Following noticeable actions from Bank of Japan (BoJ) and OPEC members in September month, together with Fed's no rate-hike disappointment and UK's downbeat economics, global Forex market witnessed volatile sessions that dragged US Dollar Index (I.USDX) down on a monthly basis even if the US GDP pleased greenback traders during last week. The same helped JPY to strengthen for the month and fuelled Crude prices for consecutive second-month while the GBP registered fifth monthly decline that stretched to the present week with UK PM Theresa May's announcement to start formal proceedings of UK-EU partition by March. Further, commodity currencies, like AUD, NZD and CAD, managed to print positive figures on upbeat Chinese stats and improvement in commodity prices backed by Crude production-freeze accord.
Looking forward, the present week, being the first of October, started showing its impact with liquid trading sessions during early-day as downbeat results of quarterly Japanese Tankan Manufacturing & Non-Manufacturing Survey dragged JPY while eleven month high print of UK Manufacturing PMI triggered short-lived GBP up-move. However, major market attention is likely to be stick on US Jobs reports, headline UK PMIs and RBA's monetary policy meeting outcome scheduled during the week while Trade Balance details from AU, Canada and US, coupled with US Factory Orders and ISM Manufacturing PMI being some second-tier data-points to continue making markets alive. Let's analyze them in detail.
With Few Releases Left Before December, US NFP Gains More Importance
Even if the US Federal Reserve disappointed global market players with no rate-hike in September and also cut-down the longer-run rate-lift forecasts, the central banker kept emphasizing on the chances of a rate-change in 2016 to upwards considering moderate economic improvement which in-turn increases the importance of headline data-points. The US jobs report, being one of the two crucial details that Fed is more interested in, has only three releases left for publishing before the FOMC meet in December and hence with each reading approaching the market, change in chances of a rate-hike can fuel market momentum.
During its September announcement, the US Bureau of Labor Statistics disappointed greenback traders when the headline NFP dipped to 151K compared to 200+ figures in previous two results while the Unemployment remained static at 4.9% and Average Earnings printing 0.1% rise against 0.3 % prior. Looking at the Friday's scheduled release, the Non-Farm Payrolls (NFP) is expected to print 171K mark and the Earnings are also likely to flash 0.2% growth-mark while Unemployment-rate isn't predicted to change from 4.9%.
In addition to the Jobs report, Monday's ISM Manufacturing and Wednesday's ADP Non-Farm Employment Change, Trade Balance and Factory Orders, are some second-tier economics that could help determine near-term USD moves. While ISM Manufacturing PMI is likely to reverse its previous month contraction-indicating print of 49.4 with 50.4, the Factory Orders might not please greenback traders with -0.4% mark against +1.9% prior. Further, the Trade Balance is also likely to depict larger deficit of -41.1B versus -39.5B previous and the ADP figure, an early indication for Friday's NFP, could also raise worrisome signs with 166K number compared to 177K flashed in previous month.
As the NFP is likely to remain around its 2016 average of 180 mark, upbeat prints of Manufacturing and Factory Orders might extend recent upside of the US Dollar while a disappointing start of the week could continue pushing greenback traders to the edge and might drag the USD to south if the week closes with a below 150K print of NFP.
UK PMIs To Portray Near-Term GBP Trend
With eleven-month high UK Manufacturing PMI failing to counter the pessimism at GBP front, this week's headline PMIs, Trade Balance & Manufacturing Production become important for the Pound traders. Another reason for all the upcoming data-points gaining more importance is that the nation is coming closer to March 2017 deadline of its formal Article 50 proceeding and downbeat economics might force British PM to accept heavy conditions of EU to gain single-market status, which in-turn becomes negative for the GBP.
After upbeat Manufacturing PMI on Monday, Tuesday's Construction PMI is likely to print contraction-indicating figure of 49.1 against 49.2 prior while Wednesday's Services PMI, crucial for the British economy, is also expected to flash weaker figure of 52.1 mark versus 52.9 previous. Further, monthly releases of Goods Trade Balance & Manufacturing Production, scheduled for Friday, could please Pound Bulls with -11.1B and 0.4% mark compared to their respective priors of -11.8B and -0.9%.
Looking at near-past details of UK economics, coupled with BoE's firm communication to do whatever it takes to safeguard British economy, soft prints of the headline PMIs could clear the road for the central banker to announce another round of monetary easing and drag the national currency towards fresh lows of the year.
AUD Traders Shouldn't Miss RBA Details
Positive stats from China, world's largest commodity consumer, coupled with recent optimism at commodity market, mainly due to Algerian agreement, increases the importance of Tuesday's Reserve Bank of Australia (RBA) monetary policy meeting. The central banker is less likely to alter its monetary policy after it cut the benchmark interest-rate in May and August; however, it is more expected to pursue hawkish tone while writing policy-statement due to latest upbeat data-points. In addition to the RBA meeting, Wednesday's Retail Sales and Thursday's Trade Balance figures might also provide intermediate moves to the AUD. The Retail Sales are likely flashing 0.2% growth against 0.0% prior and the Trade deficit is also forecasted to shrink with -2.32B versus -2.41B previous. Hence, an upbeat statement of the RBA, together with better growth figures of Retail Sales, might help AUDUSD to clear important trend-line resistance.
At The End, Economics From Canada And Germany Conclude The List
Alike US, the Canada is also scheduled for releasing its Job market figures, Ivey PMI and Trade Balance details during the current week while the German Factory Orders becomes the only release scheduled from Europe. Forecasts suggest Canadian Trade Balance to print a wider deficit of -2.6B against -2.49B prior and the Employment Change softening down to 10K against 26.2K previous while the Unemployment-Rate is likely remaining stagnant at 7.0% and the Ivey PMI also signaling a weak mark against 52.3 earlier figure. With weaker economic data-points and Crude rally flashing mixed signals, chances of the CAD to pare some of its recent gains are more likely as the energy prices are trading at resistance levels and the Algerian accord was just an informal signal before the OPEC members meet in November. At European front the German Factory Orders, up for Thursday release, are expected to please EUR traders with four-month high figure of +0.3% against +0.2% prior but strong US details and absence of major data-points could curtail the strength of such move.
Cheers and Safe Trading,
Anil Panchal