Crazy season in the markets

Ah friends, I hate to be the one to break it to you but silly season is upon us. The end of August with the UK Bank Holiday on Monday 29th and then Labor Day the following Monday in the US sees many traders heading off to the country for a few days R&R. Fewer announcements that affect the markets happen around this time, but with junior left in the driving seat the markets can get a little… cray-cray. crazydancing

But let’s not be glum – after all, one man’s trash is another man’s treasure and this week, let’s treasure hunt. Here’s what you should be watching to get the most of the markets.

USD

Last week the dollar index was up 1% after Yellen’s Friday speech at Jackson Hole hinted at a possible September rate rise. Some pundits think it won’t happen until December so it doesn’t affect November’s presidential election but this week’s Non-Farm Payroll on Friday coupled with Tuesday’s CB Consumer Confidence and a few other US figures due out this week could give the Fed a positive reason to hike rates sooner rather than later. Both key announcements follow two months of higher than predicted figures. If this trend continues this week, the US economy will look stronger to the markets. It’s worth noting that not everyone agrees – one major bank was shorting the dollar two days before Jackson Hole.

Oil

Last week, oil declined around 3% after an initial 9% rise so ended approx 6% up on the previous week. The midweek Crude Oil Inventories figures will stimulate movement but the trick is knowing which way to jump. Last week’s surprise 2.5M increase evened out the previous -2.5M decline so things could go either way on Wednesday 31st.

EUR

When you play EUR FX pairs, you watch the Germans. That could be spotting when the towels go down around the pool, or if Greta and Oskar are spending much in the shops. This week the Germans reveal their monthly Retail Sales figures. If they have been splashing out, then all is well, but if not, the EUR could take a hit. This announcement could be as early as Monday but the date’s not yet fixed so keep an ear out for updates.

GBP

Monday is a Bank Holiday and the country is closed. This is no joke. The country is closed…

empty tube

The City of London is empty

Happily Thursday and Friday give us some GBP action with two key events – Thursday 9.30am sees the Manufacturing PMI figures (after 3 months of positive movement July saw a decline) and Friday 9.30am gives us the Construction PMI (after 3 months of negative numbers July saw an increase). This conflict gives our players lots to work with on the FX GBP pairs.

AUSD

Tuesday 2.30am GMT sees the monthly Building Approvals figures. You know and I know they’ve been shocking with two months of pretty steep decline. The markets will be looking for a turnaround in the numbers or they could lose faith, but there are lots of factors at play for the value of AUD this week. Wednesday 2.00am GMT the Assistant Governor of the RBA speaks in Singapore and may drop hints about future policy. Traders love nothing more than reading too much into the nuances of speeches like this. Then Thursday 2.30am brings Private Capital Expenditure  and Retail Sales monthly figures. Both have declined and the recent apparent strength of AUSD could be about to wobble.

Jackson Hole Symposium

Landscape_of_Jackson_Hole_October_2010

Jackson Hole, Wyoming

From 25-27 August, Kansas City Federal Reserve hosts the biggest US monetary policy event of the calendar in Jackson Hole, Wyoming. Since 1978, the world’s most influential central and commercial bankers, finance ministers and economic academics have packed their suntan lotion and gathered round the BBQ to chew the fat about economic issues, implications, and policy options connected to the biggest economic policy question of the year in the world’s biggest economy.

This year that question is “Designing Resilient Monetary Policy Frameworks for the Future.” What this means to you and me is that they will mull over whether or not the current system and the beliefs that underpin it work and if they don’t, what it could be replaced with. This is the finance world’s version of Olympics with a touch of naval-gazing thrown in – are we the best at what we do? if we are not, how should we change? and, how can we keep on top?

Speculation is rampant among financial pundits. With the next Fed policy statement due on Sept 14th, traders will be agog to see if a rate hike is on the cards or even a complete overhaul of monetary policy. San Fran’s Fed president, John Williams, has called for an increase in inflation targets while other Fed presidents have called for caution. The contradictory statements coming out of the Fed in recent days has left traders bewildered and frustrated. So it’s clear something has to change. A failure to increase rates will be seen as an admission that current policies are failing and could send markets plunging though maybe more like John Smith and less like Chen Aisen.

Improved household spending and last week’s better than forecast employment figures could give Yellen reason to hint at a rate rise on the 14th and a wide range of media pundits support this view though the Federal Funds futures doesn’t agree with only an 18% probability rate rise priced in.

