Weekly plan - 13.01 - 17.01.2025

Cryptology.Key
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Cryptology.Key
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Crypto News
12 January 2025
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Macro

Next week, consumer and manufacturing inflation and retail sales data are released.

We advise to pay attention to events that cause uncertainty in price movement:

Tuesday - Core PPI m/m, PPI m/m.

Wednesday - Core CPI m/m, CPI m/m, CPI YoY.

Tuesday

USD (US Dollar) / Core PPI m/m - 15:30

Important data with a major impact on price movement volatility!

Change in the Core PPI for the month.

The US Federal Bureau of Statistics releases the Core PPI every month, about 13 days after the end of the previous month. To calculate it, prices are taken by major sectors of the economy, as well as by stages of production.

Core - a variant of the index calculation that excludes energy and food prices. It is used for "smoothing" the index and operational monitoring of price changes.

Energy is the most important sector of the modern economy. Energy is used to produce goods, to move transportation that moves produced goods, to light streets, to heat houses and much, much more.

The higher the price of energy, the higher the price of all other aspects of life. Rising/falling prices cascade down a long chain, affecting the prices of everything else.

Food is the most important component in human life. Without quality nutrition, a person cannot exist. Today, most of the food produced is done by machines. Raw materials are sown and harvested using specialized machines. It is then processed in factories by specialized machines. Energy binds this whole process together, as neither machines nor machines will work without energy - fuel and electricity obtained in various ways.

Since this is a basic element of human survival, the higher the prices of products, the faster they rise - people buy products en masse, fearing shortages and everything else.

In order to "smooth" the price growth, economists went for a trick and made an additional parameter that does not take into account energy and food prices. Even without taking these prices into account, in any case they indirectly affect everything because of their importance.

The producer price index is an important parameter that shows how prices change on the production side. Before a product hits the store shelves where people buy it, the product has to be produced. This is a whole chain of stages where raw materials are gradually processed into a product.

All these stages and transformations require different goods, equipment and so on. If prices increase at each of these stages - it affects the cost of the final product.

When a manufacturer realizes that the cost of his product is constantly increasing, he is left with two options for further pricing of the finished product:

  • Either reduce his margins. In simpler terms, start selling the product at a loss, and therefore earn less.
  • Or increase the cost of the product itself. In this case, the end buyer pays for the increase in production prices.

I think you realize that producers most often choose the second option. Therefore, the parameter of producer price growth actively influences the growth of commodity prices and consumer inflation.

The core producer price index has been in a downtrend for a year. More often than not, the actual change coincides with the predicted change.

After the COVID-19 lockdowns, which caused a large number of businesses to close and disrupted logistics, producer prices rose sharply. The main factor was that direct-to-consumer businesses were placing large numbers of orders because the goods were simply not reaching warehouses.

For example, you wanted to order 10 cars. You placed the order, 1 arrived due to logistical problems. So to solve this problem, you made multiple orders to dial those 10 cars up bit by bit. This caused a huge strain on the companies.

They had to work harder, order more raw materials and components for production to meet this demand. However, people are on lockdown, there are also difficulties with raw materials, as there are disruptions in logistics, and the enterprises supplying raw materials are also partially in lockdown and also have problems with logistics at their level. Vicious circle.

As soon as the supply problem started to be resolved, prices started to come down.

The latest release of the actual rate (0.2%) was equal to the forecast (0.2%).

The current market forecast is 0.2%.

You can read more here.

USD (US Dollar) / PPI m/m - 15:30

Important data that has a serious impact on the volatility of the price movement!

Producer Price Index change for the month.

The US Federal Bureau of Statistics releases the PPI monthly, about 13 days after the end of the previous month. The calculation takes prices by major sectors of the economy, as well as by stage of production.

This type of index takes into account energy and food prices, showing a more realistic picture of the current situation.

Why producer prices are so important is described above. We would like to discuss separately why the pure indicator is so important, without removing statistically convenient prices.

When working with data, it is easy to manipulate them. The reason for manipulation is most often an attempt to fit reality to one's model, and to say that the people in charge are good, they are doing everything right and everything will be fine.

As it was described above, energy is the main indicator influencing everything. So trying to reduce the weight of this indicator just doesn't show the reality.

Just compare a graph of Core PPI and PPI, how beautiful Core PPI is and how volatile PPI is. That's all the manipulation in action.

The latest release of the actual index (0.4%) was higher than the forecast (0.2%).

The current market forecast is 0.4%

You can read more here.

Wednesday

USD (US Dollar) / Core CPI m/m - 15:30

Important data that has a major impact on the volatility of the price movement!

Change in Core CPI for the month.

The US Federal Bureau of Statistics releases the Core CPI every month, about 16 days after the end of the previous month. The calculation is based on the prices of consumer goods, excluding energy and food (Core).

