Hi Folks.
A quick note before we begin: the USA, CAN, and EU all have interest rate decisions on the calendar this week, so be aware they are out there. Because even if you have no plans to trade them, an announcement, even though planned, can shock the market and cause prices to act erratically, so just know the whens and wheres for all these before you open any trades, just for safety's sake.
Here is this week's forecast.
SUNDAY: Nothing, but enjoy your holiday, Australia.
MONDAY: Asian/London Session: Not much happening of note anywhere. Lagarde is speaking at a Hungarian National Bank event in Budapest at 3:10 a.m. my time, which could throw some shade on the London open 10 minutes earlier, but not likely. At 4:25 p.m. my time the Swiss National Bank Chairman (Schlegel) is giving an interview to Swiss TV. Just too close to end of day for this to do much barring any truly surprise announcements, and the market has a way for finding out about those surprises well in advance of any press events, so I don't see this TV interview resulting in any real activity involving the CHF. The rest of the events on the calendar for today are space fillers and I would be shocked if any of them cause more than 1-2 pips/ticks worth of movement upon release.
USA Session: Equally bad in the US. One number. New Home Sales. No one cares.
TUESDAY: Asian/London Session: Right at the stroke of midnight the JPY release their Core CPI y/y number, which would be a big deal if it was the US number, but no one seems to pay attention when it's the JPY number. And the timing is such the Asian markets are sort of winding down and the Euro markets are still asleep, so not a lot of activity is expected. The Spanish Unemployment rate drops at 3 a.m. but it's been in double digits for so long no one cares any longer. Deeper into double digits (expectation is 11.1%) won't surprise anyone and less than the expectation won't be trusted by anyone (Spain has long standing issues in this regard). Later in the evening (again, my time) Japan releases the minutes from their last Monetary Policy Meeting (where they jacked their interest rate from .25 to .50%) so it could be an interesting read and may even spark some activity at some point, but it's a report, not a number, so there likely isn't much we can do about it. But if you see a big and steady move start up right around the same time in the USDJPY, look at it as a possible trend and follow along if you're brave enough. Then, to close out this session the Aussies have their bundle of CPI numbers dropping at 7:30 p.m. Again, if this were the US version of CPI we would be all over it, but the last two Aussie CPI bundle drops have generated 13 and 16 pips over the hour after the release. Not exactly the kind of price action one can grow their account off of. So this version of CPI, red folder notwithstanding, is a pass.
USA Session: We start at 8:30 with Core and Overall Durable Goods. This one is right up (or down) there with Retail Sales. At some point in the past traders traded these numbers, but lately, not so much. The last two months generated about a dozen pips in the 30 minutes after the number dropped, so don't get excited by this one. It will only let you down. At 9:00 we have both the S&P Composite and the FHFA Housing Price Index. Housing is universally ignored in these markets these days, so again, pass. Finally at 10:00 a.m. we have the Conference Board Consumer Confidence and Richmond Manufacturing Index numbers. Neither of these do much on their own and I don't expect grouping them together will help any, but we haven't had a decent number to trade during the US session in what? 9? 10 days? So maybe the market is ready to do some real trading and this is when and where it happens. Anything is possible. But I think tomorrow's number will likely render this one a dud yet again.
WEDNESDAY: Asian/London Session: A dozen or so reports, all of them ultra-low level, most before US opens but a few after the close, and not a single one of them noteworthy, given the other numbers dropping today. Bailey from the BOE is set to testify before the Treasury Select Committee in London at 9:15 a.m. (Fed Speak = No Trades). But at 9:45 a.m. the CAD Monetary Policy (Interest rate) decision drops, with the inevitable Press Conference set for 10:30. The current rate is 3.25% and the expectation is the CAD FED will drop it to 3.00% at this meeting. If they do, expect some fireworks. If they don't expect a lot of fireworks. So if you trade the CAD, today is one of your High Holy Days. Be ready.
