A combination of the end of summer, a new month and a general drift back to work should see the forex markets pick up the pace as we begin the long run towards the end of the calendar year with this Friday’s non farm payroll likely to set the tone for the fourth quarter. A quick recap so far with the main highlights being building approvals and retail sales in Australia on Monday which once again confirmed their strong recovery with the former coming in at 2.3% against a forecast of -0.6% and retail sales confirming this positive picture at 0.7%, up from last month’s 0.4%. Tuesday’s key data came in Canada with gdp remaining flat at 0.2% and in stark contrast to the somewhat stellar economic performance in Australia which was further emphasised later in the day with a gdp figure of 1.2% against a previous of 0.9%.
Today, of course, saw the manufacturing PMI data in the UK come in worse than expected at 54.3 against a forecast of 57.1 while in the US ADP employment came in with a negative number at -10k whereas the market had been expecting a positive 20k, emphasising the parlous state of the labour market in the US. If this is reflected in Friday’s non farm payroll then this could further damage any dollar recovery and send both the usd index and US currency lower as a result. Later tonight Australia once again takes centre stage with the release of their trade balance figures which are expected to come in at 3.11bn and if exceeded could provide a further boost to the Aussie dollar.
An important day on Thursday with the ECB interest rate decision and statement with the market consensus clearly expecting eurozone interest rates to remain on hold at 1%. As always it will be the subsequent statement at the ECB press conference that will generate more interest for the forex markets as they look for clues as to the future direction for monetary and QE policies. As the press conference gets under way the US markets will be waiting for the weekly unemployment claims with a forecast to show a rise to 476k from 473k, but this release is likely to be over shadowed by testimony from Fed Chairman Ben Bernanke who is due to answer questions from the financial crisis enquiry commission in Washington. Later in the US morning forex trading session we have pending homes sales which are expected to show a small improvement, but still remain negative, moving from -2.6% the last time to -1.2% this time.
The forex trading week rounds off with the monthly release of the non farm payroll data with the forex market expecting a number close to -100k against a previous of -131k. Should the data come in vary significantly, particularly to the downside, then expect even higher volatility than usual. The final item of news is the ISM non manufacturing PMI data in the US which will be overshadowed by the nfp. This release is expected to come in at 53.6 against a previous of 54.3.
Strong data boosts Aussie dollar
Breaking down the ISM
