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  • #61
  • Jul 4, 2019 10:29pm Jul 4, 2019 10:29pm
Amazing write up EventsTrader!

I have a theory about the employment report... Between NFP and Avg Hourly Earnings (AHE), I think AHE is more important right now. NFP speaks to the strength of the labor market, but a low print isn't all that significant since the US is already at full employment. AHE speaks directly to inflation which is more important now since we're at the point in the cycle where there should be accelerating inflation. Plus, the Fed is expected to cut due to low inflation so a high AHE print would throw a wrench into their plan.

Where this gets really interesting is the market's reaction to the past few releases when there has been an NFP beat coupled with an AHE miss. The initial reaction has been to from the NFP beat, but it later reverses once people realize AHE missed. This has happened a few times now and it looks like something you could trade. If NFP and AHE differ, fade the NFP move and bet on AHE.
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #62
  • Jul 4, 2019 10:38pm Jul 4, 2019 10:38pm
Quoting Ef5
Amazing write up EventsTrader! I have a theory about the employment report... Between NFP and Avg Hourly Earnings (AHE), I think AHE is more important right now. NFP speaks to the strength of the labor market, but a low print isn't all that significant since the US is already at full employment. AHE speaks directly to inflation which is more important now since we're at the point in the cycle where there should be accelerating inflation. Plus, the Fed is expected to cut due to low inflation so a high AHE print would throw a wrench into their plan....
Great feedback! The Average Hourly Earnings certainly has the potential to overshadow both employment figures, as it did in May. Given the forecasts, I don't see a high probability for a miss. If it does miss and is accompanied by weaker jobs data, that's when you'll see me enter the market. Otherwise, I have a strict no-fade trading policy I stick to. It's always been a recipe for disaster when I've attempted it. Basically, I see the trading opportunity a being associated with the market beginning to price in a greater chance of the July 50 basis point cut. Otherwise, I might just remain an observer. But good luck to you sir! Thanks again for the input. I'm always interested in different views. All the best!
We must learn who is gold, and who is gold plated
EventsTrader Live All Time Return: 54.4%
  • #63
  • Jul 4, 2019 11:35pm Jul 4, 2019 11:35pm
According to my observation, the movement of XAU / USD based on the NFP news in June 19 was the highest in the last 3 years. Moving up 102 points on June 25, 2019 from the time it was issued on June 7, 2019. Next I do not know how much the price will happen, but based on data the last year the average movement (in the right direction, up or down depend on NFP's issue) is 37 points in a month.
I only trade XAU/USD. Based on USD news & Fib SR & BB20
  • #64
  • Jul 4, 2019 11:52pm Jul 4, 2019 11:52pm
Quoting manize
According to my observation, the movement of XAU / USD based on the NFP news in June 19 was the highest in the last 3 years. Moving up 102 points on June 25, 2019 from the time it was issued on June 7, 2019. Next I do not know how much the price will happen, but based on data the last year the average movement (in the right direction, up or down depend on NFP's issue) is 37 points in a month.
That's some good info manize. I thought the move per month would exceed 37 points. Good to know. Another good reason to be cautious heading into this event. With three datas being released, along with the Canadian data, there's a lot of different scenarios that can happen. But, if we see weak numbers across the board (which I doubt), then that 102 point move might be surpassed.
We must learn who is gold, and who is gold plated
EventsTrader Live All Time Return: 54.4%
  • #65
  • Jul 5, 2019 12:29am Jul 5, 2019 12:29am
Quoting Ef5
Amazing write up EventsTrader! I have a theory about the employment report... Between NFP and Avg Hourly Earnings (AHE), I think AHE is more important right now. NFP speaks to the strength of the labor market, but a low print isn't all that significant since the US is already at full employment. AHE speaks directly to inflation which is more important now since we're at the point in the cycle where there should be accelerating inflation. Plus, the Fed is expected to cut due to low inflation so a high AHE print would throw a wrench into their plan....
Thank you, I will learn about this relationship between NFP and AHE....
I only trade XAU/USD. Based on USD news & Fib SR & BB20
  • #66
  • Jul 5, 2019 1:55am Jul 5, 2019 1:55am
This data is going to be really important.
At the moment the market has priced in a 25 bp cut.
There is 30% chance of a 50 bp cut.
A large miss is going to have a big effect on the dollar and on Gold
  • #67
  • Jul 5, 2019 3:03am Jul 5, 2019 3:03am
Quoting Fader123
This data is going to be really important. At the moment the market has priced in a 25 bp cut. There is 30% chance of a 50 bp cut. A large miss is going to have a big effect on the dollar and on Gold
You are absolutely correct. All of what you said was spot on. That's where the opportunity is. That's the only play that I see with minimal risk.