USA Session: Just like across the pond earlier, a small set of garbage numbers no one cares about. At 2:00 p.m. however, the US FED drops the US interest rate number. Current Rate is 4.50%. Expectation is they will leave it alone for now and likely cut at least one more time this year at the March meeting. But President Trump is trying to exercise some influence and get the drop announced today instead of in 6 weeks. Typically Trump and Powell do not get along AT ALL and Powell will keep the rate as is just to spite Trump (shows you the level of maturity that exists amongst our loyal and humble servants in DC). So even though the expectation is no cut, an actual cut won't be a total shock if it happens. I think either way we see some price action off the announcement, and everyone who is anyone will be tuned into the presser at 2:30 to see/hear more (on Forex Factory there is a link you can click to see it live if you don't have access to CSPAN).
THURSDAY: Asian/London Session: A mixed bag of reports in the early hours, most being of no use to anyone. But the GDP q/q numbers start dropping for various EU countries (France-1:30 a.m.; Italy-4:00a.m.; Germany-4:00 a.m., EU Overall-5:00 a.m.). Last quarter (On Oct. 30th, 2024) 5 GDP q/q numbers dropped and all checked in better than expected, except for Italy which was flat at 0.00%, and the EU posted a 50 pip move up over the hours of 4 and 5 a.m. This is why I say to pay attention to any trends that start developing on days when you have multiples of the same report dropping within a 3-4 hour span. You can catch some fairly easy pips because no matter how illogical trading can be some time, when you have an entire region posting very good or very bad numbers off the same report (GDP, CPI, etc.,) it becomes very tradeable as a result. Then if that isn't enough, the EU FED announces its rate decision at 8:15 a.m., with a press conference at 8:45 a.m. The current rate is 3.15% and they are expected to cut to 2.90%. Either way there will probably be some activity as a result, and the presser 30 minutes later could provide more. But just be aware if you're trading this morning a Fed decision is in the offing. We close out the evening with a series of Japanese and Australian numbers that won't likely result in anything worth trading, if past history has anything to say about it.
USA Session: Advance GDP q/q and the weekly Unemployment numbers are set for 8:30 a.m. The Unemployment number is expected at 221k but this number should show the first big wave of post-Christmas layoffs of seasonal employees, so if it comes in higher than 221k, it won't be unexpected. The Advance GDP number has really moved prices around some the last few times it's made an appearance, and we are expecting a .4% drop from last quarter (3.1%.2.7%) which is a fitting epitaph for the Biden Interlude as President. But this is why they make the horses run the race. If it comes in lower (absolutely no surprise if it does) we'll see some real price action for a change. If it hits the mark or comes in a bit higher, we'll see something, but likely nowhere near as much as if it misses to the downside. We then have Pending Home Sales at 10:00 (pass) and NatGas at 10:30 (pass unless you trade NatGas).
FRIDAY: Asian/London Session: Japan starts us off at midnight with Housing Starts y/y. A number you can safely pass (I can tell you some amazing stories about the Japanese housing market if you want to hear them, like the one about the American who last year bought a 9 bedroom home on two acres in Chita (close to Tokyo) and paid the princely sum of $15,000 as payment in full for a house left in a condition where he could have moved in the day escrow closed and lived comfortably without making any renovations). That is the story of the housing market in Japan, so when you see negative numbers pop up all the time, that's one reason why. There are hundreds of thousands of homes in Japan you can buy for just about the amount of money you currently have in your pockets right now. Later on are junk numbers from the EU...German Preliminary CPI m/m is on the calendar, but no specific time is given. No time given = not tradeable. But at 8:30 the CAD GDP number comes out and anything CAD has a tendency to move the CAD pairs around. So CAD traders be ready.
USA Session: A grand total of 5 reports all coming out at 8:30 but the only one that matters is the Core PCE number...the Fed's favorite inflation measuring tool. As I noted last week, it comes out 2 days after the latest Fed Rate Decision so it's impact on policy will be muted (the one coming out next month prior to the March Fed meeting will be far more important) but from a trading standpoint I don't think it will matter much. We've had a drought of decent numbers to trade over the last two weeks (the Fed number Wednesday afternoon notwithstanding) so I again expect to see some real price action when the PCE hits the airwaves. At 9:45 we have the Chicago PMI number coming out to end the week, which is the same as saying the Core PCE is our last tradeable event for the week. If you are away from you desk when it drops, don't worry. You won't miss anything.
See you back here next week.
Jeff
