Trading news

GDP, NFP, OPEC & Lot More To Fuel Markets

Adding to generally observed thin liquidity around mid-month, Thanksgiving holidays at US provided additional reason to the trader's fraternity for cutting down last week's Forex volatility. However, USD Bulls didn't retreat and registered third-weekly up-move by the US Dollar Index (I.USDX) on better than forecast Durable Goods Orders and upbeat FOMC minutes. The same optimism kept punishing safe-havens, like JPY & Gold, but commodity currencies, namely AUD and NZD, managed to remain strong on expectations of higher demand during Trump administration. Further, the GBP printed gains due to welcome UK household spending and business investment details while EUR also strengthened against some of its counterparts on better PMI figures. Additionally, Crude kept making energy traders busy, that could also be reflected in CAD trades, as Iran, Iraq and Saudi Arabia continued flashing mixed signals to disturb this week's much awaited OPEC meeting.

After a sluggish week, investors have already started trading actively during early Monday as presence of crucial economics/events raised concerns for their respective trades. Looking at the present week's calendar, OPEC meeting, US Jobs details, UK, US & Chinese PMIs and the US GDP are likely generating headlines while EU CPI, AU Retail Sales and US Consumer Confidence may offer intermediate trading-moves. Let's briefly understand these events.

US GDP & Jobs Figure To Portray USD Moves

While Trump victory triggered US Dollar surge and some at the Federal Reserve have already signaled Fed-rate hike during December meeting, few doves are still not convinced for the United State's economic strength and hence keep inflating importance of upcoming economics. Further, the present run of USD up-move is well ahead of the actual Trump ruling and Fed rate-hike announcement which provides additional reason for countertrend traders to not being too disappointed.

US Jobs report, an important indicator to signal Fed's next move, has been performing quite satisfactory and provided much needed push to the US Federal Reserve policy makers in announcing first in a decade rate-hike during 2015. Market players would observe November jobs report, up for Friday, when Non-Farm Payrolls (NFP), Unemployment Rate and Average Earnings, are scheduled for release. During its previous release, NFP flashed a bit soft figure but a dip in Unemployment and increasing Earnings helped US Dollar.

Looking at forecast concerning this week's employment releases, Unemployment Rate is likely to remain unchanged at 4.9% and the Earnings are also expected to go soft by printing 0.2% growth versus 0.4% prior. Further, NFP might please greenback bulls with 165K against 161K noted in previous month.

In addition to the Jobs report, Second estimate of Q3 2016 US GDP, scheduled for Tuesday, becomes another crucial data for the market. In its initial forecast, under the Advance head, the GDP grew 2.9% against 1.1% prior. The growth figure is expected to register 3.0% mark and signal improvement in world's largest economy. With the recent advance in Durable Goods Orders and manufacturing figures, chances of the GDP to print another good numbers are higher.

Together with GDP and Jobs report, Tuesday's CB Consumer Confidence, Wednesday's ADP Non-Farm Employment Change, Chicago PMI and Pending Home Sales m/m, followed by Thursday's ISM Manufacturing PMI, are additional data-points to entertain greenback traders.

CB Consumer Confidence, the official gauge reflecting US consumers' optimism, is likely to reflect the present upbeat mood at US by flashing 101.3 against 98.6 prior while ADP Non-Farm Employment Change, an early signal for Friday's NFP, may also please USD bulls with 161K figure versus 147K previous mark. Further, Chicago PMI & ISM Manufacturing PMI are both expected register welcome numbers of 52.1 against 50.6 and 51.9 respective priors while Pending Home Sales growth is likely to soften with 0.3% mark compared to 1.5% earlier release.

With the scheduled data-points expected to reflect overall optimism at the US, chances of the December Fed rate-hike may get a boost on actual releases matching forecast, which in-turn could propel US Dollar further towards north. However, an unexpected decline in NFP and/or GDP could trigger the greenback sell-off which then will pave the way for December up-move on rate-hike concerns.

