Hi Folks.
Welcome to this week's edition of the Forecast. It looks like a quiet week ahead, news-wise, so once again it's all about technical indicators and War news out of Iran, only one of which we maintain any semblance of control over (and if you need a hint as to which one that is, it ain't the War). So pick your spots carefully and don't be afraid to bail if things start to look shaky.
On with the show.
SUNDAY: So real life has been interfering with my ability to crank out the Forecast until the last second each week for the last month or so, but I seem to have those matters resolved and I am back to getting something down on electronic paper on Thursday morning (5:36 a.m. my time as I write this). I mention it only because as of this minute, there is not a single entry on the calendar for Sunday evening, which is a bit unusual. So before I hit "send" Sunday morning I'll come back and make sure they don't slip something in at the last second. But it is Sunday, after all, so how important could it possibly be?
MONDAY: Asian/London Session: Normally I'd call this a dumpster fire and move on but there are so few reports on Calendar for today I might as well take 30 seconds and list them. The German Buba releases their Monthly Report at 7:00 a.m., and since it's a report and not a number, not much we can do with it. At 11:00 a.m. the Eurozone releases their Consumer Confidence number which has never moved the needle even a little, so pass. 6:00 p.m. is the Australian version of the Flash Manufacturing and Services PMI numbers, which do nothing for the AUD (and Japan's numbers drop an hour later at 8:30 p.m. with the same sad results). At 7:30 p.m. Japan releases their National Core CPI number, which has posted 14, 16, and 18 pips over the last three number drops. Definitely moving in the right direction but still a little too low to take on the risk of a trade.
USA Session: 10:00 a.m. brings us the Construction Spending number, which when it is on time does absolutely nothing to move prices around. But this one is 21 days late so expect it to do even less, if such a thing is even possible. Hard Pass.
TUESDAY: Asian/London Session: We start the session off with the Flash Manufacturing AND Services PMI numbers, which is the way I like it, as when they are combined and drop at the same time, we tend to get a little more price action than when they drop on different days. Plus, I only have to write about this once this month, not twice. So we get France (4:15 a.m.), Germany (4:30 a.m.), Eurozone (5:00 a.m.) and Great Britain (5:30 a.m...and no Canadian listing at all this month). So Trend = Trade, No Trend = No Trade. After the PMI madness subsides (yes, that's a joke) the Brits have a "tentative" 10 year Bond Auction (Tentative = don't worry about it), followed by that CBI Realized Sales number, which is a subtle Index number, and as mentioned last week, when the word "Index" is involved it's pretty much an automatic Pass. At 7:50 p.m. the Japanese release the Minutes of their last Monetary Policy Meeting, which isn't a number but could create a bit of a stir in the Yen, depending on what's said. But it's one of those deals where we as traders just get victimized by the big trading houses who have people reading and summarizing the report in seconds (actually, now they use AI for that) and throw in massive trades based on how they interpret the comments. So just be aware it's out there if you're trading the Yen. Finally, Australia releases their CPI number at 8:30 p.m., and as has also been noted any times in these pages, CPI numbers from entities not named the United States of America or Great Britain are usually not worth watching, and the 3 previous month's results of the Aussie CPI producing 5, 9, and 7 pips in the 30 minutes after the drop just provides more proof of that concept, not that we needed any more. So Pass.
USA Session: If you trade based on US News impact on the charts, today is your big day, and yes, I am being sarcastic. But here goes anyway. 8:15 a.m. is that relatively new ADP Weekly Employment Change number, notable only because for the second week in a row the calendar recognizes it as an 8:15 a.m. report, as opposed to "tentative". No matter. No one is trading this based on the complete lack of price action each week when it drops. At 8:30 a.m. we get the Revised Non-Farm Productivity q/q along with Revised Unit Labor Costs q/q. Both are 21 days late and this will have no effect on how traders ignore both numbers. Pass. We get into the Flash Manufacturing/Services PMI game at 9:45 a.m., and while these numbers are usually ignored in favor of the ISM versions that drop 15 minutes later, we don't have the ISM numbers today, so maybe, just maybe, we'll see a little activity here as a result. The Richmond Manufacturing Index number can be safely ignored at 10:00 a.m., as can the API Oil Bulletin at 4:30 p.m.
