Happy Monday, traders. And welcome back for the last full trading week of 2018.
Gold has popped back through $1240/oz this morning, likely taking some fear-based momentum from the tumult in equities at the end of last week. Currently, we’ve got gold-spot above $1242 and silver continuing to hold strength above $14.55 as US equities and the dollar remain in their slump.
It’s a relatively light economic calendar this week, with one very important event in Wednesday’s FOMC meeting and rate decision. While the Fed will likely be the dominant influence on gold price action this week, we do also want to keep an eye on the usual suspects.
One short note before we scroll through the economic calendar for the week: as of this morning, this week is the deadline for the President and Congress to sign an agreement to continue funding the federal government. Should a deal not be reached a partial shut-down will start on Friday. The news flow on this will be muddled by this week’s big FOMC meeting, but do keep an eye on the developing story, as the US Dollar (and gold in response, most likely) will have something to say about when deal gets done and what that deal is.
US Economic Data to Watch This Week
Tuesday, December 18 at 8:30am EST // Housing Starts
[consensus expected: +0.2% MoM // previous: +1.5%]
My typical reaction to seeing US housing data on the weekly calendar is usually something along the lines of “didn’t we just do this?” Sure enough, here we are again. This time around, most analysts are calling for a flat-to-negative print month-on-month for November after an up-tick last month. The anticipated drop this month is largely being credited to the winter weather and its impact seen in prior November data points like construction employment. Goldman Sachs’ note adds: “Over the next few quarters, we expect higher interest rates and tax reform to continue to weigh on homebuilding.”
Wednesday, December 19 at 10am EST // Existing Home Sales
[consensus exp.: -0.5% MoM // prev.: +1.4%]
Similar to Tuesday’s Housing Starts number, Existing Home Sales this month is expected to come in somewhat from a surprise uptick in the month prior.
Wednesday, December 19 at 2pm EST // FOMC Int. Rate Decision
This is will be the headline for this week. A 25-basis point rate hike is still widely priced-in to the market and we’ll also get an update on the committee’s economic projections going forward, which should tell us if (and to what degree) the FOMC is moving in the direction of many analysts reassessing the number of rate hikes anticipated for 2019. Following the announcement and press conference, we’ll have a post for you this week breaking down the information and it’s implications for the metals markets.
Thursday, December 20 at 8:30am EST // Initial Jobless Claims
[consensus exp.: +219k // prev.: 206k]
We finally got a reduction in claims last week, but it was so sharp (27k, week-over-week) that it’s reasonable to expect some mean-reversion this week as the number correct a bit.
Friday, December 21 at 8:30am EST // Durable Goods Orders
[consensus exp.: +1.7% // prev.: -4.3%]
For Durable Goods Orders this month the expected correction is a positive one, but the drag from still-weak aircraft orders likely will continue to have an out-sized impact on the headline number while soft oil prices will weigh on the “core” ex-transportation number.
Friday, December 21 at 8:30am EST // Personal Income & Spending
[Income consensus exp.: +0.3% // prev.: +0.5%]
[Spending consensus exp.: +0.3% // prev.: +0.6%]
There’s not a lot to say here about Personal Income & Spending ahead of the release—there rarely is. But for gold trading this is typically a reactionary number as a surprise to the downside (especially in holiday shopping season) could push investors into bigger risk-off assets like gold.
Friday, December 21 at 10am EST // U of Michigan Consumer Sentiment
[consensus exp.: 97.5 // prev.: 97.5]
Market expectation is for an unchanged index number this month, which fits with the recent (growing) sentiment that we’re all a little worried about the near- to mid-term economy without any hard data to back that worry up.
Global Economic Data to Watch This Week
In the Fed’s shadow, we’ll have two other rate decisions from major central banks:
- Wednesday, December 19 at 10pm EST // Bank of Japan Int. Rate Decision
- Thursday, December 20 at 7am EST // Bank of England Int. Rate Decision
Both committees are expected to deliver unchanged policy, but the comments from both will be worth studying. In particular, we’ll want to see the remarks from BoE Governor Mark Carney; certainly, he and his team had hoped they would be able to comment on the next steps for the economy based on a ratified Brexit agreement. Instead, the BoE has even more uncertainty to navigate.
That’s it to start your week traders—we’re almost to the holidays and all the light trading and low-liquidity that come with them. For today though, I wish you luck out there, and I’ll see you back here later this week for a breakdown of the Fed decision and on Friday for a closer look at the week’s events.