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Job Details, PMIs & Inflation To Offer An Interesting Week Ahead


Following the US Fed Chair's Jackson Hole speech lauded recent data-points, speculations concerning the Fed rate-hike rejuvenated greenback Bulls during last weekend. Yellen praised US figures concerning job and growth at an annual meeting of global financial leaders on Friday and also said that these upbeat details strengthen the case for an interest rate-lift. In addition to the broadly positive statement from Janet Yellen, the Fed Vice Chairman Stanley Fischer told CNBC that Fed Chair opened the door for September rate-hike, which provided additional strength to the US Dollar Index (I.USDX) to cut its previous two-week decline with a positive weekly closing. However, upbeat UK economics helped GBP to become the only major currency to stand tall against USD while the rest had to reverse their earlier gains. Among them, the EUR couldn't enjoy positive headline PMI readings while AUD, NZD, CHF and CAD had to bear the burden of weaker commodity prices and the JPY shed some of its safe-haven gains as concerns mounted for BoJ's additional monetary policy easing.

Moving forward, the present week becomes crucial for the USD traders as latest comments from Fed policymakers highlighted the importance of Friday's job numbers to help them announce much awaited rate-hike. Other than the US Job details, headline PMIs from US, UK and China, coupled with EU Flash CPI, US Consumer Confidence, Factory Orders and Pending Home Sales, are additional stats that could continue offering an interesting week ahead. Let's describe them.

NFP Becomes Even More Important

Even as the Jackson Hole speech gifted required relief to the USD traders, Fed policymakers were not straight in favor of a 2016 rate-hike as they kept repeating the words "Depending upon upcoming data-points". However, the Vice Chairman stressed on this week's job details when he said Yellen has opened the door for September rate-hike. Hence, August month labor market details, up for Friday, is a crucial event which can make or break the chances of the first Fed rate-lift in 2016 during September month.

While July month NFP printed a back-to-back +250K reading, coupled with stagnant 4.9% Unemployment rate and an increased 0.3% Earnings, this week's job details might disappoint some of the analysts who have already put their bets on September rate-hike after Jackson Hole event. Forecasts suggest the Non-farm Payrolls (NFP) print of 186K against 255K prior and the 4.8% Unemployment Rate versus 4.9% prior. Further, the Average Earnings are also expected to soften a bit to 0.2% from 0.3% marked in the previous month.

Other than the front-line Job details, CB Consumer Confidence, ADP Non-Farm Employment Change, Chicago PMI, Pending Home Sales, ISM Manufacturing PMI and the Factory Orders constitute the heavily packed US economic calendar for the present week. Consensus points towards a weaker start for the USD with 97.2 CB Consumer Confidence print on Tuesday against 97.3 prior. The same downturn, if matched forecast, might extend on Wednesday when, ADP Non-Farm Employment Change, Chicago PMI and Pending Home Sales are scheduled for release. The ADP figure is expected to show 173K mark versus 179K while the Chicago PMI & Pending Home Sales shows contrasting picture as the PMI could reveal weaker stat of 54.1 versus 55.8 previous but the Pending Home Sales might follow recent upbeat housing details with 0.7% growth figure than the earlier 0.2% expansion. Furthermore, Thursday's ISM Manufacturing PMI and Friday's Factory Orders are also showing mixed signals as ISM Manufacturing PMI is expected to show 52.0 mark against 52.6 prior while the Factory Orders figure might please greenback traders with +2.1% growth unlike its previous -1.5% contraction.

Considering the present expectations, the US NFP might not strengthen the case for September rate-hike, if matching a below 200K print; however, a surprise third +200K figure, coupled with weaker Unemployment and a strong Factory Orders' figure, can provide a smile on the face of USD traders.

EU CPI & UK PMIs To Plot EUR & GBP Moves

In his latest appearance, the ECB President said that further monetary easing from the European Central Bank isn't a guarantee due to faded downsides of Brexit and helped the EUR to gain a bit; though, Flash reading of EU CPI, scheduled for Wednesday, is an important reading which can actually show the effectiveness of ECB's mammoth measures. The headline Inflation figure is expected to show the highest point since February, to +0.3% versus +0.2% prior, and might help the EUR to extend its north-run.

At UK, the Manufacturing and Construction PMI, scheduled for release on Thursday and Friday respectively, could help portray near-term GBP trend. Both these front-line PMIs are likely to follow the recent pattern of upbeat UK economics with Manufacturing PMI expected to show 49.1 against 48.2 previous and the Construction PMI bearish the forecast of 46.6 versus 45.9 prior.

Hence, while seven month high print of EU CPI might strengthen the ECB President's hawkish argument and can fuel the EUR, UK PMI readings, even after being better than previous, are still in the contraction region and could only provide intermediate gains to GBP buyers.

Chinese PMIs & AU Retail Sales Are At The Third Level To Observe

As US details acquire major attention of market players, followed by EU-UK numbers, top-tier Chinese PMIs and Australian Retail-Sales are also standing in a queue to grab the focus on Thursday. While the official Manufacturing PMI from China is expected to show an unchanged figure of 49.9 and the Non-Manufacturing PMI can also print a near 53.9 mark, Caixin Manufacturing PMI might flash 50.1 mark against 50.6 prior. Further, the AU Retail Sales growth can rise to three month highs of 0.3% against 0.1% registered in July. Looking at the AUD up-trend, positive economics from China, coupled with higher Retail Sales growth, can trigger fresh round of commodity currency north-run, including AUD, NZD and CAD.

Cheers and Safe Trading,

Anil Panchal

Tuesday, 30 Aug, 2016 / 5:55

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