: All we know from tonight's calendar entry is Japan celebrates Mountain Day today, which is a bank holiday. So enjoy Mountain Day while it lasts.
MONDAY: Asian/London Session: The first solid number we get this morning that isn't China, Tentative, or spread out over a 5 day period, is the Italian Trade Balance at 5 p.m. A quick glance at the last three times this number has shown up on Calendar tells us this one rarely cracks 20 pips in the hour after release. Two months ago it did reach 22-23 pips and this is the first real number since the open 24 hours ago so it might end up punching above its own weight. But I seriously doubt it. Trade it if you must but keep your expectations low. At 7:01 p.m. the Brits have a BRC Retail Sales Monitor y/y number. I'm not entirely sure what the point of this one is, but it comes out just after midnight London time (thus you can tell how much weight they give this number) and the last three months barely reached 10 pips over the entire hour. So Hard Pass. At 7:50 p.m. we get the Japanese M2 Money Supply y/y number, and this is another sub-20 pip performer, so pass on this one as well. Finally we get the Australian NAB Business Confidence number at 9:30 p.m., and like the other numbers this evening it's a poor performer, rarely cracking 10 pips in the 30 minutes after release. So yet another Hard Pass.
USA Session: We have a "tentative" release of the Cleveland Fed Inflation Expectations number. The good news is that this one usually drops right at 9:45 a.m. so we can kinda sorta expect it to do the same here today, even though the folks at FF weren't certain enough to put it in print. The bad news is this is yet another important sounding number that fails to inspire the market to move prices around (we average 10-12 pips in the 15 minutes after the number drops, when it drops at 9:45...I didn't bother looking at the dates when it dropped at a different/unexpected time). So a lot of words just to say Pass.
TUESDAY: Asian/London Session: We start with the Australian Interest Rate decision at 12:30 a.m. my time, and historically this one doesn't do very much (in the 10-15 pip range most of the time). But the last 3 months have been an odd set of releases. 3 months ago the expectation was the rate would remain at 4.10%, it did, and the market moved around 10 pips. Two months ago the expectation was the rate would drop to 3.85%, it did, and the market yawned out about 10 more pips in activity. Last month the expectation was the rate would drop to 3.6% but the RBA decided to leave the rate at 3.85% and you can spot the 30 minute candle from outer space without a telescope. Almost a 50 pip move from the surprise decision. So nothing is expected to happen and nothing happens, no movement. A drop is expected and a drop is announced, nothing happens. Then another drop is expected but no drop is announced and the market loses its mind. So tonight the expectation is unknown at this time (Friday morning there is no expectation listed on the FF calendar) but a quick Google search says they expect it to drop to 3.6% again. So watch for the number and if it stays at 3.85% for another cycle, this one may be worth trading. The RBA also has a presser set for 1:30 a.m. and if no rate cut is announced, this presser might generate some activity as well. The Brits have their Unemployment number along with a couple of ride alongs at 2:00 a.m., and it checks in similarly to the Aussie Interest rate number. 3 months ago was a little better than expected and it pulled up at 18 pips, just short of my 20 pip Red Line. Two months ago they were expecting a 5k number and got a 33K number instead and the market lost its mind. Last month it missed again but not by a whole bunch and we saw 25 pips in movement from high to low. So watch this number closely as well and if it misses by a mile expect some seriously tradeable price action. The 5:00 a.m. ZEW numbers for Germany and the EU don't register a blip on the chart, so Pass. 8:30 Canadian Building Permits are another Pass. Japanese PPI at 7:50 p.m. gets about the same amount of respect from traders that our own PPI gets (meaning little to none) so pass, and finally, the Aussie Wage Price Index q/q, a FF Red Folder number, routinely fails to generate even 10 pips after release, so one final Pass for this session.
USA Session: CPI at 8:30 a.m. Not much more need be said. Prop Firm traders already know the CPI has reached elevated status amongst brokers as a major price mover immediately after release (and oftentimes just before) the number drops, leading some to think (accurately, in my opinion) that some pigs are more equal than others and the more equal pigs get those numbers a few seconds before the rest of us so they can fire off trades and clean out stops before anyone else gets the chance. But we can still make serious money off the CPI, so make sure you are in front of your platform before 8:30 (and again at 9:30 when the Indices open and the traders who are forced to stand on the sidelines until 9:30 get their bite at the apple as well). Fed Speak 10:00 (no one cares), 2:00 p.m. Federal Budget Balance (a number finally moving into the black on the regular thanks to those pesky tariffs), and the API Weekly Oil Bulletin at 4:30. Today it's all about the CPI.
WEDNESDAY: Asian/London Session: Kind of a sorry day for both sessions from beginning to end. The German CPI/WPI numbers come out at 2:00 a.m., along with the Japanese Preliminary Machine Tool Orders y/y, and collectively, none of them move the EURUSD or USDJPY around enough to merit an explanation. Just Pass. The German Bond Auction is a Tentative (= untradeable). At 1:30 p.m. Canada releases the Bank of Canada Summary of Deliberations, which are the notes from their last Fed meeting. If you trade the CAD it's worth reading (it's a report, not a number) but is otherwise likely untradeable. The Brits release their RICS House Price Balance at 7:01 p.m. my time, Midnight 01 local time, so I don't even have to look at the charts to know that no one is trading this one. Then we get to the Australian Unemployment number at 9:30 p.m. Normally not a strong performer, but two of the last three months cracked over my 20 pip Red Line so while it isn't a big mover, it might be strong enough right now to be worth watching. Just don't be surprised if it turns south and ends up another sub-20 pip move.
