The week ahead: NFP data, Rate decisions and more

2 November,, Lagos – As we step into the semi-final month of the year, traders are left with many important fundamentals to look forward to before the year closes. We have rate decisions from the ECB and the Fed and China’s economic appraisal reports, to mention a few of the fundamentals which will keep traders active into the close of 2015.

The week has already started out with data from China showing an eighth-straight month of contraction in the caixin manufacturing PMI, sending Asian markets lower. It will be a big week across many major currencies, considering the number of market moving events on the calendar.

RBA rate decision

Building approvals m/m from Australia which was released this morning showed an impressive 2.2% change in the number of new building approvals issued, which surpassed forecast of 1.8%. However, the highlight of the week for this currency will be the rate decision. Having already cut rates twice this year, the inherent slack in the economy leaves room for possible further cuts. Although, majority of surveyed economists still opine that the central bank will maintain its 2.00 % cash rate into 2016. Other interesting data from the region this week include: retail Sales m/m, trade balance, as well as the RBA Monetary Policy Statement on Friday.

UK Monetary Policy Summary

The UK monetary policy officials have been quite clear about their intention to raise rates soon. However, this decision is not expected to come until next year as some key mandates still remain short of target levels. The Bank of England clarified that price pressures in the UK labor market are not enough to boost inflation towards the 2% target and that inflation will remain is likely to remain below 1% until 2016. In this week’s meeting, no changes to the rate is expected, but the monetary policy summary on the appraisal of the economy will be key. Today, we have the manufacturing PMI, which is forecast to come at 51.3, potentially showing continuing expansion in manufacturing. Latter in the week, we have the construction PMI, services PMI, and manufacturing production m/m. All bound to create volatility for the pound.

Non-Farm payroll

The surprise consecutive falls of the NFP data in the past two months has contributed its fair share to ensuring a shift in market sentiment, as most traders now expect rate hikes to come next year. Many experts, as well as some Fed officials have described the fall in hiring as a normal course in the economic cycle and that the job conditions remain robust. A 179k increase in jobs is expected, which will mark a rebound from the two months dip. An upbeat data will definitely boost the dollar, as expectations of a December timing for rate hikes has returned to the table. The unemployment rate will also be closely watched as well. Other high impact data for the dollar this week includes: ISM manufacturing PMI, trade balance figures, ADP non-farm employment change.

Canada trade balance

Canada’s exports fell 3.6% in August while imports edged up 0.2%. Export prices dipped 3.0% and volumes 0.6%. For imports, prices were up 0.3% while volumes edged down 0.1%, putting the trade deficit at 2.5B. The fall in global energy prices continues to bite on the country’s economic conditions as the unemployment rate has widened from 6.6% at the start of the year to 7.1% last moth. The employment change and unemployment rate data will be released on Friday, alongside the US job data report.

In conclusion of the weekly fundamental outlook, a volatile week is expected in the markets, with the USD and GBP topping the list of strong movers.

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