High Impact Events Trading... Gold & Copper

How do you see the outcome on today's CPI?

I'm not the threadstarter, can I weigh in?

I think with such a strong NFP, I'm inclined to believe US CPI data will print positively and beat expectations. This might lend strength to the USD again.

Just my thoughts.

The ECB will publish its account of monetary policy meeting in 20 minutes. It might bring about selling pressure of the Euro. When the Euro is sold, DXY usually moves up; since the DXY basket is made up of more than >50% Euro. DXY and Gold has an inverse correlation. Gold made more than $30 north move without any pullback, so perhaps it could be time for a pullback. Just my two cents.

HI Mmase12, if you're holding on to Gold, EUR, and GBP long then you should be up pretty nicely. I would be cautious and make sure and have some trailing stops or lock in profits however you can in case we see the dollar make back some of yesterday's losses. This risk in today's CPI report is a surprise one way or another. Also, keep in mind that we have to watch both, the headline and the core number. I don't think CPI will be a big market mover, but I could be wrong. It has had significant impact in the past. However, recent history shows that volatility could be limited. Another thing to consider is the forecast for the overall number is 0.0%. If it misses and comes in negative, that could be seen as worse than it might actually be.

Powell is schedule to testify again today 90 minutes after the CPI data. That could also keep the impact somewhat muted. The market is focused on Powell, so I'm thinking we may need inflation numbers that deviate from forecasts considerably, for anything other than some volatility at the release time. Expect CPI to have impact, I'm not convinced it will be big.

I've been doing this long enough to know I can't predict what's coming. But I did enough research to be confident in the fact that the impact may not be too significant, unless we see a much stronger or weaker than expected. If it comes in weak, the dollar could continue to sell off as the market continues to price in a more dovish Fed. If inflation comes in stronger than expected, perhaps the market dials back some of the expectations for multiple rate cuts by year's end.

This seems like the most likely outcome given how oversold the USD seems to be after yesterday's sell off. The pendulum may swing back around today.

Exercise caution around these events. Good luck!

Powell coming on in 8 minutes time...brace ourselves!!!

Powell giveth then he taketh.

Wild ride

He still has about $17 left on the table though.

Shhhh, don't give him ideas!!!

DOW at fresh highs...Gold and Silver?? eeh! I suspect a summer range on both...unless something amazing happens, like respective countries try to do the right thing for their people...never going to happen.

Hi again Eventstrader.

I took you advice and placed my trailing stops and was stopped when EUR AND GOLD pulled back but I am still holding on GBPUSD to see if it can reach my expected 25822 level.

I did not trade any news today as I lost internet signal 5 minutes before the event and it only came back 2hours later.
If I may ask,have you ever used the BLOOMBERG TERMINAL YET?

I am always careful not to blow my account as I have learned the hard way and I am always content with the profit I make as there are many opportunities in the market and noting that Rome was not built in one day.I will get there.

Thank you so much for your updates and everything

China GDP - July Preview

1. GDP q/y

Notes:

1. The consensus forecast is for 6.2% vs a 6.4% previous.
2. A drop from the 6.4% prior will mark the lowest GDP reading since April 2009.
3. The market may be sensitive to a surprise in this reading, as both a negative and positive surprise will have implications to risk sentiment.
4. There might be more risk for a bigger move in a lower than expected reading.
5. China's GDP figures are released with a lot of other data, most notably Industrial Production.
6. China's GDP can take a backseat to Industrial Production, especially when it comes to Copper prices.
7. Most economists are forecasting between 6.2% and 6.3%. Very few forecasts are outside of the range previously mentioned. Those forecasts that do fall outside the range are calling for 6.1%, 6.5%, or 6.6%. Those should be considered outliers as they are very few compared to the entire sample of forecasts.
8. When this release takes place on a Sunday, the impact is usually greatly diminished.
9. In order for gold to be impacted, the actual must deviate for consensus forecast.

Recent Impact on Gold:

April

January



October



Conclusion:
As you can see by the lack of impact in January's release, when this is released on a Sunday and the actual comes out in line with expectations there will be limited to no impact. Industrial production is also being released which can have a bigger impact, especially on copper. In order for this event to have any significant trading opportunity we'd likely have to see a wide deviation between the 6.4% forecast and the actual. I'd recommend the wait and see approach and use caution. It's a Sunday and Japan is on a holiday. Liquidity is going to be thin, and whipsaws are a possibility.

China Industrial Production - July Preview

1. Industrial Production y/y

Notes:

1. This data has the most impact on copper. Precious metals are usually not impacted, but the potential exists on a big surprise.
2. This data is being released at the same time as other data, most notably China GDP.
3. The range of estimates are from 5.0% to 5.5%. Outliers exists from 4.8% to 6.2%, although insignificant in relation to sample.
4. More forecasts in the range fall higher than 5.2%, so according to most economists there is risk for a better than expected number.
5. Historically, this has shown a diminished impact when released on a Sunday.
6. Half of copper's entire global demand comes from China, and mostly within the industrial sector.

Recent Impact on Copper:

June

May


April



Conclusion:
April's release is a good example of how this data can impact copper prices. There's a positive correlation between the data and copper. Meaning any better than expected data will drive copper prices higher, while weaker than expected data will likely result in lower copper prices. Given that this data is being released on a Sunday, we should expect impact to be weakened. However, whenever there's a significant deviation from forecasts, this data will impact copper. There is potential for a surprise to move copper prices, but given the low liquidity conditions there's greater uncertainty. I'd advise caution and use the wait and see approach again here.

Tonight we see the release of some Chinese economic figures for the second quarter, which will give the latest reading on the health of the economy following the solid start in Q1.

