Good morning, traders. Welcome to your weekly look at the upcoming macroeconomic calendar, with a specific focus on the events that are most important for the precious metals and US Dollar charts.
Gold prices are slightly higher this morning after some mild weakness Sunday night. The global markets’ reaction to the news of a “phase one deal” on trade between the US and China seems to be that things aren’t getting worse (for now,) but lacks the confidence that global growth conditions will start to improve just yet.
Trading today will be fairly muted, with the US Treasury market closed for Columbus Day and many other traders and investors out as well. We’ll of course be tracking any new developments in the trade war story this week, as well as the mad dash to prevent the UK from crashing out of the European Union in two weeks without a deal in place.
Let’s jump into the data points on the calendar this week.
US Economic Data to Watch
Tuesday, October 15 at 8:30am EDT // NY Empire State Manufacturing Index (Oct)
[consensus expectation: +1.0 // previous: +2.0]
Last month’s ugly manufacturing PMI has analysts and economists stressing about the performance of the US sector. With these regional surveys having moderated since mid-summer, I don’t think each one needs to be on your radar as a metals or Dollar trader but it will be useful to mind the ones that historically draw attention if they dislocate far above or below trend and expectations—and the Empire State read is certainly one of those.
Wednesday, October 16 at 8:30am EDT // Retail Sales (Sep)
[consensus exp.: +0.3% MoM // prev.: +0.4%]
If we continue to see signs of weakness and slowing from the US manufacturing sector, the performance of retail data will become more and more important—the thought being that even in the face of poor performance in the former, the argument can be made that as long as the US consumer is spending into the economy the late stages of the growth cycle will continue. So, expect a few risk-off shivers if we see ugly number from September retail. There is some room for a pullback as the summer’s performance was pretty strong, but I do anticipate some market sensitivity to anything much lower than the consensus 0.3%.
Thursday, October 17 at 8:30am EDT // Housing Starts (Sep)
[consensus exp.: -3.4% MoM // prev.: +12.3%]
I wouldn’t expect the market to be spooked by a negative month-over-month number here—for one, the Dollar has been fairly insensitive to housing market data this year but also, it’s reasonable to expect some reversion to the mean after August’s big number.
Thursday, October 17 at 8:30am EDT // Philadelphia Fed Manufacturing Index (Oct)
[consensus exp.: +8.0 // prev.: +12.0]
Like the Empire State regional manufacturing survey, (non-Dollar) safe haven assets have been vulnerable to the Philly Fed version this year.
Thursday, October 17 at 8:30am EDT // Initial Jobless Claims
[consensus exp.: +215k // prev.: +210k]
Thursday, October 17 at 9:15am EDT // Industrial Production (Sep)
[consensus exp.: -0.2% MoM // prev.: +0.6%]
With the general level of concern about the US industrial sector that is laying the theme of this week’s macroeconomic calendar, I would anticipate precious metals (and other risk-off trades) to be more sensitive to the downside possibilities of IP data rather than the upside. The gold chart probably won’t be much moved by an outperformance, this month, but a dip further into the negative than is already expected could send a knee-jerk flow of positions away from US risk and into the yellow metal.
FedSpeak this Week
Last week’s release of the most recent FOMC minutes confirmed the view that many analysts had of a very divided committee over the future of the rate path, and in the two weeks prior we haven’t had any revelations or changes of position from the members’ public availability. I think, then, that for at least the next few weeks there will be lower market sensitivity to FOMC member remarks (with Chairman Powell always the exception) and more focus on the macro data. With that said, there are a lot of scheduled appearances this week; here are the ones that might be most worth the market’s attention:
Tuesday, October 15: St. Louis Fed President James Bullard (FOMC voter) (4:25am EDT); San Francisco Fed President (non-voter) (3:30pm)
Wednesday, October 16: Chicago Fed President Charles Evans (FOMC voter) (10:45am); Fed Governor Lael Brainard (voter) (3pm)
Thursday, October 17: Evans & Fed Governor Michelle Bowman (FOMC voter) (2pm); New York Fed President John Williams (voter) (4:20pm)
Friday, October 18: Dallas Fed President Robert Kaplan (non-voter) (9am); Kansas City Fed President Esther George (voter) (10:05am); Federal Reserve Vice Chairman Richard Clarida (voter) (11:30am)
And that’s how the map lays out for us this week, traders. As always, I wish you the best of luck out there in in the metals and currency markets; I’ll look forward to seeing you all back here on Friday for our recap of the week.