6 November, AtoZForex.com, Lagos – At the moment, expectations of rate increases from the Fed remain the major fundamental factor impacting the markets. Hence, every US data release is interpreted in line with how it is likely to influence the Fed’s decision.
Especially today, we have the non-farm payroll job report, which is bound to add market volatility. Furthermore, there are key data releases from the UK and Canada.
BOE rate decision
Following the Bank of England’s decision to leave rates at 0.5%, Governor Carney noted that the current level of rates is acting as a shock absorber. To reduce some of the negative impact from recent possible contagion from a China-driven turbulence in the global economy. The bank’s message can be regarded as reassuring to businesses and households that interest rates are to remain at their record low for a reasonable period, lowering its forecast for near-term inflation.
Traders were somewhat disappointed by the report, as the sterling plunged across board against its major counterparts. The pound plunges on postponed hike expectations, it fell about 200 pips against the dollar.
UK Manufacturing Production m/m (9:30 A.M GMT)
This index measures change in the total inflation-adjusted value of output produced by manufacturers. Having increased by 0.5% in August compared with July, the figure represented the highest level reached in the year so far. This strength was attributed to growth in the manufacture of transport equipment; the manufacture of basic metals & metal products; and the manufacture of food, beverages & tobacco. It will take another upbeat data to overturn the recent plunge in the pound at the moment, considering the currency is on a sell off, due to the effect of the BOE report yesterday.
Canada Employment Change (1:30 P.M GMT)
In the past few months, the country’s employment change has surpassed forecast consistently. Last month’s figure is forecast to come in at 9.5k, a potential fall from 12.2k recorded in the previous month. The unemployment rate is expected to remain at 7.1%. The Canadian dollar has weakened for the most part of the year, due to ailing energy prices. However, an upbeat data today may present an opportunity for temporary strength for the currency, with major focus on the USDCAD, considering both countries have job related reports today.
Non-farm Payroll (1:30 P.M GMT)
After two months of disappointing NFP figures, a rebound is expected in the October figures. More optimistic analysts also expect a possible upward revision of the previous weak release. With more than 50 percent of traders now expecting rate hikes in December, according to a Bloomberg, a rebound of the job data will indeed further boost the dollar which has been strong in recent days. The unemployment rate is also expected to remain at 5.1%.
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