Hi Folks.
Here is this week's forecast:
SUNDAY: A very typical lineup for Sunday night, which means there is little to nothing worth looking at. The 6:50 Preliminary Japanese GDP q/q numbers have generated 6, 13 and 9 pips over the last 3 reports, so an easy Pass. Britain has their Rightmove Housing Price Index dropping at 7:01 p.m. my time, midnight:01 local time, so another easy Pass. Then Japan takes another stab at the apple with the Revised Industrial Production m/m numbers, but this one's history over the last 3 months is 8, 7, and 4 pips. Sunday should be renamed Pass Day as that's all we ever seem to do with these reject numbers.
MONDAY: Asian/London Session: And as you might have noticed, Monday has been faring no better during the A/L session. Mostly afterthought numbers of zero interest to traders anywhere, as you will see. The Eurozone leads off at 5:00 a.m. with an Industrial Production m/m number that does zero in terms of moving the EURUSD around, and maybe they plan on discussing that disturbing fact at the Eurogroup meetings this week, which are on calendar to take place at "tentative" so an easy Double Pass out of the EU to start. Canada is listed as being closed for a Bank Holiday but also releases Housing Starts at 8:15 and Manufacturing Sales at 8:30. Housing has never moved the CAD needle, and the Manufacturing Sales number has posted 9, 8 and 16 pips over the last 3 months. 16 is moving into respectable territory but it appears other numbers released at the same time were responsible for this double-digit result. So Pass on both of these as well. German Fed Speak (Nagel) at 12:40 p.m., followed by the New Zealand Food Price Index at 4:45 p.m. (yet another New Zealand number that struggles to get past single digit responses to the number drop). Australia posts the minutes of their last Interest Rate meeting, which is a report, not a number, so we have no other option than Pass, and finally, Japan closes us out at 11:30 p.m. with their Tertiary Industry Activity m/m number, that also struggles to get past 10 pips in movement after release. So yet another Pass.
USA Session: President's Day holiday in the US which is a national holiday observed by banks and the markets. Bowman from the Fed is also speaking at 8:25 a.m. but we don't trade Fed Speak even when the markets are open, so Pass.
TUESDAY: Asian/London Session: 2:00 a.m. starts us off with the German Final CPI, which is a hard Pass on all the EUR charts, and the GBP Claimant Count Change, the British version of the Non-Farm Payroll, which has posted 37, 16 and 24 pips over the last 3 reports. And while 16 is a bit lower than is acceptable, it was also the beginning of a 100+ pip straight up run on the GBPUSD, so that has to count for something. All in all, a decent number to trade, so be ready at 1:59 a.m. The rest of the morning numbers are not worth looking at, until the Canadians drop their CPI numbers (5 of them are listed but I think there may be more) at 8:30 a.m. Unfortunately, the once stately Canadian CPI number has been in a slump of late, posting 17, 10 and 8 pips over the last 3 months. Those numbers are going the wrong way and I suspect unless FF has a rule that says all CPI numbers will remain Red Folder reports for all time, this one has a date with a Beige folder in the near future. The rest of the morning and evening numbers are unremarkable, including the New Zealand Interest Rate decisions, where they have been cutting the rate at the last 3 meetings and have failed to move their own dollar by more than 10 pips in the hour after the release. So ignore the glaring Red Folder. Nothing to see here.
USA Session: We start with the "tentative" ADP Weekly Unemployment Number which has consistently dropped at 8:15 since it was added to the calendar a couple of months back, and it has consistently been ignored by traders since Day One, much like they ignore the Monthly number that drops the Wednesday before the NFP. So Pass. Continue Passing on the Empire State Manufacturing Index at 8:30, and the "Tentative" Cleveland Fed Inflation Expectation number. According to the Cleveland Fed, we should be seeing 3.3% inflation on a regular basis, but last Friday's CPI showed we are in the lower 2% range and falling. But maybe it just costs more to live in Cleveland. I don't know what starter homes cost in Cleveland, but in Orlando and Miami they start in the low $500k's. Maybe they cost more in Cleveland. But I seriously doubt it. Ignore this one until further notice. 10:00 a.m. brings us the National Association of Home Builders Market Index, which is a joke number everyone pays zero attention to, so you should do the same. And we close out the day with Fed Speak at 12:45 and 2:30 p.m.
