With all the glitters of EU CPI, BoJ, RBA and FOMC meeting general consensus, the market moved against US Dollar since the start of the week. The US Dollar Index (I.USDX) has been a victim of uncertainty concerning next week's Presidential Election after the news that FBI is investigating past-matters related to Hillary Clinton. Even the upbeat FOMC statement that "the case for an increase in the federal funds rate has continued to strengthen" couldn't help the greenback and investors are now eagerly waiting for tomorrow's NFP. The EUR printed gains on positive CPI & GDP releases while GBP rallied across the board with welcome PMI figures and PM's statement that government would do its best to secure a good deal for the agriculture sector during March's Article 50 negotiation with EU. Further, the NZD celebrated welcome job figures and the AUD remained firm on intact RBA while the CAD had to bear the burden of weaker Crude prices after unexpectedly high US stockpiles dragged energy prices to five-week low. On the top of everything, the JPY and Gold are getting stronger day-by-day as indecisive stage of US election forecast favored their safe-haven demand and festival buying at India provided additional strength to the yellow metal prices.
Moving forward, traders are being cautious on "Super-Thursday" when the Bank of England (BoE) is scheduled to fuel global market volatility by announcing its Quarterly Inflation Report (QIR) together with holding monthly monetary policy meeting. In additional to the BoE and US Job details, the US Factory Orders, AU Retail Sales and Canadian Ivey PMI are the left ones to be taken care of.
US Job Details Become Crucial To Analyze
Beneath the broader blackout phase concerning election uncertainty, US economic details have been quite mixed. At one hand, sustained increase in Income-Spending and ISM Manufacturing advances, coupled with hawkish FOMC, strengthened chances of December rate-hike while nearly three-year low of US ADP and soft Chicago PMI continue raising bars for the much awaited rate-decision. Hence, investors are all locking their eyes to screen in search of clues for Friday's crucial NFP, Unemployment Rate and Earning Details to forecast whether the Federal Reserve is capable enough to please USD Bulls with second rate-hike in a decade.
During its latest release, the NFP flashed 156K versus 151K earlier mark and the Average Earnings remained unchanged at 0.2% while Unemployment rate rose to 5.0% from 4.9% prior. Consensus point towards upbeat readings of US Job details as NFP and Earnings are likely to please greenback Bulls with 174K and 0.3% stats respectively while Unemployment Rate is also expected to go soft to 4.9%. In addition to these headline figures, the Labor Force Participation Rate also catches market attention as the same, even after gradually improving, still remains at the lower end of the historical chart. Forecasts suggest the second consecutive monthly advance in the figure towards 63.00% against 62.9% prior.
Although US Labor market figures are likely to grab market's eye, monthly readings of ISM Non-Manufacturing PMI and Factory Orders m/m are likely to provide intermediate moves to the USD traders on Thursday. Following the upbeat ISM Manufacturing, the Services related Index might disappoint greenback optimists with 56.2 mark against 2016 high of 57.1 marked in previous month while Factory Orders are likely to maintain their 0.2% growth figure.
Considering upbeat forecasts and a hawkish statement from FOMC, chances are higher that NFP might please greenback buyers by trimming some of its recent looses. However, a dip in Factory Orders or participation rate, coupled with on-going election related pessimism, can continue maintaining its pressure on the US Dollar up-moves.
GBP Traders Beware, Super-Thursday It Is!
Following upbeat releases from headline UK details, the Bank of England seem less in pressure to announce any further monetary policy actions during its Thursday's meeting; however, the simultaneous release of Quarterly Inflation Report (QIR) and the speech by BoE Governor becomes more important to analyze near-term GBP trend.
As the 18% plunge of the UK currency has already helped giving green economic signals and are helping the British leaders to believe that they might have a good stage discussing their Article 50 demands in March with EU. Though, the September and October meetings have been quite dovish and might force the central bank to convey the same message of past during its fresh analysis; however, the Governor is more likely to sound as an optimist and could provide additional strength to the Pound prices.
Hence, latest economics could well force the BoE Governor to utter positive remarks on the UK developments but past details might drag excessive gains of the GBP. Moreover, surprise dovish tone of the central-bank head, relating to future rate-cuts, can fade recent north-run of the British currency.
AU Retail Sales, Canadian Jobs and Ivey PMI Are At The Last Stand
Other than US NFP and BoE's QIR, AU Retail Sales and Canadian Ivey PMI are the only economics to gauge for Forex traders. The AUD which is already enjoying post-RBA moves, is less likely to witness any dramatic moves if the Retail Sales grow with 0.4% no-change forecast on Friday.
At the Canadian front, headline job details, including Employment Change and Unemployment Rate, followed by Ivey PMI, are all indicating downside of the Canadian Dollar (CAD) as the Employment Change is expected to dip with -10.0K figure against +67.2K prior while the Unemployment Rate bears the forecast of 7.0% intact number. Further, the Ivey PMI is also indicating CAD disappointment with a 56.2 mark against eight-month high previous figure of 58.4. With Crude prices being victim of higher stockpiles and nearness to OPEC meeting uncertainty, weaker economics might continue dragging the CAD towards south.
Cheers and Safe Trading,
Anil Panchal