It is considered that energy and food prices are very volatile, while occupying only 1/4 of the whole index. For this reason, economists use the Core index for more accurate measurement.

Consumer prices account for a large part of inflation, as people are the main buyers of goods. This is a very important macroeconomic parameter and indicator, which is the last in the chain of inflation and shows the real situation in the economy.

Inflation is dangerous because money is constantly depreciating. It causes very big economic and social problems, which in case of uncontrolled growth can even lead to civil conflicts and wars. This has already happened in history. That is why the government is watching this parameter very closely and doing everything possible to influence the price growth.

At the moment, the Fed is making every effort to curb the growth of inflation. The main tool is the increase in refinancing rates. The higher the rate, the higher the borrowing and lending. Expensive loans and borrowing - people can't buy new goods, houses, cars. Lack of large demand for goods - manufacturers make fewer orders, do not increase production capacity and thus do not increase prices at their level.

The latest actual rate (0.3%) was equal to the forecast (0.3%).

The current market forecast is 0.2%.

You can read more here.

USD (US Dollar) / CPI m/m - 15:30

Important data that has a serious impact on the volatility of price movement!

Change in the Consumer Price Index for the month.

The US Federal Bureau of Statistics releases the CPI monthly, about 16 days after the end of the previous month. The calculation is based on the prices of consumer goods, including energy and food prices.

Since the index includes energy and food prices, it is more realistic and closer to ordinary people. The dependence of prices on energy costs has been described above.

In the USA, the infrastructure of cities is built in such a way that it is very difficult to get around without a car. The public transportation system there is not as well developed as in European cities. For this reason, the cost of fuel used to refuel their cars is very important for ordinary citizens. The same can be said about nutrition.

When all of this is taken into account, as with the example of comparing Core PPI and PPI, a very large volatility in performance is created. If you look at it from an academic point of view, it is superfluous information that doesn't play a role and it is smoothed out. If you look at it from a consumer point of view, this extra information is everything. Today you fill up a liter of gasoline for 55 hryvnias, tomorrow for 70, the day after tomorrow for 90, and in a week for 60. Not a very calm situation for an ordinary person.

The last actual indicator (0.3%) turned out to be equal to the forecasted one (0.3%).

The current market forecast is 0.3%.

You can read more here.

USD (US Dollar) / CPI y/y - 15:30

Important data that has a serious impact on the volatility of the price movement!

The year-over-year change in the Consumer Price Index.

The US Federal Bureau of Statistics releases the CPI monthly, about 16 days after the end of the previous month. It is based on the prices of consumer goods, including energy and food prices.

The index is annualized. It is widely used in the media, as it is easier to explain for ordinary people. A large number of instruments related to social security and insurance are calculated on the basis of this index.

The latest actual rate (2.7%) was equal to the forecasted rate (2.7%).

The current market forecast is 2.9%.

You can read more here.

Thursday

USD (US Dollar) / Core Retail Sales m/m - 15:30

Core Retail Sales change for the month.

TheU.S. Census Bureau releases monthly data on the change in Core Retail Sales for the month.

To calculate the Core, the data excluding auto sales is used. Statistically, automobile sales account for about 20% of retail sales. Car prices are constantly changing due to strong demand and therefore create a lot of volatility.

As described in past reviews, economists try to fit any situation to a model. Volatility can create problems for these models, so they remove the volatile component from the calculation.

The retail sales baseline is very important because it is the first in the chain to determine consumer demand.

The more people buy goods, the less they become available in store warehouses. In order to supply the demand, stores start to order more and more goods from enterprises. Enterprises begin to actively purchase raw materials to produce these goods.

If people buy less goods, the stocks in the stores' warehouses remain and there is no point in making a new order to the enterprise. The chain that creates a positive impact on the economy does not work.

With the help of the retail sales indicator a large number of statistics are calculated, based on which further decisions on the work of enterprises and government agencies are made.

At the moment, the main task of the Fed is to reduce inflation as carefully as possible. That's why the declining retail sales figure is a short-term positive, saying that the impact is working and they will reach the 2% inflation target in the long run.

The last release of the actual figure (0.2%) was below the forecast (0.4%).

The current market forecast is 0.5%.

More details can be found here.

USD (US Dollar) / Retail Sales m/m - 15:30

Retail Sales Change for the month.

TheU.S. Census Bureau releases monthly data on the monthly change in Retail Sales.

To calculate the index, the data is taken into account the sales of automobiles. Statistically, automobile sales account for about 20% of retail sales. Car prices are constantly changing due to strong demand and therefore create a lot of volatility.

As described in past reviews, cars are a very important part of American life because the infrastructure is very spread out geographically and the transportation system is not as developed as in Europe.

Underreporting real statistics is not a good thing, but when compared to inflation and core inflation (CPI and Core CPI / PCE and Core PCE), car sales are not as important as rising food and energy prices.

