Good morning traders, and welcome to another week in the markets.
Gold spot prices are starting the week relatively flat to Sunday evening’s market open, with gold by the ounce going for $1296.00 at time of writing.
This week’s macroeconomic calendar is a busy one, with US Inflation as the headliner going into next week’s FOMC meeting.
US Economic Data to Watch
Monday, March 11 at 8:30am EST // Retail Sales (Jan)
[consensus expectations: +0.1% MoM // previous: -1.2%]
Somehow, we’re still playing catchup on economic data delayed during the Federal government shutdown. January’s Retail numbers are expected to be in improvement on December’s ugly numbers. While Retail Sales figures can have a marked impact on US Dollar pricing and that of the Dollar’s correlated assets like gold, the fact that we’ll be looking at number as old as January means anything other than an out-sized surprised to the upside or downside will see muted reaction in markets.
Tuesday, March 12 at 8:30am EST // Inflation (Feb)
[headline consensus exp.: +1.6% YoY// prev.: +1.6%]
[core consensus exp.: +2.2% YoY // prev.: +2.2%]
US Consumer Price Inflation is my pick for the macroeconomic data release that has the most potential to move gold markets over the next couple of weeks. As I’ve often mentioned since the release of the FOMC’s January meeting minutes, Chairman J. Powell & Co. have indicated that their focus is firmly on inflation in the coming months, and that changes in the realized data as well as their projections for it will factor heavily into the decision about when to end the current “pause” and whether the next adjustment to short-term interest rates will be to raise or lower them. While the February numbers are expected to be pretty vanilla (unchanged year-over-year in fact, for both headline and core inflation,) it will be the Fed’s last look at inflation before next week’s FOMC meeting, at the end of which the committee will release updated economic projections.
Wednesday, March 13 at 8:30am EST // PPI (Feb)
[consensus exp.: +0.2% // prev.: -0.1%]
Producer Price Inflation is always overshadowed by its flashier Consumer Price Inflation counterpart, and that will be especially true with the focus that the Fed has put on CPI this week. Still, we have to assume all relevant forms of inflation will be taken into account in upcoming FOMC decisions, so we do need to keep an eye out for any big beats or misses on this number as well.
Wednesday, March 13 at 8:30am EST // Durable Goods Orders (Jan)
[consensus exp.: -0.6% MoM // prev.: +1.2%]
Another catch-up-from-the-shutdown number, so I’d again expect fairly muted reaction on this one. There’s actually an unusually wide range of estimates for the January headline number, as analysts have different expectations of how much recent rebounds in aircraft ordering will continue to pass-through to the data.
Thursday, March 14 at 8:30am EST // Initial Jobless Claims
[consensus exp.: 225k // prev.: 223k]
It sure looks like we’re settling into this 225k/week pace for the time being, and this may become a pretty fixed number.
Thursday, March 14 at 8:30am EST // Import Prices Index (Feb)
[consensus exp.: +0.3% MoM // prev.: -0.5%]
With US-China trade talks continuing to drag on, I think there will be more Dollar traders’ attention paid to import prices, the effect that persisting tariffs on Chinese goods are having on them, and how that input is being passed on to the American consumer. Any sharp rises in this number would likely boost risk-off sentiment and drive moves out of the US Dollar and into gold positions, in my opinion.
Thursday, March 14 at 10am EST // New Home Sales (Jan)
[consensus exp.: +0.6% MoM // prev.: +3.7%]
January’s New Home Sales is the third set of “catch up” data we’re observing this month, and the one with the largest possible volatility as last week’s read of the December data was a solid upside surprise that put selling pressure on gold. Because of the size of that beat, expect the number to moderate towards the mean this time around, but another strong number would likely mean more gold selling.
Friday, March 15 at 8:30am EST // Empire State Manufacturing Index (Mar)
[consensus exp.: +10.0 // prev.: +8.8%]
The Empire State number, like several measures of the US economy’s manufacturing sector, has shown considerable declines since Q3 of last year. Market watchers will be interested to see if this particular index’s uptrend from the January bottom continues.
Friday, March 15 at 10am EST // Univ. of Michigan Consumer Sentiment (Mar)
[consensus exp.: 95.6 // prev.: 93.8]
Similarly, this consumer sentiment read hit a 12-month low point in January and rebounded in February, so we’ll be looking at whether that move continues or if it was more of a dead cat bounce.
Global Economic Data to Watch
Tuesday, March 12 at 5:30am EST // UK GDP (Jan)
[consensus exp.: +0.2% MoM // prev.: -0.4%]
Tuesday’s parliamentary vote has the opportunity to alter the timeline, but at the moment we are now within the same calendar month as the current UK-EU divorce date and we are screaming towards it with no plan in place. Coming before the votes take place, risk markets will want to see just how much pressure this mess has been putting on UK growth.
Thursday, March 14 at 11pm EST // Bank of Japan Rate Decision
[no change expected]
Analysts and observers are anticipating a vanilla meeting for the BoJ this month with no policy changes made or implied. But with the Fed on “pause” and last week’s announcement that the ECB plans to further postpone the potential of rate hikes through the year, we’re seeing the major machinery of developed market central banks shift their weight towards preventing the next recession. While the questions for the Fed and the ECB center around their ability to fight recession with a limited set of tools, the situation could be even more challenging for a BoJ who has yet to even exit its extremely accommodative monetary policy stance. We want to see if the Bank of Japan is discussing addressing these issues, because if the worm turns and there are limited options to support the Japanese economy we could see a much stronger move into gold positions as the Yen becomes a less-attractive safe haven.
So that’s how the busy week ahead lays out. Alongside the macroeconomic calendar we as always recommend gold and currency traders keep an eye on the larger economic narratives around important stories like the US-China trade negotiations and the latest round of Brexit votes in the UK and we’ll of course update you should anything develop.
Best of luck out there, traders. I’ll see you back here on Friday for a recap of the week in gold markets.