The Rooster Call: Can Monetary Policy Talks Affect Market

Hit the Mark Trading’s Brief Review of Overnight Market Action Setting the Tone for the Trading Day

Today Janet Yellen speaks on monetary policy at 11AM ET. This is a potential market moving event, although nothing new is expected. It is the odd slip up or inference that can cause a knee-jerk.

Overnight the European Union released GDP numbers for the Euro zone, a third and final revision for first quarter 2014. Quarterly growth was 0.2%, while year over year growth is 0.9%. The next meaningful data on GDP is slated for August 14th and will likely move the market if you want to mark your calendar.

Euro zone Producer Price Inflation (PPI) fell for the fifth consecutive month in May, underscoring continued deflation. Deflation is caused by a lack of demand. Market mechanism are attempting correction, yet central banks refuse to let the hidden hand of economics work.

Update on Iraq – Parliament convened and the first order of business was salaries. No agreement was reached, so parliament walked out. Such is the priority of the elected government.

Ukraine is heating up again with increased fighting between Ukraine and separatists. Putin rattles the sabre again threatening incursion.

Another day, another bank fine…Goldman Sachs fined $800K for failing to ensure that trades executed in the bank’s own trading venue met US laws protecting investors’ right to best market prices (Financial Times).

Today’s Reports and FED Activity

7:00 MBA Mortgage Applications
7:30 Challenger Job-Cut Report
8:15 ADP Jobs Report
10:00 Factory Orders
10:30 EIA Petroleum Inventories
11:00 Janet Yellen speech

Overnight/Pre-Market

  • Equity index futures are quiet after yesterday’s move higher. Look for ADP, Factory Orders, and Yellen as potential market moving events.
  • Bonds are quiet incrementally higher.
  • Brent crude lower. We discussed Brent in last night’s video testing the up trend.
  • USA crude lower in harmony with Brent.
  • Natural gas in pause mode.
  • Gold and silver quiet ignoring deflation reports in Euro zone. Deflation is typically a negative for precious metals.
  • Grains are quiet after a huge move in Soybeans and Corn on Monday.
  • Softs uneventful.
  • US dollar flat.
  • Euro incrementally lower.
  • Yen incrementally higher.
  • Pound strength continues.
  • Aussie gives up some of yesterday’s knee-jerk movement caused by Chinese manufacturing data.

Think About This!

Tomorrow the ECB issues a monetary policy statement at 7:45AM ET with press conference. We have USA Employment Situation Report at 8:30AM ET. Big morning for day traders likely followed by quiet in the afternoon. Plan on taking off after morning rush hour if you trade Thursday. Friday we have a USA holiday.

To learn more from Martin, visit HitTheMarkTrading.com to join his mailing list and receive blog updates.