Most notable will be Q2 GDP data, which the consensus expects to rise 1.5% quarter-over-quarter, but slow to 6.2% year-over-year. I forecast growth will slow a bit more quickly, to 6.1%, while within that overall growth figure I expect that activity in the service sector held up better than in the manufacturing sector.

Mixed confidence surveys and activity data during Q2, and uncertainty stemming from trade tensions with the United States, likely contributed to slower growth Q2. Activity data for June are also on the schedule.

Growth in retail sales is expected to ease to 8.5% year-over-year, while growth in industrial output should rebound modestly to 5.2% after a soft May reading. Overall economic trends remain subdued however, and a further growth slowdown seems likely.

Previous: 6.4% Consensus: 6.2% (Year-over-Year)

US Retail Sales - July Preview

1. Core Retail Sales m/m
2. Retail Sales m/m

Current July 31 interest rate expectations:
Investors continue to debate the depth of the July 31st rate cut. A little over 25% still expect a 50 basis point rate cut, according to the CME FedWatch Tool.

Notes:

1. Retail sales data is expected to show signs of a slowing US economy.
2. Consensus estimates are for 0.1% in both the core number and overall retail sales figures. Both came in at 0.5% last month.
3. Forecasts for the overall number excluding outliers range from 0.0% to 0.3%. The distribution is skewed higher than 0.1%. The average estimate is 0.15%, while the median is 0.1%. More economists expect better the 0.1% consensus forecast.
4. The range of estimates in the core number is -0.1% to 0.4%. Most estimates fall between 0.0% to 0.3%. The average of estimates is 0.11% and the median is 0.1%. The core number shows a lot more uncertainty in terms of what economists are expecting.
5. Revisions are very common for both the core and overall priors. Any trades initiated on the release are susceptible to volatility/reversals from revisions to the prior data.
6. The revisions can limit the impact of the data, or they can exacerbate any initial move.
7. The market will be paying close attention to this data since Powell mentioned it as one the FOMC will be watching leading up to the meeting later this month.

April 1st

April 18th


May


June


Conclusion:
The risk associated with this release involves the implications it might have on the upcoming FOMC meeting. Weaker than expected data could cause investors to increase their bets for a 50 basis point rate cut. That would send gold higher on a weaker USD. If the data comes in stronger than expected, it could trigger selling in gold as the USD rallies on investors lowering expectations towards a 25 basis point rate cut July 31st.

I'd recommend waiting to see how the data comes out before opening any positions in anticipation. Gold will take a clear direction if the data surprises enough to impact rate expectations. If not, I'd recommend sitting this one out. Powell is expected to speak a few hours after this release while attending an event in Paris.

US retail sales data is very susceptible to whipsaws. There's four numbers to watch our for, the two actuals and potential revisions to prior data. As always, caution is advised.

Today we receive retail sales estimates for June, which will provide us with a complete look at how sales fared over the second quarter. I have recently nudged my Q2 personal consumption expenditures (PCE) forecast higher to 3.4% from 2.9% previously, as spending is already on solid footing for the period. Indeed, following two solid monthly gains, retail sales rose 0.5% in May. This pushed control group sales—which exclude volatile components and are a good proxy for consumer spending—up 8.5% on a three-month annualized rate. This is the fastest pace since 2006 and suggests PCE growth is tracking well north of 3% in the second quarter. Higher frequency data, such as the Redbook Index for same store sales— which covers a sample of U.S. retailers—suggest sales remained solid in June. But given a more recent wilting of confidence, I expect retail sales rose a more modest 0.2% last month.

Previous: 0.5%

Consensus: 0.1%

My forecast: 0.2% (Month-over-Month)

Australian Employment Data - July Preview

1. Employment Change
2. Unemployment Rate

Notes:

1. The range of estimates for the employment change is from -10K to 24K. Although most forecasts fall between 0K and 20K.
2. There isn't a general consensus, as forecasts are very disbursed. The average forecast and median are about the same, about 9K.
3. The unemployment rate forecasts mostly range between 5.1% and 5.3%. Most economists are forecasting 5.2%.
4. It should be noted however, the two of the most recent forecasts are calling for 5.3%. As previously discussed in this thread, later forecasts can carry more weight as they can include more information and higher accuracy.
5. The average and median estimate are about the same, at 5.2%.
6. Ongoing trade tensions between the US and China may play a factor in any weaker than expected reading.
7. The RBA Indicator is showing market expectations of an interest rate decrease at the upcoming meeting is low. 20% believe the RBA will decrease while 80% of the market excpect no change.
   Attached Image (click to enlarge)

   
   
8. This data may not have the significant it's had in recent months when interest rate uncertainty was higher.
9. Althought it'll likely take a big surprise to see a significant reaction, the potential is there.
10. There is more risk associated with a stronger than expected release, although there's risk in a weaker number as well.
11. The impact on gold compared to the AUD will be diminished compared to recent releases, given the RBA has been more transparent in guiding rate expectations.

Recent impact on Gold, Copper, and USD/AUD:

Below you will see how each release impacted gold, copper, as well as the USD/AUD. I left out

June:

May:

April:

March:

Conclusion:
The RBA relies on employment data for signs of any strength in the Australian economy. There doesn't appear to be the market anticipation behind this release, which can be a sign of how traders will react. However, it's data that always has potential to move the market with a big enough surprise. I'd expect any move triggered by the actual data to be limited unless the deviation from forecasts is wide. Also, this is data that usually has revisions to the priors. Revisions can trigger impact as well, adding to the risk of trading this event.

If you plan to trade this event, it might make sense to wait until after the data is released. There isn't a good reason to take a position beforehand. As always, caution is advised. Good luck!!

Employment figs are up now! Ima watchin!

Can you please tell me where you get this figures from,the source?