If the data is bad enough to trigger more bets on a 50 basis point cut, we could see some large moves. That's the scenario where the markets would be impacted most. Perhaps similar to what happened back in May. Gold rallied for two hours while the dollar kept dropping.

There's plenty of ways this can play out. I agree this is a really important one and will probably affect the FOMC decision. To what extent? Let's see what the data says!

Thanks for dropping by Fader. I enjoy hearing from fellow traders. Good luck sir!
We must learn who is gold, and who is gold plated
EventsTrader Live All Time Return: 54.4%
  • #68
  • Jul 5, 2019 2:03pm Jul 5, 2019 2:03pm
Quoting Ef5
Amazing write up EventsTrader! I have a theory about the employment report... Between NFP and Avg Hourly Earnings (AHE), I think AHE is more important right now. NFP speaks to the strength of the labor market, but a low print isn't all that significant since the US is already at full employment. AHE speaks directly to inflation which is more important now since we're at the point in the cycle where there should be accelerating inflation. Plus, the Fed is expected to cut due to low inflation so a high AHE print would throw a wrench into their plan....
I concede I was 1,000% wrong about this. NFP was all that mattered today.
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #69
  • Jul 5, 2019 2:10pm Jul 5, 2019 2:10pm
Quoting manize
{quote} Thank you, I will learn about this relationship between NFP and AHE....
The Fed's dual mandate is to maximize employment and maintain price stability. They've met the first objective since the US has a 3.7% unemployment rate which is below the long term natural rate:

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(link)

It would reason that the Fed should mostly just be concerned about price stability at this point. Further, usually when the unemployment rate is this low you have a tight labor market and start getting wage inflation as a result. That hasn't been the case during this business cycle, but it makes hourly earnings all the more important in case it starts to show in the data.

That's my take on it at least. The market disagreed today and reacted purely due to the strong NFP number.
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #70
  • Jul 5, 2019 10:52pm Jul 5, 2019 10:52pm
Quoting Ef5
{quote} I concede I was 1,000% wrong about this. NFP was all that mattered today.
Economic data difficult to figure out sometimes. Your thinking had precedent and made sense. But that's what happens in this irrational market. It's never boring at least!

Ef5, I appreciate you sharing your thoughts at the time. I hope to see you back here for the next one.

Quoting Ef5
The market disagreed today and reacted purely due to the strong NFP number.
Sure seemed that way.
We must learn who is gold, and who is gold plated
EventsTrader Live All Time Return: 54.4%
  • #71
  • Jul 9, 2019 7:36pm Jul 9, 2019 7:36pm
Quoting Fader123
This data is going to be really important. At the moment the market has priced in a 25 bp cut. There is 30% chance of a 50 bp cut. A large miss is going to have a big effect on the dollar and on Gold
What about Powell and minutes tomorrow? I still think we will see the same rhetoric from him and not much will change. I'm also not quite convinced yet that we will see a rate cute in July, but curious what some of you more experienced traders think?
  • #72
  • Jul 9, 2019 8:34pm Jul 9, 2019 8:34pm
FOMC Meeting Minutes - July Preview

  1. FOMC Meeting Minutes

Quick Notes:

  1. The FOMC minutes looks like it will be overshadowed by Powell's testimony scheduled three hours earlier.
  2. Of the last three FOMC meeting minutes, Feb 20th and the April releases impacted gold, but not significantly.
  3. The most recent release had limited impact on metals.

