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THE WEEK AHEAD FUNDAMENTALLY – KEY DATA TO WATCH OUT FOR
With the end of the summer doldrums, which was anything but dull, we revert back to a full week of economic data culminating in the usual much awaited first Friday of the month NonFarm Payroll data.
The week is also punctuated with a sprinkling of PMI numbers and central bank announcements.
The last few sessions have witnessed heightened volatility in risk as market participants try and analyze whether the first series of rate hikes in the western world since 2008 are priced in or not.
From last week’s price action it would seem they are not.
USD:On Tuesday we have manufacturing PMI expected to be virtually unchanged from last month at 52.6.
On Wednesday we have the ADP NonFarm Employment Change estimated at 204,000. This figures excludes both farm and government jobs.
Thursday sees the release of the Trade Balance thought to be negative 43.2Bn, Unemployment Claims guesstimated at 273,000 and Non-Manufacturing PMI expected to show a slight fall from 60.3 to 58.3.
Friday is the big day with NonFarm Payroll at 220,000, the Unemployment rate at 5.2%. FOMC Member Lacker speaks about FED interest rate policy.
COT data shows that large commercials substantially reduced their net short position in the US$ Index from 75,177 to 58,988. We therefore adjust from BEARISH to SLIGHTLY BEARISH.
EURO:Only two items of note for the EURO, both on Thursday when we have the Minimum Bid Rate which is the interest rate on the main refinancing operations that provide the bulk of liquidity to the banking system.
More importantly we have the ECB Press Conference.
COT data for the Euro shows that large commercials substantially decreased their net long position from 122,326 to 91,151. We therefore move from BULLISH to SLIGHTLY BULLISH.
GBP:On Tuesday we have Manufacturing PMI expected at 51.9.
Wednesday we have Construction PMI expected to show a small rise from 57.1 to 57.6.
Thursday sees Services PMI thought to show a small rise from 57.4 to 57.6.
COT data for GDP shows that large commercials increased their net short position from 2,449 to 10,144. We therefore maintain our NEUTRAL stance.
YEN:Two important numbers.
On Thursday we have the Average Cash Earnings which which is expected to grow from a -2.5% last year to a positive 2.3%.
On Friday we have the start of the G20 Meetings which go on into Saturday.
COT data shows that large commercials notably reduced their net long position from 125,219 to 54,714. We therefore move from very slightly less BULLISH to NEUTRAL.
AUD: A fairly full week for the AUD starting on Monday with the Building Approvals number expected to show a marked improvement from the p[previous months-8.2% to 3.0%.
On Tuesday we have the Cash Rate figure static at 2.00% and the more important RBA Rate Statement.
Wednesday sees both Retail sales falling slightly from 0.7% to 0.4% and the Trade Balance number worsening from a negative 2.93Bn to -3.10Bn.
COT data shows that large commercials increased their net long position from 76,778 to 89,239. We therefore remain BULLISH.
CNY:A quiet week for the CNY with only one point on Monday when we have Manufacturing PMI expected to dip from last month’s 50.0 to 49.8 indicating contraction.
There is no COT data for the CNY.
OTHER COT DATA OF NOTE:
GOLD: Large commercials increased their net short position slightly from 29,948 to 62,636. We therefore change our stance from SLIGHTLY BEARISH to OUTRIGHT BEARISH in the very short term.
SILVER: Large commercials slightly increased their net short position from 23,393 to 23,970. Like gold we continue to be SLIGHTLY BEARISH in the very short term.
CAN$: Large commercials maintain their very large net long position which currently stands at 81,035 and is the fourth highest over the last 52 weeks.
THOUGHTS FOR NEXT WEEK
With all or most of the market participants back at their desks and it being the first week of the month and therefore the Employment data in The US on Friday we can expect a heightened level of activity, greater volumes and volatility.
We are now in the month of September which is the month in which the market has anticipated the FED rate hike.
The market may try and force the FED’s hand by pushing risk lower prior to any action which, if it happens could result in a spike post the event.
A classic case of ‘buy the rumour, sell the fact’.
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