Across the media there is a sense that there are two routes ahead – either a rate hike in response to improved conditions, or a major rethink on monetary policy if that’s not seen as a good enough indicator of improved economic health. The Fed’s own San Fran president John Williams has stated he wants to see a revised inflation target.

With attendees from major financial institutions across the globe, traders will be paying close attention to news updates from the Symposium across all three days. Expect lots of movement on USD FX pairs as well as the USD index and other US-based market indexes across the week. If you’re busy elsewhere then cancel during Yellen’s speech on Friday as well as first thing on Monday 29th as there will probably be a reaction when markets open.

There are certainly plenty of bears around Jackson Hole so let’s see if the markets go the same way when they hear what the world’s finance bigwigs have to say.

jackson hole bears

A Jackson Hole bear

 

 

 

 

 

 

Rallies, bears, bulls and Ryan Lochte – news for 22-26 August 2016

rallying like a sir

Tuesday 5am GMT

The Bank of Japan‘s governor, Kuroda, is going to speak. He’ll try to sound encouraging and calm, but traders will be analysing every syllable and weighing up if the measures he outlines will shore up the currency. Will his dulcet tones appease them? 0% inflation reported last Monday won’t have made them receptive and he’s got a lot to do to win them over. JPY has been on a downhill slope since 21st July and broke the 100 barrier against USD a few times near the end of last week. This is a key point for the Yen and some traders may be looking for a rally to ride but hopes are starting to fade.

Wednesday 2.30am GMT

Follow the yellow brick road as all eyes turn to Oz for some southern hemisphere action. The AUD/USD pairing has been a little unsettled but data is showing the AUD may be a good place to make some gains for currency traders. Traders like round numbers and AUD has been bouncing between 76 and 77c against the dollar. The construction work done quarterly figures will move things but where would you put your money? Recent building figures have been in the red with bigger contractions than forecast for the last three quarters. Current predictions estimate another -1.9%.

Wednesday 3.30pm GMT

pay_attention_to_me

Do pay attention (sigh) this is more important than finding a new species on No Man Sky. Brent oil smashed USD50$ last week. Psychologically this is massive for traders and a far cry from only a few weeks ago when it was hovering around USD40$ – just shows what a fickle thing the market can be so remember a big swing up can also swing back down again just as far but traders will be waiting with baited breath for Wednesday’s crude oil figures from the US. Last week showed a sensible -2.5M fall in barrels being held in inventories against predictions of a 1.1M rise. A smart guy might say it’ll be in the same direction again but oil’s a slippery little fellow at times. We are still waiting for the forecasts so stay focused and listen out for announcements.

Thursday 9am GMT

The EUR has been giving our players lots of fun as it’s been rather volatile as last week’s German economists’ data provoked lots of movement. This week the German IFO Business Climate data will be very interesting: based on a wide spread of manufacturers, wholesalers and retailers as well as builders, it gives a well-founded view of the economy. And the markets will react because the German economy is a major factor in the health of the currency. It’s up to you to decide which way it’s going to go, but recent forecasts have been a little under par with the actual data being more positive. However, some say Brexit is starting to impact and maybe this will be the month there’s a downturn.

All week long… but especially Friday

The S&P500 has really come down off its high and the futures market is as changeable as Ryan Lochte’s story this weekend.

lochte10

Pundits indicate the S&P500 will open near its record close on Friday; and the start of the week will likely see some readjustment as it finds its level. But US announcements from Thursday could send it swooping or soaring once again.

  • Thursday 1.30pm GMT Unemployment Claims
  • Thursday 1.30pm GMT Core Durable Goods Orders
  • Thursday all day Jackson Hole Symposium
  • Friday 1.30pm preliminary GDP quarterly figures
  • Friday (time tbc) Federal Reserve Bank Chair Yellen speaks
  • Friday all day Jackson Hole Symposium

Ears to the ground, eyes on the news, and fun on the horizon.

Whistle while you work…

by Denton Cushing

by Denton Cushing

Not quite how I remember these guys but they had a knack of being cheery about working down a mine. And a good thing too when this week’s big focus is on employment figures.

Tuesday 2.30am GMT

AUD Monetary Policy Meeting Minutes – who gets excited about minutes? Traders do, that’s who. And for good reason, these minutes usually contain trading gold about what influenced the Bank’s most recent decision on interest rates. It’s a good heads up on where the economy is heading next.

