Economic Data Calls for November 5, 2019

Weekly Calendar Calls

Here’s what we are looking for in tomorrow’s economic reports (November 5, 2019) — Good Luck Trading!

1. AU PMI Services (16:30 ET) Bearish AUD — Potential downside rise given significantly weaker PMI manufacturing index

2. RBA Rate Decision (22:30 ET) No Trade — We do not trade rate decisions but RBA will most likely to dovish

3. UK PMI Composite and Services (04:30 ET) Bearish GBP — Potential downside surprise given drop in GfK confidence. However UK PMI Manufacturing index increased

4. EZ Producer Prices (05:00 ET) Bullish EUR — Potential upside surprise given rise in consumer price index

5. CAD Trade Balance (08:30 ET) Bearish CAD — Likely to be weaker given significant drop in IVEY PMI

6. US Trade Balance & ISM Non-Manufacturing (08:30 & 10:00 ET) Bearish USD — Rise in ISM but slightly weaker than prior month

7. NZ Q3 Employment Report (16:45 ET) No Trade — RBNZ has been cautious but labor data forecast is hard given improvement in Manpower but weakness in jobs component of manufacturing index

Economic Data Calls for September 5, 2019

Weekly Calendar Calls

Here’s what we are looking for in tomorrow’s economic reports (Sept 5, 2019) — Good Luck Trading!

1. AU Trade Balance (21:30 ET) Bullish AUD — Potential upside surprise given stronger manufacturing activity

2. US ADP Report (08:15 ET) No Trade — ADP is hard to predict but can be market moving ahead of US NFP

3. US ISM Non-Manufacturing (10:00 ET) Bearish USD — Potential downside surprise given sharp decline in manufacturing activity

Economic Data Calls for August 5, 2019

Weekly Calendar Calls

Here’s what we are looking for in tomorrow’s economic reports (Aug 5, 2019) — Good Luck Trading!

1. AU PMI Services (17:30 ET) Bullish AUD — Potential upside surprise given rise in manufacturing PMI

2. EZ PMI Revisions (04:00 ET) No Trade — Revisions are hard to predict but changes will be market movingp>

3. UK PMI Services (08:30 ET) Bearish GBP — Potential downside surprise given drop in consumer confidence and no improvement in manufacturring activity

4. US Non-Manufacturing ISM (10:00 ET) Bullish AUD — Wages are up, signs of improvement in manufacturing activity.

Economic Data Calls for July 5, 2019

Weekly Calendar Calls

Here’s what we are looking for in tomorrow’s economic reports (July 5, 2019) — Good Luck Trading!

1. US Non-Farm Payrolls (08:30 ET) No Trade — Fed officials have suggested that NFP will rebound after the big drop prior month but NFPs are always best traded reactively

2. CAD Employment Report (08:30 ET) No Trade — VEY PMI is released after CAD labor data so this month’s report is difficult to predict

Economic Data Calls for June 5, 2019

Weekly Calendar Calls

Here’s what we are looking for in tomorrow’s economic reports (June 5, 2019) — Good Luck Trading!

1. AU PMI Services (18:30 ET) Bearish AUD -- Weaker PMI manufacturing signals weaker PMI services

2. AU GDP (21:30 ET) Bullish AUD -- Potential downside surprise given improvement trade & retail sales in Q1

3. UK PMI Services (04:30 ET) Bearish GBP -- Potential downside surprise given sharp drop in PMI Mfg but confidence was higher

4. EZ PPI & Retail Sales (05:00 ET) No Trade -- Conflicting data makes EZ reports hard to read. Stronger GE CPI. Lower FR CPI. French spending increased. GE fell.

5. US ADP (08:15 ET) No Trade -- ADP is very important to hard to predict

6. US ISM Non-Manufacturing (10:00 ET) Bearish USD -- Weaker ISM Manufacturing report

7. US Beige Book (14:00 ET) No Trade -- We do not trade reports but likely more cautious

Economic Data Calls for March 5, 2019

Weekly Calendar Calls

Here’s what we are looking for in tomorrow’s economic reports (March 5, 2019) — Good Luck Trading!

