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Traders should be cautious until seeing next week’s China growth data and U.S.-Q4 earnings notes Bob Savage.

As we learned from FOMC Powell yesterday, the FOMC can be patient on one hand and nervous on the other with inflation data central to their pause in tightening along with financial conditions.

The rally in equities this week balances against the U.S. Consumer Price Index (CPI) report this morning. The role of oil bouncing with equities and the role of better U.S.-China trade talks supports renewed global growth views and adds to the one-handed risks for today. Against this we have the U.S. government shutdown, the weakness in retail sales and autos in China and Europe and the ongoing uncertainty from emerging markets.

One has to respect the calendar in the week ahead, and remember it won’t be until Friday that we get the full picture – with China growth data and U.S.-Q4 earnings— for why a one-handed market seems particularly scary. All that puts the stories from overnight into perspective with weaker Japan household spending, lower EcoWatchers survey, smaller current account surplus, weaker Italian industrial production, weaker UK industrial production all pointing to trouble in Q4 that sets the momentum for Q1 and beyond. The risk barometer to watch isn’t the (CNY) – its expensive here – nor is it the euro () at 1.15 as the ECB looks as confused as the FOMC. Rather, the safe-haven story to respect should it start to move today or next week is the Japanese yen () with 107.50 the pivot to watch for a return to flash crash 105 barriers.

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