WEDNESDAY: Asian/London Session: 2:00 a.m. brings us the GBP CPI and all other related numbers. The other numbers do not matter. The CPI has generated 24, 65 and 20 pips over the last 3 months. That's a pretty wide spread, but think of it like being a little kid at Christmastime. Some years you get a bike and others you get socks and underwear. Socks and underwear might be boring, but you are going to use them, so no matter how it turns out, you're coming out ahead. The rest of the morning numbers are meaningless, so Pass. At 6:50 p.m. Japan releases their Core Machinery Orders m/m number, which sounds impressive but rarely moves the yen even 10 pips. Pass. But at 7:30 p.m. we get the Australian Employment Change (think NFP). In the interest of time let me cut to the chase: 10, 8, and 3 pips over the last 3 months. Pass.
USA Session: 8:30 a.m. brings us Durable Goods (Core and Overall). A few months back this one kept dropping huge misses and we saw some pretty significant price action. The last 3 months? 31, 16 and 13 pips. 16 landed on Dec 23, so that one can be forgiven. But 13 last month has no excuses and 31 was 3 months ago. Add in this number is allegedly 21 days late due to one or both of the shutdowns and I think it's a logical pass. It might surprise, but the odds are against it. There are other 8:30 numbers dropping today as well but they have long histories of inducing comas in the charts, so it's Durable Goods or Bust and my money is on Bust. Capacity Utilization and Industrial Production m/m also have long histories of doing nothing, so those are a Pass. The 2:00 p.m. Minutes from the last Fed Interest Rate meeting drop at 2 and are a report, not a number, so there isn't much we can do about it, but this particular report has the ability to create some price movements based on what was or wasn't said during the meeting. So if you see price action after 2 p.m., it's likely based on the Minutes and may be worth trading blind. We close out with the TIC Long Term Purchases at 4:00 and that API Oil Report at 4:30, and you don't need to miss a nap staying awake for either of those. Pass.
THURSDAY: Asian/London Session: Just a wasteland of useless numbers for the entire session, day and night. The only one that looked vaguely tradeable is the Japanese National Core CPI, but it only generated 10, 13 and 16 pips over the last 3 months. If you ever thought about taking a day off from trading mid week, this is the day to explore other interests
USA Session: And that goes double for the US session. A bunch of numbers that are both worthless AND late, thanks to one of the shutdowns. The only comment worth making is that the Monday Holiday knocked NatGas to 10:30 today while Crude Oil drops at noon eastern time.
FRIDAY: Asian/London Session: Maybe yesterday was the market's way of giving us a palate cleanser in anticipation of better trading conditions today. At 2:00 a.m. GBP releases their Retail Sales Numbers, which have landed squarely in the 20s, pip-wise, over the last 3 months, and there is no reason to think today will be any different (and you can skip the German PPI for the Euro at the same time). We then get all the Flash Manufacturing and Service PPI numbers (France 3:15, Germany 3:30, Eurozone 4:00, UK 4:30), and the usual rule applies. See Trend, Trade Trend. No Trend, No Trade. Canada follows up with Retail Sales numbers at 8:30 along with some offshoot PPI numbers, but results of 8, 11 and 9 over the last 3 reports fails to inspire. Pass.
USA Session: If you missed out on the fireworks last week with the delayed NFP and CPI throwing up stellar numbers, here is your chance for a makeup test. At 8:30 we get both Advance GDP q/q and the Core PCE Price Index, allegedly the Fed's favorite inflation measuring tool. It likely won't even matter what the actual numbers are. This just looks like a prime place to find the sources for some really great trades moving forward on Friday (meaning the 8:30 a.m. drop and the 9:30 a.m. market opens). The Red Folder Flash Manufacturing and Service numbers are the ones the market usually ignores in favor of the ISM versions that normally come out 15 minutes later. But that isn't happening today, so these could throw a little more fuel on what I expect will already be a raging fire. We also get Fed Speak at 9:45 but no one cares. 10:00 a.m. is another housing number (Pass) and the Revised UofM Consumer Sentiment and Inflation Expectations number (Inflation also being in the 3-4% range here as well, in spite of the actual number falling for another month...pessimists!). This one does not generate the kind of heat we see with the Advanced numbers released a couple of weeks earlier, so not much likelihood we see much out of this batch today. There is yet another delayed Housing number (pass) coming out with the UofM numbers, maybe, and we close with Fed Speak at 1:15 p.m.
That's it for another week. See you back here next Sunday.
Jeff
