Good morning traders, and welcome back to another week in the markets.
I hope you’re all having as a good a start to Monday at shiny yellow metal is having: at time of writing, gold by the ounce is rising with strength after some US Dollar weakness overnight, and has crossed back above the $1300/oz mark where it could renew a solid line of support.
The economic calendar for metals traders is a light one this week, with the majority of focus drawn towards the middle as Wednesday brings us both an updated read on US inflation as well as the minutes from March’s market-moving FOMC meeting.
Smart eyes will also be on any news or developments bubbling up from the US-China trade talks which appear headed towards some kind of turn, whether that’s just the announcement of a lose agreement or the actual pressing of pens to paper. Technically, it’s also possible that the UK crashes out of the European Union at the close of business on Friday, which is the current deadline, and so we’ll keep half an eye on that although anybody with sense expects the two exhausted sides will agree to a lengthy extension by midweek. (A caveat should of course be noted that Brexit negotiations haven’t been burdened with an overabundance of sense.)
Let’s dive in.
US Economic Data to Watch
Tuesday, April 9 at 6:45pm EDT // FOMC Vice Chairman Richard Clarida speaks
Vice Chairman Clarida, an FOMC voter, will speak at the Minneapolis Fed and is expected to discuss the recent review of the Fed’s monetary policy framework. Comments here could give markets and investors some insight into what actions the FOMC sees themselves taking to avert or soften the next recession.
Wednesday, April 10 at 8:30am EDT // Consumer Price Inflation (Mar)
[headline CPI consensus expectation: +1.8% YoY // previous: +1.5%]
[core CPI consensus expectation: +2.1% YoY // previous: +2.1%]
The individual inputs for CPI in March have been a fairly evenly balanced mixed bag, so both the headline and the core inflation read for last month are expected to match the February data. Should the consensus expectations be proven correct, that’s another confirmation that the FOMC can continue their “pause” in the rate hike cycle: inflation remaining within the Fed’s “symmetrical” 2% range (headline CPI) means there’s little macroeconomic support for easing policy, while the lack of upward momentum (core CPI) means the economy isn’t overheating either, and so there’s no pressing need to resume rate hikes. There may be some whippy (algo-driven) trading in gold and US Dollar markets around the release of this data but barring a large surprise vs. expectations I don’t anticipate much of a net change in the price of gold as a result of the inflation report this month.
Wednesday, April 10 at 2pm EDT // FOMC Meeting Minutes (Mar)
In parsing the minutes from March’s FOMC meeting, statement, and update to the Staff Economic Projections we’ll be looking for any added insight about the committee’s views of inflation in the US economy, and assessments of the risks to growth both at home and globally. Eyes will also be on any discussion that expounds on the downward shift in the SEP median dot plot, which now “anticipates” 0-1 total hikes in 2019.
Thursday, April 11 at 8:30am EDT // Producer Prices Inflation (Mar)
[consensus exp.: +0.3% MoM // prev.: +0.1%]
Producer Price Inflation, forever the Jan Brady to CPI’s Marsha, is expected to print similar to it’s sibling in March: an indication that overall inflation is just steady enough to keep anything from changing.
Thursday, April 11 at 8:30am EDT // Initial Jobless Claims
[consensus exp.: +210k // prev.: +202k]
Last week’s claims number was low going back to before the Al Gore invented the internet. In a market that still largely believes in the concept of mean-reversion, we can expect this week’s add to come up a little bit from that but will be keeping an eye on it in the off-chance that it doesn’t.
Thursday, April 11 at 9:40am EDT // St. Louis Fed President James Bullard speaks
St. Louis’s Bullard is an FOMC voter in this rotation and, as we’ve covered in the past, is always worth keeping an eye on when he is scheduled to make remarks on monetary policy and the health of the US economy.
Friday, April 12 at 10am EDT // University of Michigan Consumer Sentiment (Apr)
[consensus exp.: 98.0 // prev.: 98.4]
Most analysts expect at least some pull-back from last month’s report due to the fact that U of M’s confidence reading “appears elevated,” as Goldman Sachs puts it, relative to other measures.
Global Economic Data to Watch
Wednesday, April 10 at 7:45am EDT // ECB Interest Rate Decision
[No change to monetary policy is expected.]
This month’s ECB meeting is expected to see Draghi & Co. mostly treading water, with no new changes to policy either announced or alluded to. Most observers expect the language coming out of the meeting and the brief press conference that follows at 8:30am EDT to support recent comments from Draghi that imply expectations of an eventual rebound in EU growth after some turbulence while acknowledging the downside risks to those projections.
And that, traders, is how the week lays out for you. It should be a fairly calm one, which bodes will for gold prices if the market can set a decent foothold here just above $1300/oz but do keep an eye out for the action on Wednesday.
Either way, I’ll see you back here on Friday for our recap of the week’s events.