Impact of three most recent releases:

May 22nd:

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April 10th:
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Feb 20th:
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Conclusion:
FOMC meeting minutes always has the potential to have heavy impact, although it doesn't seem likely for tomorrow's release. Powell's testimony earlier in the day is much more in focus and will provide better clues about the probability of a July rate cut.
We must learn who is gold, and who is gold plated
EventsTrader Live All Time Return: 54.4%
  • #73
  • Jul 9, 2019 9:06pm Jul 9, 2019 9:06pm
Powell Testimony - July Preview

  1. Fed Chair Powell Testifies

Quick Notes:

  1. There hasn't been any notable impact during Powell's testimony in the past. But that doesn't mean tomorrow's testimony doesn't have potential for significant impact.
  2. Since NFP, the market has dialed back it's rate cut bets. Currently, most believe the Fed will cut rates by 25 basis points.
  3. It's important to remember that the Fed usually does not try to deliberately signal where they stand on rates. They try to remain as vague as possible as to not disrupt the markets.
  4. The market is heavily focused on what Powell will say and you could see prices extremely sensitive to statements that usually wouldn't move the markets.
  5. Because of that sensitivity, there's a greater chance that we will see some price volatility.

What is the CME FedWatch Tool telling us?

  1. As stated, the market is almost fully expecting 25 basis point rate cut in July.
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  2. What's just as interesting and should be noted is that currently about 60% believe rates will be lowered at the Sept meeting.
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  3. Here's a look at where the market stands for the Oct meeting:
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Conclusion:
It seems like the risk is heavily skewed. The probability that the market will continue to price in a more hawkish fed seems significantly more likely than the other way around. Given that the rate cut this month has been widely accepted, the market could continue to change it's sentiment on the changes of rate cuts into the September and October meetings. Because those meetings are already heavily in favor of rate cuts, I see there being significant risk in the possibility of those bets reversing if Powell hints that the Fed will continue to be patient and offer no guarantee of those future rate cuts. I'd advise caution but be ready if the market sends the dollar higher. We could see it in rally mode, triggering a sell off in gold.

As always, take it with a grain of salt. Just one trader's thoughts. Good luck!

Attached Image
We must learn who is gold, and who is gold plated
EventsTrader Live All Time Return: 54.4%
  • #74
  • Jul 9, 2019 11:58pm Jul 9, 2019 11:58pm
Quoting EventsTrader
Powell Testimony - July Preview Fed Chair Powell Testifies Quick Notes: There hasn't been any notable impact during Powell's testimony in the past. But that doesn't mean tomorrow's testimony doesn't have potential for significant impact. Since NFP, the market has dialed back it's rate cut bets. Currently, most believe the Fed will cut rates by 25 basis points. It's important to remember that the Fed usually does not try to deliberately signal where they stand on rates. They try to remain as...
Do you think Fed testimony is easier to trade than pure data releases? I don't usually trade big events but it seems like markets take a big longer to digest speeches like this and there are several spikes in prices along the way... as opposed to a single data release with one big almost instantaneous move that is best captured by algorithms on the shortest fiber optic line to an exchange.
careful not to step in a pile of it
  • #75
  • Jul 10, 2019 12:10am Jul 10, 2019 12:10am
Quoting bulltrap
{quote} Do you think Fed testimony is easier to trade than pure data releases? I don't usually trade big events but it seems like markets take a big longer to digest speeches like this and there are several spikes in prices along the way... as opposed to a single data release with one big almost instantaneous move that is best captured by algorithms on the shortest fiber optic line to an exchange.
Absolutely.