1. RBA RATE DECISION (22:30 ET) NO TRADE -- Rate decisions are difficult to predict and best traded reactively -- recent US China trade developments could give RBA cause for optimism

2. EZ PMIs (04:00 ET) NO TRADE -- Revisions are difficult to predict but changes will be market moving

3. UK PMI Composite and Services (04:30 ET) Bearish GBP -- Potential downside surprise given lower manufacturing PMI

5. EZ Retail sales (05:00 ET) Bearish EUR -- Potential downside surprise given weaker German spending

6. US ISM Non-Manufacturing (10:00 ET) Bearish USD -- Potential downside surprise given weaker Manufacturing ISM

Economic Data Calls for Feb 5, 2019

Weekly Calendar Calls

Here’s what we are looking for in tomorrow’s economic reports (Feb 5, 2019) — Good Luck Trading!

1. AU PMI Services, Trade Balance & Retail Sales (18:30 & 21:30 ET) Bullish AUD -- Potential for upside surprise given stronger manufacturing activity

2. RBA Rate Decision (02:30AM ET) No Trade -- Rate decisions are best traded reactively. RBA could be a bit more cautious

3. EZ PMI Revisions (03:55 ET) No trade -- Revisions are difficult to predict but if changes are made will be market moving

4. UK PMI Services & Composite (04:30 ET) Bearish GBP -- Potential downside surprise given drop in manufacturing PMI index

5. EZ Retail Sales (05:00 ET) Bearish EUR -- Potential downside surprise given drop in German & French retail sales

6. US Non-manufacturing ISM (10:00 ET) Bullish USD -- Potential upside surprise given strong NFP

4 Reasons Why BoJ Hasn’t Intervened in USDJPY

Intervention Japanese Yen Kathy Lien

We have now seen the dollar fall approximately 600 pips against the Japanese Yen in just over week.  Alarms should be ringing at the Ministry of Finance and Bank of Japan because the 5% appreciation spells big trouble for Japan’s businesses and economy. However, everything that we have heard from the Japanese government so far suggests that they are not ready to intervene in the foreign exchange market to lower the value of their currency. The last time the Bank of Japan intervened in the currency was in 2011 after the earthquake and tsunami (and that was coordinated). Since then we have seen USDJPY fall as low as 76 and average around 102.25 over the past 4 years. So Japan has and can tolerate a stronger yen although they have less flexibility with monetary and fiscal policy because extensive action has already been taken through these years.

While we believe the Japanese government should intervene given the weakness of the currency, there are a number of reasons why they won’t:

  1. They could be waiting for the G7 meeting
  2. They could be waiting for fresh fiscal stimulus
  3. They could be waiting for the markets to capitulate first.
  4. They could also be looking into monetary stimulus rather than direct intervention to avoid being singled out for competitive devaluation of their currency at the G7 meeting in late May – because the host never wants to be embarrassed.

On a fundamental basis, it is becoming clear that the BoJ could allow USD/JPY to fall to 105 and maybe even 100 before taking action. In early February they let USD/JPY fall close to 1100 pips before there was also indication of intervention. While it has not been confirmed on February 11th, after dropping to a low of 110.98, USD/JPY jumped 200 pips in 20 minutes -- price action that is indicative of intervention. USD/JPY still has 500 pips to go before this capitulation point, which would put the pair right between the 100 and 105 level. However we would be surprised if the BoJ let USD/JPY fall 1000 pips from its March 29th high of 113.80 without checking rates near 105.

On a technical basis, there’s no support in USD/JPY until 106.63, the 38.2% Fibonacci retracement of the 2011 to 2015 rally. We expect USD/JPY to test and bounce off this level. However if the Fib is broken then it should be smooth sailing down to 105.85, the 200-month SMA. So while the Bank of Japan could allow USD/JPY to drop 1000 pips from its recent high, there are enough key technical and psychological support levels between now and then to make it a choppy and not one-way move.

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