Hi Folks.
This week's forecast has one obvious theme running through it, and maybe, as a result, we might get some decent price action from time to time as a result. So pay attention, have fun, and make some money.
SUNDAY: A New Zealand Bank Holiday and Australian Fed Speak at 5:10 p.m. make up the entirety of Sunday's calendar. An easy Pass.
MONDAY: Asian/London Session: Slop. Absolutely nothing among the 4 entries is worth mentioning.
USA Session: There is no USA session today. Oh, we're open, but once again the bean counters just couldn't be bothered to gin up any numbers, real or imagined, for a Monday.
TUESDAY: Asian/London Session: A garbage morning session, but things take a major turn in the evening when Australia releases their CPI (still a Red Folder report), but in spite of the pretty red colors on the calendar, this one has only generated 8, 6, and 7 pips over the last 3 months. Another Easy pass. Then we get the New Zealand Interest Rate Decision, and the last 3 pip counts landing at 5, 7, and 7 pips make this one an almost automatic pass. The RBNZ is planning to jack rates a quarter of a point, and this is usually cause for celebration amongst traders (and higher pip counts), but they raised the rates a quarter point TWICE in the last 3 sessions and only managed a measly 6-8 pips in the process. So unless they bump rates a full percentage point (unlikely to the point of being all but impossible) we probably won't see much more than a 5-10 pip response. So in spite of the blood red calendar, this evening is a complete Pass as well.
USA Session: Lots of stuff and none of it worth trading. The always ignored ADP Weekly Employment Change number at 8:15 a.m. starts us off, with Durable Goods at 8:30 a.m. (10, 19, and 8 pips over the last 3 months, with that 19 landing on a day with multiple red folder numbers dropping simultaneously, which we do not have today); always ignored Housing numbers at 9:00 a.m., the always useless Conference Board Consumer Confidence number at 10:00 a.m. (a beige folder, inexplicably) along with New Home Sales and the Richmond Manufacturing Index, neither of which have inspired traders in forever, and we close with the API Oil Report at 4:30. Lots of stuff, and none of it will do anything for us in terms of price action.
WEDNESDAY: Asian/London Session: Early stuff once again isn't noteworthy, but be aware that Great Britain releases their Annual Budget at 8:30 a.m. my time. A report and not a number, so we can't trade it with any degree of certainty, but Budgets are a big deal (not that we would know anything about that here in the USA) and while it won't be a tradeable number, it could create a mini-firestorm of price action, so if you're trading any GBP pairs, be aware it's out there. The only other noteworthy event on calendar for the A/L session is Canada joins the Interest Rate party at 9:45 a.m., with a press conference following at 10:30. The last three rate announcements generated 19, 11, and 33 pips, with that 33 on the heels of the BOC leaving rates alone when a significant percentage of traders were expecting a rate bump. This time, everyone is expecting a rate bump and unless you are New Zealand, this is usually cause for prices to get the zoomies, so CAD traders, today might be your day. Keep an eye on the actual results and look for good things to happen if the rate lands at 2.50%.
USA Session: Goods Trade Balance and Wholesale Inventories start us off at 8:30 a.m. (and no one will care) followed by Crude Oil at 10:30 (which means this must be a Wednesday). Then at 2:00 p.m. the 400 pound gorilla of trade news enters the room with the Fed Funds Rate decision. The last 3 generated 60, 62, and 77 pips with the last one fueled by a quarter point rate hike to 4:00%. No such hike is contemplated for this meeting, although earlier CPI and PPI numbers certainly would justify such a response from the Fed. But it won't matter, really. We are going to see some price action fireworks no matter how it comes out.
THURSDAY: Asian/London Session: Lots of stuff on calendar for the morning (and evening) but all that matters today is the Eurozone Interest Rate decision at 9:15 a.m. (press conference to follow at 9:45). The last 3 decisions generated 23, 14, and 15 pips, with the 23 coming after a rate increase. No such increase is expected today, so another low-to-mid teen response is expected. The other item to simply take note of is the Japanese Interest Rate decision set for "tentative". You know the drill when it comes to tentative numbers. Remember they are out there but don't bother trying to trade them. And just for fun, I went back and checked the actual release times for the last 3 decisions: 10:54 p.m., 11:11 p.m. and 11:19 p.m. And thanks to never knowing when these numbers will drop, traders responded with 4, 5, and 10 pip moves on the USDJPY, and this when 2 of the three decisions were actual rate changes. So be aware this is out there but don't get too worried. The market actually seems to have the backs of traders on this one.
USA Session: Advance GDP q/q and Core PCE m/m start us off at 8:30 a.m. along with a handful of lesser numbers. The GDP number posted up 14, 13, and 25 pips for the last 3 results (with the 25 being in February and the actual number (1.4%) a HUGE miss from the expectation (2.8%). For the PCE (once a favored tool of the Fed but lately one traders just yawn over) the results for the last 3 reports were 14, 19, and 19 pips. The 19's are encouraging simply because that's pushing up on my minimum 20 pip requirement before we trade, but this one used to generate 30+ pip with ease, so in spite of its Red Folder status, I just can't get all that excited about a set of numbers traders seem hell-bent on ignoring. Plus, we're less than 24 hours removed from the Fed Funds Rate decision, and that tends to suck some of the air out of the room as well. So, maybe. At least keep an eye on the actual numbers and if the misses are massive, then seriously consider at least a small trade. NatGas closes us out at 10:30.
FRIDAY: Asian/London Session: A huge calendar for today, at least in terms of entries (21 total) but upon closer examination, today is one of those days where FF pads the calendar with a bunch of EU-member country specific numbers (like French Preliminary Private Payrolls and German Import Prices) which certainly makes the calendar look busy but in real life terms, simply clutters up the morning with garbage numbers no one in their right mind will trade. So feel free to pass on the entire session, and that includes the Canadian GDP m/m, which is responsible for 13, 14, and 22 pips over the last 3 months. That 22 is vaguely interesting in that it was a standalone result (nothing else on calendar that morning), but that was the first time in three months there was NO increase in GDP for Canada (the previous 2 months came out better than expected and the pip counts were in the low teens). So a mixed message at best. However, since the entire day is a complete bust in terms of news-driven trading, this one might be worth keeping one eye on. I'll let you make the call for yourself because I am completely ambivalent about this one.
USA Session: So to close out the week we get the Employment Cost Index, a number they (FF) say they've covered for two decades now, but I only have a vague recollection of seeing it once or twice in that time frame. The last three pip counts were 9, 13 and 21 pips, with the 21 coming on a day when there were multiple red folder numbers dropping at the same time. So Beige Folder aside, there is not much to recommend here, especially on a Friday when the only other entries we have to work with are Chicago PMI at 9:45 a.m. ( a huge Pass) and Fed Speak at noon and 12:30 p.m. I find myself saying this a lot on Fridays: feel free to take the day off because there likely won't be much happening as the week comes to a close.
And that brings our Interest Rate Fiesta Week to a close, along with the month of October. Clocks in the US and Canada roll back to Standard Time this Sunday morning so once again we can use our regular times to match up North America, Europe and Asia. And maybe sneak in a little extra sleep as a bonus. So enjoy the weekend and I'll see you back here for our first well rested forecast of November.
Jeff