You can not change a car for a long time and still own it. However, the car market in the US runs on credit. Mostly people do not fully own cars, but take it on lease or loan. After a certain period of use, they do not pay off the full loan for the current car change it and reallocate the loan to a new car. For this reason, the global aftermarket is filled with cars from the USA.

The impact on car sales is a decrease in the activity of dealers, manufacturers and banking institutions issuing car loans. The auto industry generates 3% of US GDP and creates actual and indirect jobs for 10 million people.

The latest release of the actual figure (0.7%) was higher than the forecast (0.6%).

The current market forecast is 0.6%.

You can read more here.

USD (US Dollar) / Unemployment Claims - 15:30

Unemployment Claims.

The US Department of Labor releases weekly claims data. The indicator is based on the citizens who applied for unemployment benefits for the first time in the last week.

The indicator is very important because it shows the strength/weakness of the labor market. If people are employed, they earn wages and consume services and goods. This can influence the rise in consumer inflation.

At the moment, the Fed is actively fighting inflation. A strong labor market indicates to the central bank that the economy is holding up and the current inflation situation will continue.

The more jobless claims, the better for the Fed's actions. The fewer jobless claims, the worse for the Fed's actions - they have to raise the rate even more.

The latest release of the index (201 thousand) was below the forecast (214 thousand).

The current market forecast is 210 thousand.

You can read more here.

 

Crypto

 

BTC

Monthly

https://www.tradingview.com/x/JHzLHmpb/

There is no interesting information here for me. Last month's loy was captured, the month's close will be good if it can absorb December's body, but for now we just wait.

Weekly

https://www.tradingview.com/x/sGKjhb00/

Here I expect a capture of 90k with possible momentum to 85k, but really I only care about price reaction once we test the imb and from there wait for strength from altcoins.

Daily

https://www.tradingview.com/x/1wB7o9W3/

Only 2 scenarios are relevant for me, nothing else.

ETH

Monthly

https://www.tradingview.com/x/23uiow0N/

Desired price magnet at 3000, into imbalance , from there look for marginal positions to capture 5000.

Weekly

https://www.tradingview.com/x/jnB8DKmP/

Closing the weekly bar in this fashion, absorbing all 2 weeks of attempts to regain resistance, price has a chance to make a dive into 3000, so be ready for a final dip.

Daily

https://www.tradingview.com/x/XvwxEIpG/

The correction could be different, so consider a number of scenarios. The liquidity in the market for the current period is equal to the liquidity in the grocery market at the bazaar place, so I wouldn't be surprised if the grab is partial, with a microtest imba or deep dip.

Place limit orders in advance.

 

FX & Stock market

 

DXY

Daily

https://www.tradingview.com/x/vWQSIyEd/

The DXY index reached the major level of 110.0 as resistance, but the upward OF was not broken. The nearest support zone is the BPR formed at 108.8. If this zone is broken, we consider a move to SSL at 107.6. The key day to form the high or low of the week is Wednesday, due to the release of CPI+Core CPI data. In terms of data forecasting - DXY should continue its uptrend. In case of low CPI values release - we consider consolidation formation with movement to 107.6.

EURUSD

Daily

https://www.tradingview.com/x/sAK7jNc4/

EURUSD is in a downtrend, but has hit the key zone of 1.02. Further movement will depend on the CPI data. In case of high data release - we expect continuation of the trend from the BPR zone, or removal of 1.044 level. In case of low data release - we expect a breakdown of 1.044 and possible change of the trend.

GBPUSD

Daily

https://www.tradingview.com/x/nMlgARjG/

GBPUSD continues its active decline to the key level of 1.20. After the breakdown of 1.23 this level acts as a support together with the FVG zone at 1.24. We expect correction to 1.23-1.24 with further decline to 1.20 in case of high CPI data release. In case of low CPI data, GBPUSD may consolidate between 1.22-1.26.

SP500

Daily

https://www.tradingview.com/x/54aQMRIi/

Following the Fed's announcement of a potential slowdown in rate cuts and the move to neutral, bond interest rates have equaled stock index returns. Given this risk premium - investors are moving into risk-free assets, which is reflected by falling stock indices and rising bond rates.

CPI + Core inflation data will play a critical role in shaping the narrative ahead of the Fed meeting. If the data comes out above expectations - it will confirm the sense and reinforce the current spillover into risk free assets, which will be reflected by a fall in stock indices, where SP500 may go below 5800. In the event of a low SPI release, the trend could change to the upside, potentially to 6200. For now we consider a test of 5921 or 5985 with a further fall to 5800.

NQ100

Daily

https://www.tradingview.com/x/Ju67vqIQ/

Identical situation with NQ100 index. In case of high values of CPI we expect the continuation of falling to the level of 20,300 - 20,000. In case of low values - change of trend and movement to 22,000. For now it is optimal to work in correction to 21180 and 21500 before data release.

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