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Inflation Encore: Forex Traders Gathering Important Evidence

by with No Comment Central BanksEconomic CalendarFeatured Highlights

Inflation Encore: Forex Traders Gathering Important Evidence

The USD has been weaker against many major currencies the past week and inflation numbers coming from the U.S will test short-term outlooks. It should be remembered that in February before the CPI numbers were published, some who were leaning towards a weaker USD were traumatized after the stronger than anticipated results. However recent U.S economic data has shown a rather polite and distinct downturn.

Day traders should brace for drama today and understand that financial institutions will lead the way, either catapulting trends or stopping them in their tracks. As Forex speculators get set, Gold continues to also flirt with highs, as of this writing the precious metal is near 2175.00 USD. Financial assets from equity indices to digital assets (yes, Bitcoin) are experiencing frothy returns as values seemingly attract more capital inflows. In other words, bullish behavioral sentiment is rather strong and traders are reminded to stay realistic with their goals.

Again, there is a difference between quick hitting speculators trying to take advantage of robust trends compared to long-term investing. Day traders still need to do their homework and not bet blindly.

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Gold Five Year Chart as of 12th March 2024.

Monday, 11th of March, Japan GDP – Gross Domestic Product numbers yesterday came in with unexpected weaker results showing a gain of only 0.1% compared to an anticipated 0.3% gain. Yes, the USD/JPY held onto it downwards momentum, which it has established since last week. The trading results in the currency pair suggest financial institutions are placing their faith in mid-term outlooks.

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USD/JPY One Month Chart as of 12th March 2024

Tuesday, 12th of March, U.S Consumer Price Index – the inflation reports will headline and drive market conditions near-term. Last month’s numbers provoked a strong reaction when prices remained stubborn. The monthly core report is expected to show a slight decline today, but the monthly broad number is actually anticipated to rise slightly. With mixed statistics forecast already, day traders need to be prepared for a lot of noise – which may prove rather misguided. The problem for the markets today will come from the interpretation of the numbers, if the CPI figures can simply come close to their expectations this might keep conditions from getting wild, but choppy trading should certainly be counted upon leading up to and following the publication. This month’s encore of the CPI inflation numbers will hopefully be less dramatic than February’s performance.

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GBP/USD One Month Chart as of 12th March 2024

Wednesday, 13th of March, U.K Gross Domestic Product – a gain of 0.2% is expected via the growth number. Last month’s minus -0.1% outcome should serve as a reminder tough economic conditions remain evident. Yet, last month’s number actually beat a worse expectation. GBP/USD traders who have been patient with their bullish stances have been rewarded recently. A slight gain in the GDP number from the U.K could help bolster additional confidence regarding mid-term outlooks for the GBP/USD. The BoE, like the U.S Federal Reserve, will make their monetary policy pronouncements next week.

Thursday, 14th of March, U.S PPI and Retail Sales – the Producer Price Index and consumer spending numbers may produce the surprise for the week regarding market reactions. The Core PPI results are expected to be weaker, while Retail Spending is anticipated to grow. If the inflation results via the PPI data is weaker than anticipated this could allow for further weakness in the USD to develop.

Friday, 15th of March, China New Home Sales – real estate values in the nation remain a focal point for analysis. Another large decline in prices for homes would not be good news. The economy of China is suffering from deflation which hasn’t shown evidence of diminishing soon. China remains a vital part of the global economy. Industrial Production numbers will come from the nation on Monday.

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Inflation Data and Fed’s FOMC Meeting Minutes This Week

by with No Comment AMT MarketsCentral BanksFeatured Highlights

Inflation Data and Fed's FOMC Meeting Minutes This Week

Last week’s economic data ended with rather tantalizing headline jobs numbers as the U.S showed more hiring than expected, but while this grabbed media soundbites in many circles – the Average Hourly Earnings numbers came in below expectations. The broad Forex market proved dynamic with a stronger USD in many cases, but intriguingly equity markets in the States generated upwards momentum on Friday too. U.S Treasuries were mixed regarding their yields, and the 10-year bond while finishing up for the week was below its highs.

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WTI Crude Oil One Month Chart as of 9th of Oct. 2023

The coming week will likely continue to produce nervousness, but outlook will be helped via a couple of U.S inflation reports and the FOMC Meeting Minutes report. Crude Oil prices should be watched as news from the Middle East unfolds. Gold remains under pressure.

Cryptocurrency speculators should keep their eyes on Binance Coin as it battles important lows. Bitcoin has remained relatively stable, but BNB/USD is near crucial support that could signal another wave of pressure is developing within the Binance exchange.

