It’s been another fairly slow start to the day in Europe and this is unlikely to change as we head into the US session.
A lack of economic data has left traders without any form of catalyst for the next big move in the markets.
We won’t have to wait too long for this though, with the next few days bringing an abundance of tier one economic data and earnings reports, as well as the latest policy decision from the Federal Reserve.
This is probably contributing to the lack of volatility in the markets again this week.
Traders can quite often stay on the side-lines during periods like this when so much can change in such a short period of time.
Fed Hint at Rate Hike Would Stir Things Up
All it would take is a hint at an earlier rate hike in the FOMC statement tomorrow and all of a sudden we could see a significant amount of selling in both equities and bonds, not to mention gold, while we’d probably finally see that dollar strength that so many predicted at the end of last year.
While this may not be much of a bother to intra-day traders, who would aim to be in and out of positions before then, many others may be deterred by this and instead opt to wait until after these announcements to make their move.
This is why we tend to see a little less volume and volatility during such periods and this has probably been exacerbated this week by the fact that we have the FOMC decision, preliminary US GDP reading and the US jobs report all in the same week, which is very rare.
Let’s not also forget that we’re now right in the middle of the summer holidays so a lot of people will now be topping up their tans rather than looking at the charts.
There is Some Data to be Had
While the economic calendar is looking very bare, there are still a couple of pieces of data being released, but based on yesterday’s market reaction to similar figures, I have doubts about the kind of impact these will have.
The one that stands out for me is the consumer confidence figure for July, which is seen rising from 85.2 to 85.3.
The consumer is so important to the US economy right now that I would normally pay far more attention to this but yesterday’s muted reaction to the services PMI suggests to me that this is unlikely to get much of a response either.
One thing about this though is it does tend to be wide of the mark from expectations which could wake up the markets a little.
Another focus for investors today could be earnings season, with another 48 companies from the S&P 500 due to report including Pfizer, Merck & Co and American Express.
We’ll also get an update on the second quarter from Twitter after the closing bell so there’s plenty to keep an eye on in this area today.
Ahead of the opening bell, the S&P is expected to open 2 points lower, the Dow 10 points lower and the NASDAQ 2 points lower.
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