Tuesday 9.30am GMT

GBP CPI (consumer price index) – last month bucked the trend as actual figures were 0.1 higher than forecast at 0.5, which we haven’t seen since April. Have average prices risen substantially since this time last year? Not likely so expect another micro change if anything. Forecasts say 0.5. We agree. The GBP RPI (retail price index) data is released at the same time but are slightly more optimistic forecasting a 0.1 rise. Let’s not hold our breath though.

More interestingly, the GBP PPI (producer price index) also at 9.30 GMT forecasts a significant drop from 1.8% to 0.6%. So it will be cheaper to make things in the UK, but what do the Brits even make anyway? Traders will be watching and the GBP could take a hit.

Tuesday 10.00 GMT

The Germans have a big influence over the Euro and the ZEW German economic sentiment statement has been on a wild ride. It’s a 6-month view of the economy from a group of bods seriously in the know. Spiking to 19.2 in June after a predicted 5.1 then plunging to -6.8 in July, there is a lot of speculation about this month’s announcement. These guys are worth listening to but they don’t always get things right.

Now, spot the difference – ZEW economic sentiment statement – took me a while too, the first time. This statement, also at 10am GMT, also by the same bunch of German economists is about the Eurozone rather than just Germany… seems a little greedy to have two announcements but I guess they want to prolong their moment of glory each month. Important, but less so than the German one and less of an impact on the markets.

Tuesday 1.30pm

A working lunch today – so many announcements from the USA that the currency is going to get a little hot under the collar a little as traders take it all in. Here’s what they’ll be reacting to:

  • Building Permits (last few months on track with forecasts)
  • Housing Starts (actual has been slightly higher than forecast in recent months)
  • CPI m/m (forecast is flat, no growth 0.0)
  • Core CPI m/m (excludes food and energy, seen as more reliable; says 0.2)

Wednesday 2.30am GMT

Australia’s going to let slip what people are earning Down Under with the Wage Price Index. It’s been steady as she goes for months at around 0.5% to 0.6% but other figures from Oz have been a little rocky lately – will this be the moment wages start to suffer?

Wednesday 9.30 GMT

whdh.com hire me image DM

The Brits are also talking about their pay packets with three UK announcements at 9.30 GMT

  • GBP Average Earnings Index
  • Claimant Count Change
  • Unemployment Rate

The GBP Average Earnings Index quarterly figures were a little above forecast in May and June but July was spot on. Punters are giving the nod to another rise from 2.3% to 2.5%. Higher business costs aren’t always a good thing, but more money in Henry’s pocket means the high street should benefit. We think the pound will get a little boost if the figure is above forecast.

How many Henrys are claiming benefits? The GBP Jobless Claims total was quite good news last month when figures rose by a minimal amount at 0.4K though forecast at 4.1K. Now they’re saying to expect a 5.2K rise. On past form, they’re off the mark and low unemployment is good for currency.

Talking of which, the Unemployment Rate has been fairly stable at around 5.0%. No surprises expected in today’s announcement. But that’s the thing about surprises – you just never know.

Wednesday 3.30pm GMT

robin-thicke-i-know-you-want-it-blurred-lines

If you’re going to pick any one announcement to trade around today, I’d pick this one. USD is going to react whatever happens. All the news talks about is global overproduction so the markets keep predicting a drop in Crude Oil Inventories to help shore up the price, but the reality is the inventories have grown by around 4 million barrels in the last three weeks alone. This week the prediction is finally skyward by 1.1M and we predict a little dip in the markets to match.

Wednesday 7pm GMT

8 time a year the Federal Open Market Committee  USD FOMC meet at 6pm and the minutes are published at 7pm. This is what the markets are waiting for. It may not be verbatim but there’s enough meat on the bones to give the markets something to chew on.

Thursday 2.30am GMT

Australia puts the spotlight on Employment Change  and their Unemployment Rate this time. With the rate steady at around 5.8% for the last few months, it’s the change that traders will focus on. Increases jumped in April to 26.1K but they’ve been dropping since then. July saw an increase of only 7.9K but the powers that be are positive and see a 10.2K increase coming. If they’re right or if it’s higher the AUD will be on the up.

Thursday 9.30am GMT

Henry and Henrietta have not been to shops shocking markets with a -0.9% drop against the already gloomy -0.4% predicted for the Retail Sales m/m. Retrospectively the 0.9% gain in July looks like a blip. The UKP could be heading into a tailspin if there’s another negative figure and the klaxon sound of a recession is echoing over the hills.

