Hi Folks.
As of today (Friday, Oct. 31) we have officially endured 31 days of the US Government shutdown. The record, according to Google, is 35 days, set in 2018 during the first Trump Administration. So unless they get this thing solved by mid-week, it looks like we will have a new record in place. Not exactly the kind you want to brag about, but it is what it is. And what it is, is a major pain in every trader's ass, not having a "normal" set of trading conditions to work with. And if things go as they seem to be going, this coming Friday will mark the second consecutive Non-Farm Payroll Friday that will come and go without any Non-Farm Payroll numbers. So the rules remain the same. Be extra very careful out there if you are planning to take a trade, and do not under any circumstance trade without a stop in place. We are still seeing too many odd mystery moves and rapid reversals for my taste, so no sense trading naked and watching your account evaporate from a move that only lasts a second or two.
Here is this week's forecast (and remember, any US number mentioned might not make an actual appearance thanks to those grumpy senior citizens up in D.C.)
SUNDAY: A handful of New Zealand and Australian numbers open the week (NZ: Building Consents at 4:45 p.m.; AUS MI Inflation Guide m/m at 7:00 p.m. and ANZ Job Advertisements m/m, Building Approvals m/m and Household Spending m/m at 7:30 p.m.) and not a single one of those will move either currency enough to even notice. But today also marks the day when both the US and Canada move off Daylight Savings Time and back onto standard time, so if you've struggled with the time conversions (did London open at 2 a.m. or 4 a.m. eastern time last week) no worries. Everything is back in sync now.
MONDAY: Asian/London Session: A bunch of numbers start us off for real this week (Sundays numbers just don't seem to count). At 12:30 a.m. Australia releases their Commodity Prices y/y, but the last 3 months have generated 9, 7 and 6 pip moves in the 30 minutes after the drop, so no reason to think tonight will be any better. Pass. At 2:30 a.m. the Swiss release their CPI m/m number. 3 months ago this one popped off a 25 pip move from tip to tip, but since then it's been single digits. The last two months have been in the single digits. Also 3 months ago they were expecting their CPI to drop by .2% but instead it came in flat at 0.00%, which is much higher than expected. The last two came in closer to expectations, so that might be the answer for the big move in August. So pay attention to the actual number vs. Expectations. If it strays .2% or more you could be looking at some decent price action. After the Swiss get out of the way, we find ourselves treated to a boatload of PMI numbers: Spain @ 3:15 a.m., Switzerland @ 3:30 a.m., Italy @ 3:45 a.m., France @ 3:50 a.m., Germany @ 3:55 a.m., Eurozone @ 4:00 a.m., Great Britain @ 4:30 a.m., and Canada at 9:30 a.m.. The usual rules apply. Look for a trend to start developing on the EUR charts if all the early numbers come in better or worse than expected. No trend = no trades, as these numbers do very little individually to move price around. At 1:30 p.m. Canadian Fed Speak makes an appearance, at 7:30 p.m. Japan releases their PMI number, but any trend from this morning is long since dead and gone by now and the Japanese PMI has as little impact on Yen prices as the individual EU member state numbers do on the EUR. Finally, at 10:30 p.m. Australia releases their Interest Rate decision (most expect the rate will remain at 3.60% based on higher than expected inflation numbers that came out since the last rate Meeting). If they do in fact cut the rate one more time, or if they decide to bump the rate back to 3.85% where it was 6 weeks ago (because of the inflation number) you can expect some real price movement as a result. If they stand at 3.60%, you might still get some price movement. Two months ago, price stalled out at around 17 pips but the other two meetings (out of the last three) went well over 20 pips. So this one has some real potential, especially with the reasonable suspicion the rate might go up a quarter point again.
USA Session: A couple of real numbers with strong likelihoods of actually dropping are on calendar today. The 9:45 a.m. Final Manufacturing PMI number (the companion number to all the other PMI's that dropped worldwide this morning) still likely won't do much for price action because at 10:00 a.m. we get the ISM Manufacturing PMI (and Prices), and that one does make things happen on the charts. So don't get too excited at the 9:45 number but be ready for the 10:00 a.m. version. Construction Spending is a "tentative" so don't expect to see that one, not that it matters since it's always been a filler number and has no real history of generating price action on its own. That Ward's Total Vehicle Sales number is also on tap as a tentative, but it's always a tentative and drops whenever the fine folks over at Ward's get around to pushing the "send" button, which historically is late afternoon. Fed Speak at noon and 2:00 p.m., and lastly the Loan Officer Survey is listed as tentative as well, but it's a Federal Reserve number and they are still showing up to work, so it will drop at some point today, maybe. It won't matter because prices don't move off that survey anyway.
