Hi Folks.
Here is this week's forecast.
SUNDAY: A slow start to the week. New Zealand issues a forgettable number 15 minutes before the markets open so that's a non-issue. Japan has a holiday today (Monday for them) and while Australia has a pair of reports dropping at 7 and 7:30 p.m. my time, neither is a number with any sort of history of creating decent tradeable price action. So we turn our attention to Monday...
MONDAY: Where pretty much the same conditions are present.
Asian/London Session: At 3 a.m. the Swiss have the SECO Consumer Climate number, which has been mired in the negative 30's and 40's since the beginning of 2022, and the expected number today is -38. So unless there is a massive sea change in the direction of the Consumer-perceived economy, don't expect a lot of price action from the SECO number. New Zealand has a floating Consumer number as well, but with no fixed release time there isn't much we can do about it. The good news is no one cares about this number so the odds of it dropping and causing trouble with any of your open trades is about ZERO. Australia has the WESTPAC Consumer Sentiment number (a lot of those Sentiment numbers today) but this one will likely have the same impact as the others, which means none. Japan has two numbers dropping at 6:50, Bank Lending y/y and the Current Account number, which measures the difference between the amount exported and the amount imported. No surprise that Japan is a net exporter so the number pretty much always ends up a positive, and usually pretty close to expectations. And when it's off by a lot, prices on the USD/JPY show no signs that anyone cares. So we can pass on these as well.
USA: At 2 p.m. we have the Federal Budget Balance number, which has stayed in the red since the Eisenhower administration, so no surprises are expected here either. And no surprises = no price action.
TUESDAY: Asian/London Session: A few numbers set to drop, but none designed to generate any price action and all easily forgotten within moments after their release. Japan has the Economy Watcher's Sentiment number...they actually survey 2500 retail workers who see consumer spending from the front lines to get their opinions. This is as bad as the method used to select the King in Monty Python's Holy Grail. But while it's a real number, no need to risk any real money on the results after the number drops. The French Budget Balance is at 2:45 a.m....spoiler alert: they're in the hole just like we are here in the USA...so no surprises = no price action; A British Fed guy speaks at 3:30, with the usual rules applying (we can't trade it but he can certainly say something stupid that can ruin an otherwise good trade we are already in); Italian Industrial Production is at 4:00 a.m...I was unaware Italy still had any industrial production. The number doesn't say how much they produced, just a percentage to indicate they produced more or less than they did last month. I looked at some charts and didn't see any sort of unusual price moves the last two times this one dropped so it's another pass for me. Finally, Japan has their M2 Money Stock number out at 6:50 p.m. A very consistent number which rarely moves price enough to be worth the risk of trading. However, if the number is a huge miss, by 3/10ths of a percent either way, the JPY pairs and the NIKKEI Index will likely be worth trading. But based on its history of consistency, don't count on seeing anything like that.
USA: We open with the NFIB Small Business Index at 6:00 a.m., and any report issued while the related country is still in bed can be safely ignored. The RCM/TIPP Economic Optimism report is a floater, so no fixed release time means no way to trade or plan for it (it does seem to drop around the 10 o'clock hour but rarely right at 10). Two Fed clowns are speaking, one at 10 and one at 3, so again, they only get mentioned because of their ability to screw your trades up if they get half a chance, and finally, at 8:30 a.m., PPI (Core and Overall). This is one of those odd months where the PPI drops a day before CPI, so we might once again see some real price action simply because the CPI will remain a mystery for another 24 hours.
WEDNESDAY: Asian/London Session: A lot of numbers, most of them not worth noting, except the Brits have their various CPI, PPI and RPI numbers dropping at 2:00 a.m. my time. This is an hour before London opens, but this one defies the rule about numbers that drop before the local market opens. And even if nothing happens at 2:00 a.m., stand by for London Open at 3:00 a.m. because you could still see some fireworks once the local banks come online. At 8:30 a.m. there are a pair of Canadian numbers dropping: Manufacturing Sales and Wholesale Sales. Neither is all that big a deal, but the CAD has been a little jumpy of late on just about everything Canadian related in terms of numbers. So if you trade any of the CAD pairs, this might work out for you to at least a small degree. Later in the evening (after the US shuts down for the day) we have a few more numbers of little importance dropping, but at 7:30 p.m. my time the Aussies have their monthly Employment numbers hit the streets. I went back and looked at the results on the AUD/USD for the last couple of Employment numbers and I was hard pressed to find them on the charts. It may be a big deal here in the US but apparently traders couldn't be bothered over the Australian numbers.
