Good morning traders, and welcome back to another week in the metals markets!
This week’s calendar is somewhat calmer in appearance than our last few weeks. Given the current state of Fed commentary and the short-term rate path, public appearances of FOMC officials that are spread throughout the week could be the dominant mover of gold and US Dollar markets, but there are more concrete data points like Retail Sales to keep an eye on. We’ll also be looking out for any developments in trade discussion between the US and China this week, in hopes that talks soon resume in earnest.
At the time of writing this morning, gold prices are trading within $1 of last week’s close in the spot markets. A Japanese holiday made for a shallow Asian session that transitioned into mostly calm European trading.
US Economic Data to Watch
FedSpeak This Week
- Monday, July 15: NY Fed President John Williams [FOMC voter] (8:50am EDT)
- Tuesday, July 16: Atlanta Fed President Raphael Bostic [non-voter] and Fed Governor Michelle Bowman [FOMC voter] (8:15am EDT); Dallas Fed President Robert Kaplan [non-voter] (12:20pm EDT); Fed Chairman Jerome Powell* (1pm EDT); Chicago Fed President Charles Evans [FOMC voter] (3:30pm EDT)
- Thursday, July 18: NY Fed President John Williams [FOMC voter] (2:15pm EDT)
- Friday, July 19: St. Louis Fed President James Bullard [FOMC voter] (11:10am EDT)
*Powell is delivering a prepared address at the Bank of France. Typically there would be a low probability of relevant language cropping up in something like this, after the last couple of weeks and ahead of the July FOMC meeting market observers will be parsing every sentence that the Chairman dares to release into the wild.
Monday, July 15 at 8:30am EDT // NY Empire State Manufacturing Index (July)
[consensus expectation: +2.0 // previous: -8.6]
We’ll be keeping an eye on this month’s round of surveys on the US manufacturing sector. The prior month’s data was almost universally dismal and surely plays some part in the FOMC’s gloomier outlook. There’s a near-zero chance that these data sets will affect the seemingly unshakable odds of a rate cut at the end of this month, but whether these observations turn more positive or continue the sharp downtrend will certainly factor into whether the committee decides that further rate cuts are needed.
Tuesday, July 16 at 8:30am EDT // Retail Sales (June)
[consensus exp.: +0.3% MoM // prev.: +0.5%]
Similar to last week’s inflation data, lower prices at the pump this summer will weigh on the headline data for retail sales in June. As long as the core data indicates—as it’s expected to—that the pace of spending in the US economy remains steady, there doesn’t look to be much downside for the US Dollar (or upside for gold prices) in this month’s data.
Wednesday, July 17 at 8:30am EDT // Housing Starts (June)
[consensus exp.: -0.7% MoM // prev.: -0.9%]
There’s a lot of very vanilla preceding data that justifies another month-over-month decline in housing starts, largely to do with the complicated multifamily category, and there are better ways to spend your time than parsing through it so I’ll boil it down to this: a marginally decline in June, within touching distance of expectations, won’t do much to shake the Greenback or boost gold-buying. But a big surprise to the upside (bearish for gold) or downside (bullish for gold) would probably bring in some extra trade-flows.
Thursday, July 18 at 8:30am EDT // Philadelphia Fed Manufacturing Index (July)
[consensus exp.: +5.0 // prev.: +0.3]
See my comments on Monday’s Empire State Mfg. survey for context. It’s the kind of data that can snowball through a week in terms of positive or negative sentiment—and negative input is the key issue this week. So, if Monday’s data is a disappointment, all the more pressure that will be on the Philly Fed survey come Thursday.
Friday, July 19 at 10am EDT // U. of Michigan Consumer Sentiment (July)
[consensus exp.: 98.6 // prev.: 98.2]
A tag-team of solid stock market gains and—somehow—moving towards an interest rate cut makes it hard to imagine we’ll see much downside in consumer sentiment for July.
Global Economic Data to Watch
Wednesday, July 17 at 4:30am EDT // UK Inflation (June)
[consensus exp.: +2.0% YoY // prev.: +2.0%]
Thursday, July 18 at 7:30pm EDT // Japanese Inflation (June)
[consensus exp.: +0.8% YoY // prev.: +0.7%]
Gold markets have been most influenced by dollar-denominated news flow (the Fed, US-China tension) and that looks to be the case for the near-term. Still, it’s worth out attention to keep an eye out for any downside surprises in the major economic data tied to the Bank of England and Bank of Japan, both of whom could be compelled by negative outlooks to resume or increase, respectively. Monetary easing—if the other major economies are easing at the same time as the FOMC begins to cut, the lack of monetary policy divergence will put a high floor on relative US Dollar weakness which could ultimately dampen gold upside.
And that, traders, is how the week lays out in front of us. I wish you all the best of luck out there, and I’ll see you back here on Friday for a close recap of the week’s action in the gold and currency markets.