USA Session: The suckfest continues in the US session, with "tentative" Fed Speak from Barkin (he's speaking at some rubber chicken Chamber of Commerce foodfest in Greenville South Carolina, an event so important they don't even have a starting time). Pass. Crude Oil at 10:30 a.m. as usual, More Fed Speak at 1:00 p.m. and yet even more Fed Speak at 1:30 p.m.
THURSDAY: Asian/London Session: The Brits perform their version of a Data Dump at 2:00 a.m. with 8 separate numbers hitting the wire at the same time. The only one worth mentioning is the GDP m/m, accompanied by the GDP q/q. This one is going to cause a stir simply because of the massive amount of numbers, but their GDP number is usually good for a 30+ pip move, so be ready at 2 if you're awake and trading the GBP pairs. At 2:30 a.m. the Swiss release their PPI m/m number and while it barely cracked 20 pips 3 months ago, the last two months have been sub-10 pip movers, and this when they've missed to the downside on their expected number 4 months in a row. So pass. Also pass the French Final CPI at 2:45 a.m. At 5:00 a.m. however, the EU releases both a GDP and Unemployment Change q/q numbers, and these two, released together traditionally, have flirted with both sides of the 20 Pip Red Line for the last 3 months. So it's a solid positive Maybe. If price stalls on you at +18, don't be a hero. Get out with what you have and be happy.
9:30 a.m. brings the GB Conference Board Leading Index number and I've never seen any country's version of this number move prices around at all, so don't expect anything different today. The Aussies follow up at 10:30 with their own Conference Board Leading Index number. Expect the same result. Pass. At 6:45 p.m. New Zealand drops the BusinessNZ Manufacturing Index, which has no impact and at 6:45 p.m. they follow up with a Visitor Arrivals number (zero impact expected) and the Food Price Index (FPI) m/m number, which lately has been generating between 3 and 7 pips in price action in the 30 minutes after release. Pass.
USA Session: We get both PPI and Weekly Unemployment at 8:30. Unemployment has been a bust the last few months, and the PPI simply fails to duplicate the CPI price action when it comes out a day or two after CPI (as it does here). There will likely be some price action at 9:30 simply because it's an 8:30 a.m. number, but I'd expect it to be both muted and short lived. Trade if you must but don't get your hopes up. Mortgage Delinquencies shows up as an untradeable "tentative" as always, and NatGas makes its weekly appearance at 10:30, followed by more Fed Speak from Barkin at 2:00 p.m. Not a great day but maybe the PPI/Jobs combination will generate 20 for somebody.
FRIDAY: Asian/London Session: It hasn't been a great week for the A/L session, and today keeps that streak alive. Japan releases their Revised Industrial Production m/m number, and with no other Japanese numbers to speak of over the last 48 hours, and the fact this one isn't as terrible as a lot of the other numbers (it occasionally is behind a 20-30 pip move) it might be worth at least watching. At 8:30 a.m. Canada releases their Manufacturing Sales and wholesale Sales numbers, and much like their Japanese sidekicks from earlier in the morning, these are not the worst numbers Canada releases each month, and while 20 isn't a guarantee, at least it tries to get close to our Red Line target. And otherwise there is just a complete lack of A/L numbers tonight, so that makes it look a lot better from lack of comparison.
USA Session: A lot of numbers for a Non-Non-Farm Payroll Friday. 8:30 a.m. brings us Retail Sales, Empire State Manufacturing Index, and Import Prices. We can safely ignore the last two because either alone or part of a group they don't carry their own weight. Typically Retail Sales fails to do much any longer as well, but this is again a case of so many numbers listed for 8:30 a.m., the sheer number of reports (not to be confused with the actual numbers linked to those reports) should cause at least a small amount of price action. And probably not even 20 pips worth. But given how sorry this week has been (and the summer months as well) this might be a spot where the traders who are present band together to try and make something happen. Honestly, it isn't likely and what we'll probably see is some sort of knee-jerk price spike on the release of the numbers and then things will settle back down again. But be aware that even though the summer trading this year is the textbook definition of Doldrums, we still get the little price kerfluffle on occasion, and this looks like one of those spots where it happens. 9:15 a.m. brings Cap Utilization and Industrial Production (before the Index markets open at 9:30) so these will likely follow historical patterns and do nothing as usual. In their esteemed wisdom FF has once again adorned the Preliminary UofM Consumer Sentiment and Inflation Expectations numbers with Red Folder status. Last month they dropped down to Beige level, but I mentioned then it was only a matter of time before someone raised them back up to Red and it only took one month. I've never been a fan of these numbers because I find them suspect at best (based on their methodology) but the market moves at 10:00 a.m. when the Prelim numbers drop, there is no denying it. So maybe this Friday we make some money for a change. Off the two dumbest numbers I've ever encountered (aside from all the Conference Board nonsense). Business Inventories also drops at 10:00 but no one has ever cared about Business Inventories. We close out the day at 4:00 p.m. with the TIC Long Term Treasury Bond Purchases, which measure how much in bonds is bought by foreign entities versus US based buyers. It drops at 4 p.m. on a Friday. You can guess how important traders think this one is.
Have a great week and I'll see everyone back here next week for more Summer Fun.
Jeff
