Thursday 8th Sept in the spotlight

Hello - welcome back

Hello – welcome back – good to see ya

The traders are back at their desks with a triple espresso, the politicians are back from their hols, and the children are at school: big sighs of relief all round and let normal service resume… um, no, not quite.

September is a special month with a rare triple witching near the end of the month, the G20 summit and tonnes of other headline stuff for our players to trade on.

To start the week we will be riding the effects of the G20 summit in China as markets digest what the political heavyweights decided. And then there is Thursday. This week Thursday is a big day and here’s why.

  • CHY trade balance
  • AUD trade balance
  • Crude oil inventories
  • EUR central bank minimum bid rate and press conference
  • US unemployment claims

Well, well, well, it puts a twinkle in our eyes to see such a wealth of opportunity. That’s a lot of action for one day and we mean to make the most of it.

Starting off, the close trade relationship between Australia and China means the 2.30am GMT AUD trade balance will affect both currencies. We expect the Chinese figures to arrive within a few hours of the AUD announcement, though the time is not yet fixed. It could be a real rollercoaster for the CHY as well.

Later in Europe, the central bank minimum bid rate at 12.45pm GMT is important for interest rates but it’s been stable at 0.0% for months. The press conference 45 minutes later could be a lot juicier if some interesting questions get asked when they open the floor. Set up your position on the EUR going in and you could make a killing.

A busy day is one thing but chaps (and chapettes – TIQL is very equal opportunity) when you have two big events at the same time you need to be a very special player indeed. Or at least have set up your strategy in advance: so we advise you do that. Look at the charts, listen to the pundits, and make your punt. It could be a good plan to stay tuned to the EUR central bank press conference at 1.30pm GMT but the release of the US Unemployment Claims another massive hitter in the field, is at the same time. We’re getting a buzz on already. Two screens. Two big waves to ride.

Now that's just showing off

Now that’s just showing off

But it doesn’t end there. Keep riding the wave in the US as the Crude Oil Inventories are released at 4.00pm on Thursday this week, not the usual Wednesday of recent weeks.

Woohoo – get through all that and you deserve your favourite tipple in that little place you know. Get to it.

 

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.

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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 market-moving events catching our eye today

I'm in a money making mood

Something for the weekend?

Three big announcements today could upset the markets and give you boss-like chances.

Asia

The land of the rising sun might have put a wad in your pocket if you were on the ball early enough. Did the Japanese go to the shops this month? The household spending announcement at12.30am BST has been in decline for months but forecasts have been off the ball. More chances to play like boss with a JPN monetary policy statement (time tbc) due. This is looking more hawkish. Markets should perk up if the expected stimulus is announced.  The Bank of Japan outlook report at 6am could give us a heads up about which way the government is going to jump.

Europe

Fail! European banks are freaking today with the 4pm BST announcement from the EBA Bank Stress results. Nerves are going to be frayed as  Brexit’s recent spanner in the works could have weakened confidence and the test checks central banks abilities to cope.

USA

More chances to jump on the bandwagon or buck the trend around lunchtime with the US quarterly advance GDP announcement. This can be good for currency trading and is a biggie to make money (or lose it) today. With the US economy on the up and up, and more average Joe’s doing an honest day’s work, we predict a positive advance GDP announcement and a rise in the dollar. But do you know something we don’t?

Oil – Some Levels To Trade

Depending on what you read, the fundamentals seem to be bulish and bearish on Oil in equal quantities lately.

Oil prices have dropped over 50% in the last year with retail investors and informed money alike shorting Brent and Crude futures markets this year. Goldman Sachs have gone as far as to predict that Oil prices could remain depressed for the next 15 years due to a global over supply.

However, in early trading this week, Oil prices have risen against a fundamental backdrop of talk about declining stockpiles, the futures contract rollover on September 16th and a large net reduction in long positions by Hedge Funds according to the Commodity Futures Trading Commission.

Its hard to know which way to trade…

What are the charts saying?

Oil trend is down but buyers have come in

The trend is down, but thats not the whole story.

This is a very bearish chart, Brent oil has been dropping over the last year and price has been capped by the trend line in play. What is interesting about this chart is that price broke the yearly lows and plunged to the early $42 before it picked up some buyers and we got some impulsive looking candles bringing price rapidly to $52.

We are now seeing some back and forth corrective price action with price basing off of the $47 level. If we drill down to the 4 hour chart, we can see the corrective price action we have had recently with price firmly capped for now.

Price action is just going sideways

A slow sideways grind

If the $47 level can hold, we may get a slow corrective grind to the $58.50 – $59.50 level before suppply really kicks in again. But before Brent can get to this level, there are a couple of potential sticky supply levels to be aware of.

Some levels to watch on Oil

Some levels to watch on Oil

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