If the market takes time to digest new information and forms a clear direction it's an infrequent event. When it happens, it's usually an easier trade than trying to scalp during spikes. The key is being ready and sitting tight through all the times when there's no clear opportunity. Good luck!
We must learn who is gold, and who is gold plated
EventsTrader Live All Time Return: 54.4%
  • #76
  • Jul 10, 2019 10:24am Jul 10, 2019 10:24am
Quoting EventsTrader
It seems like the risk is heavily skewed. The probability that the market will continue to price in a more hawkish fed seems significantly more likely than the other way around. Given that the rate cut this month has been widely accepted, the market could continue to change it's sentiment on the changes of rate cuts into the September and October meetings. Because those meetings are already heavily in favor of rate cuts, I see there being significant risk in the possibility of those bets reversing if Powell hints that the Fed will continue to be...
I didn't think his testimony would cause the market to price in a higher probability of a 50 basis point rate cut. Because of this, I think there is still potential for the FOMC minutes to have impact.

Also, Powell mentioned in his testimony that the Fed will be watching data up until the meeting in order to make their decision. That bodes well for higher volatility on CPI, GDP, retail sales, etc. July should be a wild ride.
We must learn who is gold, and who is gold plated
EventsTrader Live All Time Return: 54.4%
  • #77
  • Jul 10, 2019 11:02am Jul 10, 2019 11:02am
Quoting EventsTrader
{quote} I didn't think his testimony would cause the market to price in a higher probability of a 50 basis point rate cut. Because of this, I think there is still potential for the FOMC minutes to have impact. Also, Powell mentioned in his testimony that the Fed will be watching data up until the meeting in order to make their decision. That bodes well for higher volatility on CPI, GDP, retail sales, etc. July should be a wild ride.
Be interesting to see if Powell stole all the thunder for today, my gut tells me there's still wind to push those sails.
  • #78
  • Jul 10, 2019 4:13pm Jul 10, 2019 4:13pm
Quoting Metallurgy
{quote} Be interesting to see if Powell stole all the thunder for today, my gut tells me there's still wind to push those sails.
Thanks for getting back to me.I APPRECIATE IT A LOT
  • #79
  • Jul 10, 2019 4:44pm Jul 10, 2019 4:44pm
US CPI - July Preview

  1. CPI m/m
  2. Core CPI m/m

Notes:

  1. Powell mentioned in his testimony that the Fed will be considering data between now and the FOMC meeting later in the month.
  2. The Fed tends to put more weight on PCE inflation, not CPI. Although CPI tends to have more market impact.
  3. Powell is scheduled to testify 90 minutes after the release, which could mute the impact as traders wait to hear from him.
  4. Tomorrow's testimony won't be early like today's was. Today it was the text that was early, not the actual testimony. Since the semi-annual report was already released, all we have to look towards is the testimony.

Recent impacts:

June - There was limited impact as the data came out mostly within market expectation. A slight miss in the core number was probably why gold initially spiked on the release.

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May - With both the overall and core number coming in lower than expected, it wasn't low enough to impact rate cut speculation. Impact was muted.
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April - The ECB Press Conference was taking place as these numbers were released. Aside from a minor whipsaw (overall came in better than expected, core number was weaker), the movement can be mostly attributed to Draghi as he was making statements well after the release.
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March - The impact here was again muted. The core number missed slightly but not enough to have any significant impact.
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Conclusion:
CPI has always had the potential to have heavy impact on the markets. The only way this triggers any significant impact is if there's a surprise in the data, enough to spark traders to think it's enough to impact the Fed's decision later this month. Given the recent history I don't see much opportunity related to this event. It's always a good idea to monitor it, but more importantly, be ready for Powell to make some statements a little bit later in the morning. As always take this with a grain of salt, it's just one of many takes. Good luck fellow traders!
We must learn who is gold, and who is gold plated
EventsTrader Live All Time Return: 54.4%
  • #80
  • Jul 11, 2019 5:10am Jul 11, 2019 5:10am
Greetings

I left my Gold,EUR and GBP trades open (ALL BUYS) since yesterday till now and would like to know if I should continue holding or do otherwise as I am not sure of the outlook.

To hear from you
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