Thursday 1.30pm

Pull up a chair and take a punt on the USD with two big announcements.

  • Philly Fed Manufacturing Index
  • Unemployment Claims

August has seen a jump in newly broke Americans compared to the relatively gainful July before and looks like there’s going to be more. The economy isn’t tanking as such but it’s not a great time to be the last one in the door somewhere.

yummy scrummy

yummy scrummy

Do you like Philly? Lovely stuff. Cool and creamy and great on a bagel. I digress. Philadelphia on the other hand is less tasty but traders love it anyway. Their manufacturers give a good indication of the economy with a little survey. The thing is the forecast and the actual index are often a pole apart. Aside from a great month in March 2016 has been mostly below 0.0 and there’s no reason to suspect otherwise now. Forecasters say a tentative 1.4. We say the traders will be twitchy.

Friday 9.30am GMT

It’s the end of the week, early doors, I hear you say. And you’d be about right. Aside from a little GBP action early on with Public Sector Net Borrowing there’s little to spook traders today.  If you want some serious fun over the weekend, keep your nose to the ground for Bitcoin news and skip over there. Otherwise..

top-10-summer-cats-relaxing-in-deckchairs-L-buipB8

3 events traders are buzzing about on Monday

Show me the honey

the other liquid gold

the other liquid gold

I hope you had a good rest at the weekend because you’re going to be chasing trading gold all day Monday. We know you normally like the the other liquid gold, but we’ll be looking at what the busy bees in Japan, China and the US are up to today.

Monday 12.50am GMT

JPY GDP q/q – Japan releases its quarterly GDP preliminary: key figures to kick off the week. As I’m sure you’ll have noticed, it’s like traders prefer the semi to the final or the estimate to the final bill, they go crazy for preliminary figures so – they’ll be raring to go with this major announcement and so should we. Japan’s May GDP nudged into the black for the first time in a while but recent bank action has been attempting to shore up the currency so we wonder if they know something we don’t. Are we anticipating a downward turn? Could be, could be.

Monday 8.15am GMT

CHY PPI m/m – China’s producers’ release their monthly price index. We know how hard the Chinese work but July’s figure stayed positive by a mere squeak at 0.1. Forecasts predict a slip back into the negative at -0.2 and we think they’re on the button here. The good news is a little TIQL in the right direction and our traders win either way.

Monday 1.30pm GMT

homer beehive

USD Empire State Manufacturing Index – wowzer, the busy little bees in Yankeeville have taken traders on a wild rise with the last few announcements. I don’t know who exactly is getting paid to make these forecasts on this but someone needs to have a word as they have been WAY off.

Are you thinking what I’m thinking? Forecasts wildly off so…. some serious fun to be had. Now let’s just chuck in a word of caution. This announcement is only based on the opinion of a few producers in New York State. This doesn’t exactly reflect the state of the national manufacturing output BUT those stock market traders like a good gossip and that affects currency.

See you on the other side.

 

 

Aussie Hawks and American Joes

If we see Glenn Stevens, Reserve Bank of Australia’s governor, walking like this when he gets up to give his Wednesday address to the Anika Foundation, we’ve got some fun ahead on the markets.

feeling hawkish

feeling hawkish

The Reserve Bank of Australia’s governor, Glenn Stevens, will speak on Wednesday at 4.05am GMT. He is da boss when it comes to the AUD and traders go nuts trying to work out what he means in his speeches. He may be talking to a concerned bunch of ladies who lunch but his real audience is global and you, my friend, can take a ride on their every reaction. Pundits are predicting even more rate cuts after last week’s RBA 25 basis points cut to 1% despite yesterday’s positive outlook in the Business Confidence report. This conflict between business confidence and banking uncertainty means traders will be hanging on his every word.

Weirdly, while Australia seems to be clinging on in the positive its bigger trading crony China suffered with some rather unpalatable trade data since the week started and is nowhere near recovering the CHY/USD figures seen a month ago. We hope you predicted the fall and made money over the last few days.

In other news…

Wednesday 3.30pm GMT

Crude Oil Inventories are notoriously unpredictable so traders love it. The futures market rallied after OPEC announced an informal meeting for September but overproduction is the key. Today’s data will cause fluctuations for you to enjoy.