USA: A bunch of calendar entries (most of them Fed speak) today, but the big one is the CPI, both Core and Overall, and the Overall is both m/m and y/y. This is one of the big inflation gauges the Fed relies upon, and we do have another Fed meeting in 3 weeks so this is the last CPI number they will see before they meet. So expect some fireworks, even though we had the PPI yesterday and that does tend to steal a little thunder from the CPI when that happens. The other 8:30 reports are meaningless, because it's all about the CPI this morning. Fed Speak at 9:20, 10:00, 11:00 and 12:00, with Crude Oil out at 10:30 as usual. The Fed's Beige Book comes out at 2:00 but since it isn't a number there really isn't much we can do about it. Just be aware it's out there if you're trading in the afternoon.
THURSDAY: Asian/London Session: At midnight the Canadians have some Fed guy speaking in Toronto about the Canadian Fed's balance sheet. At midnight. Apparently they hold some really boring slumber parties up there in Toronto. At 2:00 a.m. all eyes will be on the GBP as the Brits release their GDP m/m and a bunch of other numbers that don't matter. Last month they missed expectations by .2% (0.1 expected, -0.1 released) and the GBP/USD dropped 40 pips over the next hour. Again, this is an hour before the London Open, but no shock, the perceived importance of the GDP outweighs the early release time. Over the next 5 hours the Euros and the Brits drop a handful of numbers, but none of them seem worth mentioning. Canada releases a Housing number at 8:15, which would normally not be worth mentioning either except the CAD is reacting to a lot of CAD numbers lately, so again, if you trade CAD pairs, this could be your day. In the middle of the USA morning, the Aussies drop the Conference Board Leading Index number, but that number has never moved price around regardless of the time it's released. Finally at 4:45 p.m., New Zealand releases their BusinessNZ Manufacturing Index. I looked at a couple of NZD charts and didn't see any price movements based on prior number drops, so pass.
USA: This is going to be a somewhat unpredictable 8:30 a.m. news drop today. We have 5 reports coming out, 4 of which have, in the past, given us some decent price action post-number drop, but lately we just haven't seen much out of any of them on their own. Retail Sales (Core and Overall) is the ugly stepsister to CPI and PPI, both of which dropped earlier in the week, so we have a sort of number fatigue that sets in by the time RS gets here (and since this is the post-Christmas number, everyone is already expecting a decent number). Should RS lay an egg and miss to the downside, maybe we see something worth trading. Unemployment Claims w/w will likely go up a bit over the next few weeks as all the part-time Christmas help gets laid off, but this number may be a bit too early to really see the impact of those job losses. Philly Fed Manufacturing Index has made some impact at some point, but for the last three years it has swung back and forth over the Zero Line (above = good, below = bad). It would need a truly good number (30+) in order for traders to sit up and take notice. Import Prices is an inflation gauge, but buried so far down on the list of inflation gauges you need to flip over to Page Three to find it. So none of these numbers are hitting like they did in their old glory years...however, if all four come out well above expectations (or even below to a decent extent) we might just see an Avengers-like rise from the ashes and some real price action for a change. Maybe even if the misses are only moderate and not even breath-taking. If you see all the numbers hit Green or Red on the calendar, look to jump into at least a short term trend as soon as it makes its presence clear. At 10:00 we have Business Inventories and the NAHB Housing Market Index. Nobody cares. NatGas at 10:30. Only NatGas traders care. 11:00 a.m. we have Fed Speak. No one cares (unless the moron says something insane and derails your trade...then you'll care).
FRIDAY: Asian/London Session: For our last day of trading this week we start with the GBP Retail Sales number. 10-15 pips of back and forth movement over the 30 minutes after this one dropped last time. Probably makes about as much impact as the USA RS number does. Be aware it's out there but don't expect much. At 4:00 a.m. the Euros have their Current Account number, which has remained positive for several years (aside from a 6 month period mid-pandemic, so that can be excused). Another positive number won't do much if anything to the EUR pairs. At 5:00 a.m. we have the Euro's CPI numbers (Core and Overall). This one comes out on target about 90% of the time and when it misses the other 10% it doesn't miss by much. So no surprises = no price action. Brits have a Quarterly Bulletin (a written report, not a number, and no fixed time for release so nothing we can do with it). At 8:30 a.m. the Canadian Foreign Securities Purchases number drops. Again, this is a CAD number so pay attention if you trade CAD pairs. And finally, the GBP gets the good/bad news from the Conference Board Leading Index number at 9:30 a.m. my time. The combination of mid-afternoon on a Friday in GB, combined with the fact the CB Leading Index number is universally ignored, means we can safely ignore it as well.
USA: What has been a pretty good week for numbers from a USA perspective comes to a screeching halt today, with Building Permits and Housing Starts out at 8:30 and Capacity Utilization and Industrial Production numbers coming out at 9:15 a.m. Somebody might care about these, but not any traders of my acquaintance.
Have a great weekend and see you back here next week.
Jeff