Monday, the 9th of October, International Monetary Fund – week-long meetings get underway and investors who participate in global stock markets and bonds should pay attention to the chatter.

Tuesday, the 10th of October, Central Bank Officials speaking – ECB President Lagarde will be speaking at the IMF conference. Federal Reserve officials will be speaking at meetings in the U.S. While the chatter may cause some nervous reactions briefly in financial institutions, it is unlikely the central bankers will say anything that is surprising.

Wednesday, the 11th of October, U.S Producer Price Index – the broad and core reports should be watched. Last week’s lower Average Hourly Earnings numbers were slightly surprising, but the recent higher energy costs could factor into the PPI results. The broad report is anticipated to show a decline. If the Producer Price Index statistics come in weaker than expected this could help the USD lose some strength.

Wednesday, the 11th of October, U.S FOMC Meeting Minutes – the publication is expected to follow the rhetoric already voiced by the Fed at their last press conference. However, insights regarding dialogue could move the needle in Forex. The U.S central bank is widely expected to raise the Federal Funds Rate in November, but what comes beyond this anticipated move is still in question. Expect the key word in the FOMC report to be ‘inflation’.

Thursday, the 12th of October, U.K Gross Domestic Product – the growth numbers from Great Britain are expected to show a slight rise in GDP. If the gains match expectations or come in better it could help bolster the GBP/USD which has been struggling against the USD for the past three months.

Thursday, the 12th of October, U.S Consumer Price Index – these reports will be crucial and will impact Forex and equities immediately after their release. While the Core CPI number is expected to match last month’s outcome, the broad reports are anticipated to be weaker. If the inflation numbers are stronger than expected the USD could gain strength, if the results are weaker it could help build selling momentum in the USD.

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USD/CNY Six Month Chart as of 9th Oct. 2023

Friday, the 13th of October, China Consumer and Producer Price Index – the two releases will be watched carefully by investors. China’s economic data has been weak and financial institutions have become concerned by deflation. The USD/CNY may be impacted upon the publication of the reports.

Friday, the 13th of October, U.S Consumer Sentiment via the University of Michigan – following the CPI numbers from the U.S on Thursday, these numbers will show the attitude of U.S consumers and their spending habits. Financial institutions will monitor these numbers and correlate them to the U.S inflation reports seen earlier.

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Anxious Results and Outlooks as Traders Brace for Week Ahead

by with No Comment AMT MarketsAssetsFeatured Highlights

Anxious Results and Outlooks as Traders Brace for Week Ahead

Speculators with visions of taking advantage of day trading perspectives often look for correlations within asset classes to help gain an outlook on another trading vehicle they may be considering. The problem with this like many things for day traders is that sudden gyrations in asset classes technically are often affected by positioning from large players who do not care what the ‘minnows’ are doing. Institutional trading is frequently done with long-term considerations.

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S&P500 Index Future Three Months Chart as of 11th Sept. 2023

The Forex market has seen the USD grow stronger since the middle of July against most major currencies. At the same time charts via U.S Treasuries clearly demonstrate yields increasing. This is not a coincidence. Market behavior remains anxious as financial institutions look to lock in a certain amount of ‘guaranteed’ returns. Recent economic data has been lackluster from the U.S and this week important inflation numbers are certain to influence existing sentiment.

A side note for day traders who like to study economic data, ‘revisions’ via published data is starting to set off concerns among traders. Revisions to previous statistics reported are becoming a talking point among investors who believe the numbers they are looking at from many countries, including the U.S, need to be given a certain degree of skepticism. The Wall Street Journal published an article about this a couple of weeks ago.

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WTI Crude Oil Three Months Chart as 11th Sept. 2023

In the coming days the price of Crude Oil may make headlines as the commodity enters this week near values last seen in November of 2022. The high price of Crude Oil will spark vocal warnings about potential inflation dangers. Speculative elements within the energy sector will be active and hope to take advantage of its trend. A sustained move above 90.00 USD per barrel would be intriguing.

Some analysts might try to correlate higher energy prices to increased demand from global manufacturing sectors, but this could be questionable considering many spheres are suffering from recessionary pressures. But again, the real facts and dynamics behind a potential sustained climb of Crude Oil prices are complex.

Smaller traders need to understand the news they are reading today was known by ‘insiders’ many days before and they have already acted on their knowledge to take advantage of prices.