Wednesday 10pm GMT

Don't diss the Haka

Don’t diss the Haka

Looking a little aggressive there, chaps. But slide over to New Zealand at 10pm for a raft of announcements that will move the currency all at the same time. We’re adding new FX pairs all the time so look out for NZD in the future on TIQL and SparkProfit.

  • Official cash rate
  • Reserve Bank of New Zealand (RBNZ) Rate Statement
  • RBNZ Monetary Policy Statement

Make of these what you will but stick around because…

Elsewhere in the world

Wednesday 3pm GMT

JOLTS job openings announcement in the US are a good sign of the strength of the economy. More jobs

Thursday 1.30pm GMT

Keep yesterday’s effect in mind to plan your move when you hear the US Unemployment Claims figures today.

US Import Prices released at the same time will also cause ructions as they’re the earliest released government inflation figures. The forecast is -0.2. Anything higher will be taken very positively. Lower and the markets won’t like it.

Friday 3.00am GMT

Spin that globe. We’re off to China now for Industrial Production monthly figures. They’ve been on forecast or above for the most part but recent announcements have raised our hackles. Will the market be bearish in the run up to the announcement? Is there any faith left in the Chinese powerhouse?

The Chinese Fixed Asset Investment yearly figures also at 3am GMT are a major heads up on the economy and traders will be a little jumpy about them.

Friday 7am GMT

Germany hasn’t been on the radar much but watch what happens when they release preliminary GDP figures. Next week the final figures will be out and that will have an even bigger effect.

Friday 1.30pm GMT

Finish the week with a little flutter on the USD as there’s plenty of action happening at 1.30pm GMT today.

  • Core Retail Sales
  • Producer Price Index (PPI)
  • Retail Sales
Mickey Mouse American economics

Mickey Mouse American economics

Friday 3pm GMT

Prelim UoM Consumer Sentiment – 500 random bods are asked if they think things are getting better or worse by the University of Michigen… Apparently the markets take this seriously and this first preliminary figure is the one they watch the most so the dollar could take a battering if Mr or Ms Average Joe (who may know diddly squat about economics) doesn’t think they’re confident about their finances. Sounds like a load of hot air to us but if the markets think it’s important then we can have some serious fun with it.

Due South

 

Cute mountie

Cute mountie

Sadly, no, we’re not talking the weirdly popular 90s sitcom about a misplaced Canadian, but the actual geographical direction: this week we’re mostly watching Australia and it’s trade buddy numero uno, China, this week.

Is it love?

It’s a deal

Monday – ? GMT (shrugs – who knows)

Chinese trade balance figures are tentatively due on Monday, but there’s no fixed date or time so stay alert for announcements. These figures have a massive impact on currency as they’re the difference between what comes in and what goes out. A negative figure means more good were imported than exported and over the last few months that is exactly what has been happening. Not good for CHY but good for our traders.

Monday 12.50am GMT

It may be practically still Sunday in TIQL’s homeland but this is worth staying up past our bedtime for. After last week’s shenanigans, we get a peak at Japan’s current account balance. 

Has Japan been balancing the books? Forecasts say 1.60T but they’ve been a bit over-optimistic for the last few months, and there are rumbles in the press. This is big news for currency trading because if it does go up people are buying Yen to trade in Japan so it’s worth more.

surprised audrey hepburn

We’re a tad gobsmacked to hear some analysts are saying the Yen is looking good as recent trends say otherwise.

It could go either way.

Tuesday – 2.30am GMT

Ready for the night shift? Or are you lucky enough to be on the right side of the globe for this one? All eyes are down under with the big question being – are Aussie businesses confident in the future? The NAB Business Confidence report will let us know. Indicators suggest things could be at a tipping point and opinion is divided. Unlike London, some say Oz may have an oversupply on housing on the way, wages are fairly stagnant, and worst of all, best trading buddy China is looking decidedly… less of a sure thing. How’s someone looking for serious fun to know what to do?

We wouldn’t leave you hanging like that. Buckle up because China‘s announcing the monthly consumer price index (CPI) and producer price index (PPI) AT THE SAME TIME so if they pip the Aussie bank to the post and announce figures first it could help you know which way to jump… and give you a good nod for any AUDUSD moves.

If there’s ever a time to step up to trading 2 currencies at one time, this is it guys. Limber up, get those multiple tabs open and strike while the iron’s hot. We know you can do it. What’s your gut feeling saying now? Click below and let us know – after all, you scratch my back and I’ll scratch yours. Wink wink.

We’ll see you soon for more global trading news to take you to the weekend.

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