Hi Folks.
An actually interesting week from an economics standpoint as pretty much every major economy we follow (AUD, Swiss, Euro, GB, US, Japan, Canada) holds central bank meetings regarding their individual interest rates, and while most are expected to stand pat, Australia is projected to raise their rates by a quarter point. And don't bet the rent money on the rest sticking with their current rates. The War on Iran has driven gas prices up dramatically, and while those increases didn't really show in last week's CPI, you don't need a Bartending/Economics degree to know that rising prices equals inflation and fighting inflation is one of the major jobs of the Central Banks. So there may be a surprise or three at news time, so be ready. This could end up being a pretty big week.
Now on with the show.
SUNDAY: It should come as no surprise that the two numbers on tap for tonight (New Zealand's BusinessNZ Services Index at 5:30 p.m. my time and the Rightmove Housing Price Index out of Great Britain at 8:01 p.m.) share the same trait: Invisibility. Traders cannot or will not see them nor react to them once they drop. So in what has become a Sunday tradition, we PASS on both.
MONDAY: Asian/London Session: Let's get the easy one out of the way first. At 5:45 p.m. New Zealand releases a Food Price Index. Important to consumers, not the least bit important to traders. Pass. Now, at 8:15 Canada releases a lesser tier number, Housing Starts, which you can ignore because at 8:30 they follow up with a boatload of CPI variations, all hitting at once. Over the last 3 months traders saw 10, 8, and then 18 pips. Typically I would say this was likely a safe pass, but this month, given the spiraling prices at the pump and elsewhere, don't blow this one off. At a minimum keep the chart open and be ready if the BOC ignores the market's belief that the rate will stay the same and they instead bump it a quarter to maybe get a head start on battling the inevitable inflation demons (and I am going to be repeating that a lot this week). Then at 11:30 p.m. my time the Aussies have their rate meeting, and they ARE expected to bump their rate back up from 3.85% to 4.10%. If they do not, and they stand pat at 3.85%, I would expect you'll see far more fireworks in terms of crazy price action, than you will if/when they do raise the rate. But uncertainty is the fuel that powers the best trades, so once again, be ready.
USA Session: I can't see a single reason on today's calendar to even get out of bed. The Empire State Manufacturing Index is at 8:30 and is still universally ignored, followed by Capacity Utilization and Industrial Production at 9:15 a.m., another duo expected to do zero in terms of price action, and finally the NAHB's Housing Market Index at 10:00. I've mentioned this before but it bears repeating: If you see an entry on calendar that includes the word "Index" you can safely ignore it, and that goes double times 100 for Index entries involving the Real Estate market. Just a hard PASS on that one as well as the other three.
TUESDAY: Asian/London Session: Remember how last week I summed up a couple of days by saying not a single entry on the calendar was worth trading? Well, we have another one of those days. The only thing that might end up being interesting is the press conference scheduled for 12:30 a.m. by the Royal Bank of Australia in regards to their earlier rate decision. There likely won't be a single thing said or done that will be tradeable on its face, but if you are trading the AUD at the time of the presser, be aware some comment could be made that generates some turmoil and renders your otherwise good trade worthless. So be awake for that one. The rest is one big dumpster fire and can be ignored.
USA Session: And it's no better for US traders. 8:15 brings us that ADP Weekly Employment Change (and the only thing worth noticing is that after 4-5 months of being "tentative", the calendar now lists it at 8:15). No matter. Traders will ignore this one like they've done every single time it dropped since it magically appeared on the calendar back during Shutdown I. Pending Home Sales at 10:00 is zero impact, as usual, and that Conference Board Leading Index number at "tentative" has three strikes against it before 10:30 ever gets here: (1) Tentative; (2) the word "Index" is involved; and (3) this one has never, and by never I mean N-E-V-E-R made prices move upon release. Ever. So an entire session whose only positive I can find is at least it ends before lunch.