The cuts in production from Saudi Arabia and other producers has sparked speculative influence, and perhaps the narrative that outlook for more Crude Oil demand could build if the U.S continues to demonstrate a ‘soft landing’. The chatter and explanations for changes to price are almost limitless and day traders need to be aware they will not be privy certain information.

This leaves the door open for day traders to consider trying to understand market behavior within the financial world. The answer for short-term speculators who are wagering on price direction is not a simple interpretation of technical charts, they should also consider fundamental knowledge of the asset mixed with an understanding of current market dynamics as sentiment shifts among institutional players.

In other news to look out for this week, traders who are active in the cryptocurrency space should continue to monitor the support levels that Bitcoin and Binance Coin are traversing. Incremental drops in value continue to be seen and a sustained reversal higher has been difficult to attain.

Monday, 11th of September, China New Loans – the amount of borrowing from businesses and consumers within China will provide insights regarding the strength (or weakness) of the domestic economy.

Tuesday, 12th of September, U.K Claimant Count Change and Average Earnings Index – the jobs numbers from the U.K will provide the GBP/USD with a bit of additional impetus. The U.K economy is in the spotlight and critics have become loud as many point to Brexit problems, which they claim are causing complications. However, within a global economy that is under pressure the fact that conditions in Britain are difficult doesn’t take a lot of time to find other correlations.

Tuesday, 12th of September, Germany Economic Sentiment via ZEW – the reading is expected to show a negative outlook again from the responses of institutional investors based in Germany. A result of minus -15.0 is the forecast. The report could shake the EUR/USD a bit momentarily.

Wednesday, 13th of September, U.K GDP – growth numbers will certainly get plenty of attention for Britain. The anticipated number is minus -0.2%. If the result is worse than the recessionary estimate it could spark more negative sentiment.

Wednesday, 13th of September, U.S Consumer Price Index reports – inflation statistics will be studied carefully and impact Forex immediately if the published results do not meet expectations. The Federal Reserve, institutional investors and the broad financial markets will react to the CPI data.

Thursday, E.U European Central Bank Main Refinancing Rate – the ECB is not expected to make any changes to borrowing rates. The European Central Bank is also anticipated to warn that economic conditions remain challenging and they are monitoring inflation and growth. Anything more than these words via the ECB Monetary Policy Statement and Press Conference could spark some EUR/USD price action.

Thursday, 14th of September, U.S Producer Price Index – like Wednesday’s inflation numbers, the PPI statistics will affect market sentiment regarding outlook and interpretations regarding the potential responses from the Federal Reserve.

Thursday, 14th of September, U.S Retail Sales – this data will give traders insights regarding the spending habits of U.S consumers, which is a key barometer for equity traders regarding consumer driven stocks, and also because an increase would underscore solid economic sentiment from the public.

Friday, 15th of September, China Industrial Production and Retail Sales – these two reports will provide additional insights about the Asian giant. Global investors continue to be concerned about the direction of the Chinese economy. Slight gains are forecast for both publications.

Friday, 15th of September, U.S University of Michigan Consumer Sentiment – the preliminary report is expected to have a reading of 69.2 which would be below the previous reading.

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Economic Data that needs Attention this Week

by with No Comment Central BanksDataFeatured Highlights

Economic Data that needs Attention this Week

Tuesday 8th of May, U.S FOMC Member Speaks – N.Y Federal Reserve President John Williams will talk at the New York Economic Club. N.Y Fed is important regarding monetary policy particularly for financial institutions. Williams words should be given merit. Williams will also be likely listened to for any comments regarding U.S corporate banking health regarding mid-size and smaller institutions.

Wednesday 9th of May, U.S Consumer Price Index reports – three key inflation consumer price statistics will be published including monthly, annual and core monthly changes. The results will be important taking into consideration the manner the U.S Federal Reserve conducted its ‘sitting on the fence’ rhetoric last week, as if looking for an accuse to continue to raise interest rates if inflation remains stubborn or worse continues to climb.

Thursday 10th of May, U.K BoE Monetary Policy Summary and Official Bank Rate – which is expected to produce another increase of 0.25%.

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GBP/USD One Month Chart as of 7th of May 2023

Friday 11th of May, U.K Gross Domestic Product – growth numbers from the U.K are expected to demonstrate economic conditions remain challenging.

Friday 11th of May, U.S Preliminary University of Michigan Consumer Sentiment – a rise in consumer sentiment from this report could add to the confusion and ‘concern’ that financial institutions have regarding the U.S Federal Reserve’s short term monetary policy regarding the prospects for a June increase to the Federal Funds Rate. If the number is weaker than expected this could help ‘pause’ outlooks.