Happy Monday, traders.
After some excitement over the last 5-6 trading days, things are slowing down this week with Thanksgiving on Thursday; it’s nearly an America-only holiday (on this date, anyway) but markets all around the world typically play along anyway—perks of being the number one economy and global reserve currency, I suppose. USA! USA! USA!
Markets are looking mellow so far on Monday morning to match the week’s light tone and as of writing (before the cash-open in New York) precious metals markets in particular are calm but upbeat: gold has started showing some solidity around the $1220/oz level while silver hasn’t looked back since recovering $14/oz last week, spot trading at $14.30 and higher.
While we expect this week to be calm for metals trading, that doesn’t automatically mean unimportant. The longer gold can maintain a spot price at $1220 or higher, the more solid that base of support will become, whether it’s a slow week or not. On the flip side: if the it fails to maintain the $1216-1220 range in a week that lack’s any real motivation for markets to go risk-on, then I think we’ll have to ask some questions about gold’s upside in the near- to medium-term.
With that in mind, let’s take a look at the what the team will be watching this week.
US Economic Data to Watch This Week
Tuesday, November 20 at 8:30am EST // Housing Starts
[consensus expectation: +1.6% // previous: -5.3%]
Expectations this week are for a moderate rebound from last month’s housing starts, which were hampered (even more than expected) by hurricane season. That same drag will likely have an impact on these number for October (hence, moderate rebound) but it will be important to demonstrate that the housing market it still strong amidst the headwinds that rising interest rates create.
Wednesday, November 21 at 8:30am EST // Durable Goods Orders
[consensus exp.: -2.5% // prev.: +0.8%]
Durable Goods (and all its permutations) is a data set on the US economy that I look at in the same way as housing starts: everything is good until it’s not. There are wonks out there who can already tell you with relative certainty how this number will print on Wednesday because they spent their summer tracking shipments of some unique dowel rod that is used in constructing jumbo jets, and they can tell you what that means for your favorite blue-chip airline stock. But in terms of tracking precious metals markets, I try to use data like housing starts and durable goods orders to check my read on the overall US economy. Do other inputs lead me to believe that the economy is still growing at a good clip? Consistently healthy durable goods orders will confirm that. Am I concerned that interest rates have risen into “restrictive” territory? If housing starts are still robust, that’s a good argument that they have not.
(side note: I really hope they don’t use dowel rods to build airplanes.)
Wednesday, November 21 at 8:30am EST // Initial Jobless Claims
[consensus exp.: 215k // prev.: 216k]
“Jobless claims will become relevant economic data for traders once again!” seems to be the macroeconomic hill that I’m willing to die on, but even I will tell you that that relevancy will not come this week.
Wednesday, November 21 at 10am EST // Existing Home Sales
[consensus exp.: +1% // prev.: -3.4%]
Much like new housing starts, the market expects to see a solid correction from last month’s hurricane-inflicted data.
Wednesday, November 21 at 1030am EST // EIA Crude Oil Stock Change
Another week on from crude oil’s crash below $60/bb WTI and $70/bb Brent, I think weekly inventory data is worth our attention—more specifically, the market’s reaction to the data—given that Texas tea seems to have finally caught a bid after six down weeks.
Friday, November 23 at 9:45am EST // Manufacturing PMI
[consensus exp.: 55.7 // prev.: 55.7]
Friday, November 23 at 9:45am EST // Services PMI
[consensus exp.: 55 // prev.: 54.8]
Wrapping up the US week, the Purchasing Managers Index (for Mfg. and services) looks to be this week’s rubber-stamp on a stable US economy.
Global Economic Data to Watch This Week
As I said, the global economic calendar for this Thanksgiving week is about as quiet as the data-flow stateside, if not more so. For that reason, I’m not going to be the guy who tells you you’d better be up late Wednesday night tracking Japanese inflation—that turkey isn’t going baste itself! But there are a couple ongoing narratives overseas that pose some measure of headline risk for the broad economies and gold prices, so we should be aware of them (until the tryptophan really kicks in.)
- Brexit negotiations + GBP: Sterling and the UK government have so far managed to regain their stiff upper lip this morning after what I’m continually drawn to describe as “total shenanigans” during the second-half of last week. Early Tuesday morning (EST,) Bank of England governor Mark Carney will be speaking at the BoE’s regular hearing on its Inflation Report. Typically, this (regularly scheduled) appearance is of little interest outside of deep GBP traders, but I think markets will watch closely for any comments Carney has about last week’s sharp sell-off that encouraged gold’s run up to $1220.
- Italian Budget: Wednesday is the deadline for the European Commission to deliver its opinion on the Italian government’s budget for 2019. What’s expected is for the EC to again reject the budget and move forward with possible sanctions and restrictions. Likely this escalation is already priced into EUR/USD, as it’s appeared to be the only next step for the last week. However, we’ll be keeping an eye on the headlines as an unexpected development—like the Commission imposing harder sanctions that anticipated (EUR down, gold-spot down;) or the Italian government bending the knee (EUR up, gold-spot up)—could jostle this week’s sleepy metals markets.
And that’s all we’ve got for you this week, traders. I wish you the best of luck out there, and a tremendously happy Thanksgiving. Be sure to check back here for the team’s analysis of these data points, and I’ll be back later this week for a recap of the market week.