A trifecta of misses in today's US economic releases may not be a game-changer in Thursday's Fed decision because the game is already "unchanged". The September Empire Fed survey posted another double digit decline to remain at 6-year lows, August retail sales rose 0.3% to miss expectations for the sixth consecutive month and industrial production fell 0.4% in August to post seven declines over the past eight months--the worst pattern since 2008-9.

Empire Fed, Retail Sales, Industrial Production all miss - Empire Philly Ism Sep 15

On the bright side, core retail sales (excluding autos, gas and building materials), rose along upward revisions to the prior two months. In the Fed's Empire survey, the employment component turned negative to 6.2 from 1.8, as did the average workweek plunging 10.3 from -1.8. US industrial production was battered by the usual strong US dollar story and weak exports. Manufacturing dropped 0.5%, mining fell 0.6% and utilities were up 0.6%.

Bearish Argument

The bearish side may argue against the robust retail sales by indicating the report was too early to take into consideration the slump in equities, materializing in the 2nd half of the month. The argument becomes especially potent following Friday's release of the preliminary report of the September University of Michigan Sentiment Survey, showing the biggest one-month plunge since late 2012. Thus, the release of US September retail sales, due in mid-October (2 weeks before the FOMC) could potentially disappoint.

Bullish Argument

A more optimistic interpretation of the figures could point to the fact that the gloomy surveys in the chart above focus on manufacturing, which has been pummelled by the disinflationary challenges of a strengthening US dollar and the eroding global supply change. Not only manufacturing accounts for shrinking part of the overall US economy, but also inflation is more positive in the services sector.

This leaves us with tomorrow's release of US August CPI for and Thursday's September Philly Fed survey as the remaining last figures prior to the Fed decision. Fed watchers are already hedging themselves in their prediction for the big event, indicating a hawkish statement/forecasts accompanying an unchanged announcement on rates, while others predict a dovish statement/forecasts to accompany a rate hike. While we lean towards expecting no change this week, markets have already made up their mind in pursuing further downside for the month.

For more frequent FX & Commodity calls & analysis, follow me on Twitter Twitter.com/alaidi

By Ashraf Laidi
AshrafLaidi.com

Ashraf Laidi CEO of Intermarket Strategy and is the author of "Currency Trading and Intermarket Analysis: How to Profit from the Shifting Currents in Global Markets" Wiley Trading.

This publication is intended to be used for information purposes only and does not constitute investment advice.

Ashraf Laidi Archive

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.