Fundamental Summary

1. JOLTS Job Openings August Release 12 October 2016
– Job openings decreased to 5.4 million on the last business day of August
– Hires and separations little changed at 5.2 million and 5.0 million, respectively.
– Within separations, the quits rate was 2.1 percent and the layoffs and discharges rate was 1.1 percent.
– Over the 12 months ending in August, hires totaled 62.7 million and separations totaled 60.1 million, yielding a net employment gain of 2.6 million.
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2. FOMC Meeting Minutes 12 October 2016
– Labor market has picked up since first half of the year. Job gains have been solid, on average
– Growth seen in household spending
– Business fixed investment remains soft
– Inlfation still running below 2% target partly due to declines in energy prices and prices of non-energy imports
– Financial conditions remain acommodative
– Rate remained unchanged with Janet L. Yellen, William C. Dudley, Lael Brainard, James Bullard, Stanley Fischer, Jerome H. Powell, and Daniel K. Tarullo voting for and Esther L. George, Loretta J. Mester, and Eric Rosengren voting against
– Those voting for unchanged felt the case for tightening has strengthened though would like to see further data indicating continued progress toward its objectives
– Those voting against felt significant progress had been made and that further delays may result in faster more aggressive tightening later on while risking damage to the credibility of the FOMC
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– Fed Watch Tool shows 91.7% of no rate hike in November and 69.5% chance of a rate hike in December

3. Initial Jobless Claims 13 October 2016
– Weekly report unchanged from previous week’s revised level
– Previous week’s level revised with 4 week moving average being at lowest level since November 3 1973
– This week marks 84 consecutive weeks of initial claims below 300,000, the longest streak since 1970
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4. PPI 14 October 2016
– The Producer Price Index for final demand rose 0.3 percent in September. Final demand prices were unchanged in August and declined 0.4 percent in July. In September, the final demand goods index increased 0.7 percent and prices for final demand
services inched up 0.1 percent.
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5. Manufacturing and trade inventories and sales August 2016
– Combined value of distributive trade sales and manufacturers’ shipments for August up 0.2 from July 2016, but was virtually unchanged from August 2015
– Manufacturers’ and trade inventories up 0.2 percent from July 2016 and up 0.7 percent from August 2015
– Inventories/Sales Ratio. The total business inventories/sales ratio at the end of August 1.39. The August 2015 ratio was 1.38.
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6. Yellen Keynote Address 14 October 2016
Federal Reserve Bank of Boston Recording

Upcoming Data Releases 17 Oct – 21 Oct 2016
Monday: NY Empire State Manufacturing Index (Oct), Industrial Production (MoM) (Sep)
Tuesday: Core CPI (MoM) (Sep), Core CPI (YoY) (Sep), CPI (MoM) (Sep)
Wednesday: Building Permits (MoM) (Sep), Building Permits (Sep), Housing Starts (Sep), Housing Starts (MoM) (Sep), Crude Oil Inventories, Cushing Crude Oil Inventories, Beige Book
Thursday: Initial Jobless Claims, Philadelphia Fed Manufacturing Index (Oct), Philly Fed Employment (Oct), Existing Home Sales (MoM) (Sep), Existing Home Sales (Sep)
Friday: U.S. Baker Hughes Oil Rig Count

Upcoming FOMC Speakers 17 Oct – 21 Oct 2016
Monday: FOMC Member Stanley Fischer (Neutral, permanent voter)
Wednesday: FOMC Member Williams (Neutral, 2018 voter), FOMC Member Harker (Dove, 2017 voter), FOMC Member Kaplan (Dove, 2017 voter)
Thursday: FOMC Member Dudley (Dove, permanent voter)
Friday: FOMC Member Tarullo (Dove, permanent voter), FOMC Member Williams (Neutral, 2018 voter)

Technical Overview 10 Oct – 14 Oct 2016

USDollar Daily

At the start of the month price moved up from the central monthly pivot point with a target of MR2. Price broke that target on the 11 October and has encountered resistance at MR3. Support is identified at MR2 and MR1. Note that MR1 marks the level of the range breakout on the 5 October. At some point price is going to come back to this level and test it. This level also marks the 61.8% fib of the swing low on the 22 September and the swing high on the 13 October.

USDollar H4

Price came off the central weekly pivot at the start of the week though failed to reach it's target of WR2 due to resistance at MR3. The current price level at the time of writing this report indicates the formation of a head and shoulder pattern with the right shoulder forming at WR1. Note that price came off the 21 EMA though failed to make a higher high. Support is indicated in the green zones. Price would need to break last week's WPP to make a lower low. MR1 is located at last week's WM2. While current data indicates a rate hike in December is highly likely, data does not support a hike in November. Should we see some profit taking in the near term a bull would continue buying dips unless fundamental data indicates the possibility of a rate hike in December drops below 50%.

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