TUESDAY: Asian/London Session: We open with Fed Speak from Lagarde at 2:40 a.m. where and about what does not matter. Just know she's out there on the stump, anxiously awaiting her chance to say something that will torpedo your trade. French Government Budget Balance at 2:45 a.m. and Spanish unemployment at 3:00 a.m. will both be terrible numbers and have no impact. Too terrible for too long for anyone to start caring now. At 5:00 a.m. it's Groundhog Day as Lagarde speaks again, so protect any open trades. At 8:00 a.m. we have some Brit Fed speak. Canada has a Trade Balance number listed as Tentative because they can't release an accurate number without US data which is not forthcoming any time soon. New Zealand GDT Price Index is also tentative, so nothing to do or see there either. At noon and at 1 p.m. German Buba President Nagel is due to give opening remarks (noon) and participate in a roundtable discussing how "Europe is fit to assume its new global role". No idea what that role is (it doesn't say) but I guess it involves enough to deserve a half day long meeting. 3:00 p.m. brings a New Zealand Financial Stability Report (not a number so Pass). Canada is again listed as tentative for an Annual Budget Release (and again, not a number, so Pass). At 4:45 p.m. New Zealand drops their version of the NFP, which for NZ is a quarterly number. The last 3 releases generated 6, 6 and 17 pips. 17 is not the worst you could do on a trade but this one is typically a single digit mover after the release, so Pass. At 6:50 p.m. Japan drops their Monetary Base number y/y along with the minutes from their last Interest rate meeting. Monetary base on occasion will spur on a 25-30 pip move, but most of them land in the 11-15 pip range. If you're desperate for a trade, this one will likely move a little, but don't expect 20. Just be happy if you get it. 7:00 p.m. brings us the New Zealand ANZ Commodity Prices m/m, which is a non-event for us so Pass, and finally Japan posts the results of their 10 year bond auction at 10:35 p.m. Pass.
USA Session: All the US numbers are listed as "tentative" (Trade Balance, JOLTS Job Openings, Factory Orders m/m, that RCM/TIPP Economic Optimism Report) and the only one we're likely to see is the TIPP. And the TIPP does nothing because it is ALWAYS a tentative number that lands anywhere from 10:06 to 10:16, so traders universally ignore it.
WEDNESDAY: Asian/London Session: We start with German Factory Orders at 2:00 a.m., followed by French Industrial Production at 2:45 and Italian Retail Sales at 4:00. None of these are going to move the EUR at all, so pass x 3. Then we get into the Services PMI numbers (Monday was Manufacturing): Spain @ 3:15, Italy @ 3:45, France @ 3:50, Germany at 3:55, Eurozone @ 4:00, and Great Britain @ 4:30. No Canada today I guess. Same rules as Monday. Trade developing trends and no trend = no trades. At 5:00 a.m., here's a shock: German Buba President Nagle is speaking. So be aware. Also at 5:00 a.m. is Eurozone PPI, which is usually a single digit move, so Pass. 11:00 a.m. brings British Fed Speak, 6:30 p.m. brings the Japanese Average Cash Earnings number, a sub-20 performer, and 7:30 p.m. means it's time for the Australian Goods Trade Balance, also a sub-20 performer. So Pass on all the evening numbers.
USA Session: We start with the ADP Non-Farm Payroll at 8:15 a.m. This one has not gotten any respect from traders for a good while, but as I mentioned above, it's looking like we are going to go two consecutive months without the NFP itself, so be ready in case traders decide to hang their hats on this one today due to lack of any other NFP options being on the table for the foreseeable future. At 9:45 a.m. we get the Final Services PMI, which will remain invisible to traders because at 10:00 we get the ISM Services PMI, the PMI traders love to trade. We close at 10:30 with the Crude Oil number, which will (or at least should) appear as it has been here every week of the shutdown.
THURSDAY: Asian/London Session: The early numbers can be safely ignored (everything before 5:00 a.m. my time and the Bond auction stuff listed as tentative). None of these are designed to make prices move at all. At 7:00 a.m., however, we get the Great Britain Interest Rate Decision. 40-60 pips in the first 30 minutes and a few of the moves have continued well into the New York Open, so this deserves 100% of your attention as it will likely be one of the few bright spots for traders over the last 5 weeks. At 7:30 we get Bailey from the Bank of England AND, you guessed it, Nagel from the German Buba both speaking. Bailey will likely have more impact since his talk will likely revolve around the events 30 minutes prior. At 9:00 a.m. we again have Nagel speaking (I swear this guy gets paid by the word he talks so much) and at 10:00 the Canadians release the Ivey PMI, which last month cratered after a 7 pip move, but the previous 2 months posted 40 and 25 pip moves. No idea why the Ivey crapped out so hard last month, but CAD traders, be ready. Finally we get Japanese Household Spending, which has been a reliably quiet number, but last month posted a huge 27 pip move (after the Sunday night Open gapped up almost 250 pips on the Open). So something was going on then (possibly Tariff news) which likely won't be duplicated this month since that news already broke a few days back. So this is likely a pretty safe Pass.
USA Session: All the earlier US numbers are listed as Tentative and have a Government agency as a source, so you likely will not see these this week barring some cranial rectal extractions occurring in the Senate in the next few days. 10:30 brings NatGas, and the rest of the session is Fed Speak at 11:00, 12:00, 4:30 and 5:30.
FRIDAY: Asian/London Session: Once again the early numbers are nothing worth looking at until Canada has their own version of the NFP at 8:30 a.m. We typically see the same type of price action on the CAD pairs as we see on the US pairs when the NFP drops, so this is definitely one to trade this week, especially if the US NFP fails to drop once again as expected.
USA Session: Again, all the US numbers, including the Non-Farm Payroll collection of numbers, is listed as tentative and as of this morning (Friday) it is looking unlikely we will see them as scheduled (the only hope I can see is if somebody blinks over the prospect of 40,000,000 Food Stamp cards that will go blank starting at midnight tonight and they decide to wrap this up for a while). We do have the Preliminary UofM Consumer Sentiment and Inflation Expectations numbers dropping at 10:00 and this prelim number has actually been pushing prices around some the last few months. If the G is still shut down expect this one to really generate some activity as it is the only game in town for the US dollar on a Friday morning.
And that's it for another week. See you back next week, hopefully with some real US numbers to talk about for a change.
Jeff