WEDNESDAY: Asian/London Session: Ignore the early numbers. They're just filler. But at 9:45 a.m. Canada releases the decision of their Fed as to their Interest Rate. Currently at 2.25%, it's expected to remain there. But as noted earlier, Central banks are nervous about the Iran situation and those who are down close to a Zero Percent rate may be inclined to bump up a quarter point, just in case. So be wary if you're a CAD trader that this one could create a true tidal wave of price action if the CAD central bank doesn't stick to the script. They also have a presser at 10:30 where lots of war and inflation related questions will be asked, so this too could create more price action, but it's impossible to say exactly when that might happen. At 5:45 p.m. New Zealand releases their GDP q/q number, but 10, 4, and 10 pips generated by the previous three numbers makes me think this one is still a very safe PASS. At 8:30 p.m. the Aussies release their Employment Change numbers (think NFP) but the last three numbers of 8, 3 and 10 make this one a PASS as well. The Japanese close us out sometime around midnight with THEIR rate statement, and they too are expected to stand pat at <.75%, but like the others, increasing fuel prices egged on by the dogs of war might make them think a little harder about this decision, particularly since 100% of their fuel is imported. They have no local reserves they can tap if needed. So this one could end up being the most interesting decision of the day. Too bad we don't have a specific time for the release.
USA Session: Core PPI finally makes its appearance, 6 days late (according to the calendar notes). Rarely does PPI do the same or better than the CPI, and that is likely even more true today given the afternoon calendar. So watch it just in case, but don't be shocked if the market spends less than 30 seconds moving things around based on these numbers. Factory Orders at 10:00 (PASS) and Crude Oil at 10:30. THEN, at 2:00 p.m. the US Federal Reserve releases their Interest Rate Decision, which WAS expected to be a "stand pat" decision, but with the current crisis, who really knows. A billion dollars went missing from the Fed's remodeling budget and the US Attorney issued Grand Jury subpoenas after the Fed refused to cooperate in the investigation into the missing money, but our old friend Judge Boasberg quashed the subpoenas for reasons never seen before in a Federal Criminal court. So that one is likely to be reversed and the Fed will go from frying pan to fire, but as for today, don't be shocked if rates go back up a quarter point and the market loses their collective minds. THEIR press conference is at 2:30 p.m. and could involve some fireworks as well.
THURSDAY: Asian/London Session: The "numbers" for today (the monthly stuff we generally ignore) really won't matter, except for the GBP's Claimant Count Change (Unemployment) which has posted 16, 60+ and 60+ pips over the last 3 months. And it was well above the 20 line prior to 3 months back so I treat that number as an outlier. The only thing that might derail traders is that GB also releases their rate statement a few hours later so trading could be muted a bit as the Interest Rate decision is really more important than the monthly unemployment number. But keep an eye on this one anyway. Now, since we are on the subject of Interest rate decisions, we have three of them this session, and what I wrote previously about the other rate decisions applies here as well. So the Swiss (4:30 a.m.), the Brits (8:00 a.m.) and the Eurozone (9:15 a.m.) are all expected to leave the rates as is for the next month or so, but current events might cause one or more of them to break with convention and up their rate a quarter point or more. So be aware this is out there, along with press conferences for the Swiss at 5:00 a.m. and the Eurozone at 9:45 a.m. (I don't see anything about the Brits but be ready at 8:30 a.m. if FF dropped the ball on the listing). The evening numbers are all garbage and can be safely ignored.
USA Session: A rather quiet morning on tap after yesterday's Fed decision. The effects of that could carry over some, but given the number of rate decisions on calendar for the A/L session I'm guessing trader attention will be pointed elsewhere. So the Unemployment number at 8:30, along with the Philly Fed Manufacturing Index, probably won't create much of a stir, UNLESS all the people I keep reading about getting laid off because of the AI takeover of some of the more menial tasks starts landing this week. It usually takes 2-3 weeks for those increased numbers to start showing up, so maybe this is the week and traders take notice. So pay attention to the actual number (expectations are 215,000). If the number lands at 250,000 or higher we might see our first big Unemployment Number move in a couple of years. New Home Sales and Final Wholesale Inventory numbers are coming in 22 and 13 days late, making it even less likely the market will even recognize that numbers dropped at 10. PASS. NatGas closes us out at 10:30 a.m.
FRIDAY: Asian/London Session: After yesterday's rate avalanche, the market granted us almost an entire day off from looking at numbers that matter, even a little. The only thing worth even looking at (from my perspective of trying to find something, anything, nice worth saying about the report lineup) would be the Canadian Retail Sales numbers at 8:30 a.m. (and you can ignore all the PI numbers attached...they are just ridealongs). Over the last 3 reports, the CAD Retail Sales numbers have generated 10, 9, and 17 pips. This one has been running a little light for several months now, so I don't see that 17 as being some sort of major turnaround. So this one is most, most likely a PASS.
USA Session: A rare day of no reports coming out of the USA. So if having tradable news is a part of your strategy, enjoy your surprise day off.
And I will see you all back here next week.
Jeff
