Weekly plan - 13.05 - 17.05.2024

Macro

Next week sees the release of data on manufacturing and consumer inflation, New York State manufacturing, and retail sales. Fed Chairman Jerome Powell will speak on Tuesday.

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, Empire State Manufacturing Index.

Tuesday

USD (US Dollar) / Core PPI m/m - 3:30 pm

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

Change in the Core PPI for the month.

TheUS 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

Producer Price Index change for the month.

The US Federal Bureau of Statistics releases the Producer Price Index every month, about 13 days after the end of the previous month. It is calculated by major sectors of the economy, as well as by stages 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 index is so important, without removing prices convenient for statistics.

When working with data, they are easy to manipulate. 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 (0.2%) was below the forecast (0.3%).

The current market forecast is 0.3%

You can read more here.

USD (US Dollar) / Fed Chair Powell Speaks - 17:00

Fed Chair Jerome Powell speaks in Amsterdam.

An important event as the Fed Chairman has the biggest influence on the financial markets. Powell's speech can indicate the Fed's future actions.

Anexample of such a speech is talking to teachers.

Wednesday

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

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

Change in the Core CPI for the month.

TheUS 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 and take up only 1/4 of the whole index. For this reason, economists use the Core index for more accurate measurement.

Consumer prices account for most of the 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. This causes very big economic and social problems, which, with 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 (0.4%) was higher than the forecast (0.3%).

The current market forecast is 0.3%.

You can read more here.

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, on the basis of 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 (1.1%) was higher than the forecast (0.5%).

The current market forecast is 0.2%.

You can read more here.

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

Monthly change in the Consumer Price Index.

TheUS Federal Bureau of Statistics releases the Consumer Price Index every month, 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 figure (0.4%) was higher than the forecast (0.3%).

The current market forecast is 0.4%.

You can read more here.

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

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

TheUS Federal Bureau of Statistics releases the Consumer Price Index every month, about 16 days after the end of the previous month. Consumer prices are calculated 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 last actual index (3.5%) turned out to be higher than forecasted (3.4%).

The current market forecast is 3.4%.

You can read more here.

USD (US Dollar) / Empire State Manufacturing Index - 15:30

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

New York State Manufacturing Index.

TheFederal Reserve Bank of New York releases the New York State Manufacturing Index every month. The index is based on a survey of manufacturing companies on business conditions, employment, shipments and new orders.

New York State is the fourth largest state in terms of population (20 million) and the third largest in terms of contribution to the nation's GDP ($2.05 trillion). No matter what anyone says about the US being the world's largest consumer (trade deficit of $948.1 billion), manufacturing is still very strong. There are a large number of localized brands covering almost all the needs of the citizens.

It is for this reason that manufacturing data is very important and can say a lot about the future dynamics of the economy as a whole. Since the basic element in the production of goods is enterprises, they are the best and fastest to react to changes in economic conditions. For the entire 23rd year, the indicator has more often than not been in strong negative territory, with few positive changes.

The latest release of the actual indicator (-14.3) was worse than the forecast (-5.2).

The current market forecast is -10.8.

You can read more 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 automobile market in the United States runs on credit. Basically, 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 (0.4%).

The current market forecast is 0.4%.

You can read more here.

Thursday

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

Unemployment Claims.

TheU.S. 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 rate (231K) was above the forecast (212K). The labor market remains stable. For this reason, there is no particular increase in unemployment.

The current market forecast is 231 thousand.

You can read more here.

Crypto

BTC/USDT

Monthly

https://www.tradingview.com/x/k4q7pVt7/

For the current period, as long as the monthly candle closes above the imbalance, we can safely exhale and realize that with BTC liquidity does not go out. As for the past plan, it is relevant, ATH at the end of May.

Weekly

https://www.tradingview.com/x/gauB6eTc/

As for if the plan gets out of control, I would expect a prolonged accumulation like last time. Or on the contrary a panic sell into the 48000 area.

Daily

https://www.tradingview.com/x/4gO4b5EJ/

So far I am interested in watching two events like this, where one of them is a test of 5900 and comes out to break the structure.

ETH/USDT

Monthly

https://www.tradingview.com/x/can1qwEI/

Ether is still weak, so we wait for it to test 2717, from there I will wait for price momentum to 3290.

Weekly

https://www.tradingview.com/x/faJ0pIzs/

Here we buy back the weekly close above 3000, accumulate and go up or give a panic correction to the area of 2600.

ETH/BTC

Weekly

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

You know it all.

FX & Stock market

DXY

Weekly

https://www.tradingview.com/x/yP3xUHPn/

Last week the price failed to reach the External BSL target, and corrected to I-FVG. This movement was triggered by the unemployment data, and most likely it was specifically prepared for the current week, where we are expecting a lot of retail sales and inflation data. The upward context is still in force and we expect the price to return behind the made equal highs of the Internal BSL - 106.5.

Daily

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

On the daily timeframe we see a squeeze between two zones of interest in the form of Rejection and -OB, but the first PPI data will be released on Tuesday, which will increase volatility, so we assume a test of Rejection with the low of the week on Tuesday and further upward movement to the Internal BSL - 106.5. It is worth to be careful with the upper boundary of consolidation, which may hold the price.

EURUSD

Daily

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

There are no changes on EURUSD since last week, just a week of consolidation near the key zone1.0800. All narratives are unchanged - continuation of the downtrend back to 1.0620 and Internal SSL (1.0600). The main target is also External SSL - 1.0450. One thing - we advise to pay attention to the last longing FTA in the form of OB, from where the reaction followed last Thursday.

H4

https://www.tradingview.com/x/HuJw36cp/

So far H4 timeframe is in ascending OF, but all attempts to break through 1.0800 level were unsuccessful. We will consider two variants of events, a downward movement from the current values, where after the invalidation of the rising OF, we can work to short, or the removal of the External BSL (PWH) with the high of the week on Tuesday.

GBPUSD

Daily

https://www.tradingview.com/x/AX471Upo/

GBPUSD went into consolidation after the +OB test and at the moment it is difficult to determine further narratives, one should work through LTF.

H4

https://www.tradingview.com/x/22GCPkYG/

While the chart is in consolidation, consider working on exits (deviations) in both directions. We should wait for the release of Claimant Count Change on Tuesday and based on this data form further narratives.

SP500

Weekly

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

Last week we assumed a downtrend, but after J.Powell's speech the rally is still going on. Now the price is at the potential upper boundary of consolidation, but to determine the exact transition to consolidation we need to wait for confirmation on the lower periods.

Daily

https://www.tradingview.com/x/Xg9VV1MA/

We have the first sign of reversal and formation of the potential upper boundary of consolidation in the form of Friday's closing pinbar, but to consider the downward movement we advise to wait for the break of the BPR FVL level. If it happens - the first target will be the level of 5150. We advise to watch how the price will work and whether it will work at all with High of Range - 5160, as fixing above this value - will continue the rally to update ATH.

NQ100

Daily

https://www.tradingview.com/x/ptCFU6gL/

The situation is identical on the NQ100 chart, Friday closed with a sweep and pinbar near the upper boundary of consolidation. To confirm the downtrend we consider the break of FVG BISI, then the first target will be the level of 17920.

H4

https://www.tradingview.com/x/6TMDpMTl/

On the lower timeframe we also observe consolidation formation, where on Friday a deviation was formed, which is a pinbar on the daily timeframe. All this situation tells us about a potential reversal, but we advise to be more careful and wait for confirmations, as last week moved against our plans, and the rally may still continue.