WEDNESDAY: Asian/London Session: The big news of the session and likely the only thing worth trading today is Great Britain's CPI and related numbers at 3:00 a.m. my time. The last 3 numbers posted were 61, 20 and 19 pips, and while the drop off from 3 months ago is mildly concerning, the GB CPI has been a workhorse number for a long time, so we might as well stick with it one more month and see if it rebounds in terms of price action after the drop. Unfortunately, the quality of the numbers drops drastically after this, and the balance of the calendar can be safely ignored, except for the Japanese SPPI (don't ask me to explain what it covers...it's complicated) at 7:50 p.m. This is a number that normally lands right on the expectation, and when it does, you see 10-12 pips in price action in the remaining few minutes before the top of the house. But when the number misses, like it did 2 months ago (2.7% Expectation, 2.6% Actual) there was a 40+ pip run that took place after the drop. So pay attention to the actual number versus expectation. Any deviation could make this worth trading.
USA Session: Current Account drops at 8:30 a.m., along with Import Prices (which is landing 8 days late). No matter. Neither one ever inspires traders to trade. So pass. Then we get Crude Oil at 10:30, and this number may or may not have an impact seeing as how Oil is all over the place right now thanks to the Iran situation. But Oil Traders will pay attention anyway.
THURSDAY: Asian/London Session: Another short dumpster fire session. Japan starts us off with the Bank of Japan Core CPI y/y, and like all the other non-USA/GB CPI numbers, this one disappoints with 12, 14 and 10 pips the last 3 times it dropped. Pass. The rest of the short calendar is basically trash numbers, so don't expect to see any news-driven moves today.
USA Session: Weekly Unemployment Claims at 8:30 a.m., and while this one has been a do-nothing number for a long while now, anecdotal evidence says we are about to start seeing some big numbers pop up as a lot of major employers have been shedding workforce at a rapid pace these last few weeks. This will ultimately translate into numbers consistently larger than 250k, which seems to be when traders start paying attention. NatGas is at 10:30.
FRIDAY: Asian/London Session: We end the week starting with Great Britain's Retail Sales number. This one has the ability to move things around some, as the last 3 numbers coming in at 12, 23 and 28 show. The last two 20+ postings happened when the results were dramatically better than expected (Exp. 0.00%, Act. 0.4%; Exp. 0.2%, Act. 1.8%) so once again, keep an eye on the actual number, and if it comes out a few ticks better than the forecast (which is not posted yet) then this one becomes very tradeable. The last few remaining numbers are hot garbage, so Pass.
USA Session: 10:00 a.m. brings us the Revised UofM Consumer Sentiment and Inflation Expectations numbers. The Prelim numbers are worth trading as for reasons completely beyond my ability to comprehend, traders seem to like them. This set, not so much. 12 and 8 were the pip counts 2 and 3 months ago. Last month was 50+, but there was other news that came out at the same time that likely was the source of the move (or at least most of it). However, this is all we have to work with today (some Fed report is listed as "tentative" so it is of no importance) so maybe it has an outsized impact given we have nothing else to work with. But probably not. Pass. EDIT: The Fed Report just mentioned is now off calendar, but we gained Fed Speak at 11:30 and 11:40 a.m. New entries, same result. Still a Pass.
That's it for the week, although I do want to take a second and welcome in advance Switzerland, Great Britain and the rest of the Eurozone to Daylight Savings Time, which will happen at the end of this week. My friend Paul Smith in Australia sent me the meme about the Native American opining that only palefaces think you can cut a foot off your blanket and sew it onto the other end to get a longer blanket. This is as accurate a description of DST as any other out there. And don't worry Australia and New Zealand, we haven't forgotten about you. You're next.
See you back here next week.
Jeff