OPEC And The Fate Of Global Energy Investors

Ever since the global oil producers, including OPEC and some other, agreed for production cut during September, news relating to production-cut/freeze has been in limelight. However, the uncertainty is likely to be wiped out on the first-day of December when the global oil-producers, including OPEC, will announce result of their scheduled meeting on November 30.

The group is likely to announce 1 million barrels a day cut into OPEC output and has asked Russia to slash output by 300,000 barrels a day while targeting nearly 200,000 barrels a day in cuts from producers other than Russia. However, Iran, Iraq and Saudi Arabia have continued maintaining their dominance and reflected no sign of joining the cut, which in-turn could lead to no agreement. At the other hand, Russia, which was previously signaling a cut, has started showing less interest in production-freeze.

Hence, there are various barriers for the deal to take place during Wednesday's meet, which in-turn could drag the Crude prices down to 42.50 with USDCAD also bearing the burden and rising beyond 1.3600. However, an agreement over production-cut would be a historical and can propel the Crude towards surpassing $50 with USDCAD likely re-testing 1.3280-90 region.

UK PMIs & EU CPI Are For GBP & EUR Traders

British Pound recently witnessed an upstream on optimism that Donald Trump will welcome new UK but the GBP strength couldn't last long after BoE spoke for weaker growth figures. Though, last week's spending and investment details rejuvenated Pound Bulls and slew of headline PMIs can provide additional details for the UK currency traders to track.

Official figures of Manufacturing PMI and Construction PMI, scheduled for Thursday and Friday respectively, aren't offering any noticeable signals as Manufacturing PMI may improve a bit to 54.4 from 54.3 while Construction PMI is expected to weaken to 52.3 against 52.6 prior.

Given the mixed forecasts from PMI, coupled with absence of Services PMI, Pound traders may wait for a bit more prior to giving any noticeable moves to the GBPUSD. Though, chances of better prints are higher, which then could continue helping the pair to maintain short-term upward slanting trend-channel with 1.2380 being immediate support and 1.2600 acting as nearby resistance.

At the European front, Flash version of EU CPI, scheduled for release on Wednesday, becomes the only release to observe. The inflation figures is expected to test the highest since April 2014 with 0.6% mark against 0.5% prior and may help the ECB to speak in favor of QE tapering. Should the inflation reading matches forecast, the EURUSD may extend its recent pullback to 1.0850, which then will look for US cues. If those are also not up-to the mark, the major can rally to 1.1050 while disappointing EU figures and/or positive US readings can further fetch the pair to 1.0450.

Chinese PMI & Commodity Currencies' Updates

It seems that all the major global economies are in-line to flash meaningful data-points and China isn't ready to be left behind. Thursday's official Manufacturing and Non-Manufacturing PMIs from China are followed by the Caixin Manufacturing PMI on the same-day to direct commodity traders. All these details are expected to provide additional burden on China and commodity currencies as Manufacturing PMI may soften a bit to 51.0 from 51.2 prior while Caixin PMI could also flash 50.9 against 51.2 prior. Though, Non-Manufacturing PMI may soothe some pain with a higher number than 54.0 previously recorded figure.

Elsewhere, Canadian GDP and Australian Retail Sales, up for Wednesday and Friday respectively, are the left-ones from economic calendar to observe. Canadian GDP is expected to weaken to 0.1% from 0.2% prior while AU Retail Sales is also likely to tick-down from 0.6% earlier figure to 0.3% mark.

In case if Chinese PMIs disappoint commodity traders, pessimism for China, mainly due to Trump victory, gets strengthened and can help signaling further weakness of AUD and NZD.

The AUDUSD have to clear 200-day SMA level of 0.7525-30 before aiming 0.7600 mark with 0.7330 being nearby weekly support while NZDUSD is adjacent to 0.6960 support, breaking which it could drop to 0.6900 but a jump above 0.7230 can flash 0.7410 on the chart.

Cheers and Safe Trading,
Anil Panchal

Monday, 28 Nov, 2016 / 1:03

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