Weekly fundamental outlook: Trade opportunities into NFP


The following is weekly fundamental outlook covering the most important G10 data which includes NFP, US & UK Manufacturing PMI along with Services PMI, and many more. See the week’s data expectations and trade opportunities going into NFP.

02 October, AtoZForexGoing into the month of October, we start with a fundamentally busy week. We will have, Manufacturing PMI, RBA Rate Statement, Services PMI, and most importantly US Non-Farm payrolls (NFP) data.

Weekly fundamental outlook: Manufacturing PMI – Monday

On Monday we will have Manufacturing PMI releases from the US and UK. It’s a leading, direct indicator of economic health. The United Kingdom remains sensitive to survey data post Brexit, but so far the expectations for the country’s economy to stall has been proved wrong.

Given that the US ISM Manufacturing PMI fluctuates around a neutral 50 level with September US consensus of 50.4 and UK’s 52.1, we can expect several opportunities namely for GBPUSD. A continued divergence of PMI data (UK economic expansion, US economic contraction) could result in a total price correction of 200+ pips.

In addition, an indication of US manufacturing contraction would result in lower odds of December Fed rate hike.

Weekly fundamental outlook: RBA Rate Statement – Tuesday

On Tuesday, Reserve Bank of Australia will communicate with investors their monetary policy intentions. The consensus is for RBA cash rate to remain unchanged at 1.50% and thus the focus will shift to October RBA Rate Statement.

From technical perspective, the underlying trend for AUDUSD remains to the upside, but the pair continues to trade bound by a narrowing triangle. Stay tuned to AtoZ and we will analyse the RBA statement in detail on Tuesday.

Following RBA’s performance, the spotlights will turn to GBP for Construction PMI. Again relating back to the subdued UK outlook expectation post Brexit.

Weekly fundamental outlook: Services PMI – Wednesday

Just like on Monday, Wednesday can provide us another trade opportunity with US and UK Services PMI due on the same day. The logic both from data divergence and the Fed perspective remains the same.

Although, with a much higher US Services PMI consensus of 53.1 against the previous reading of 51.4, it can easily go wrong for the USD. Remember to trade what you see, not what you would like to see.

Weekly fundamental outlook – Thursday

No major data for G10 is scheduled on Thursday and the market will likely be digesting and trading according to the released data on previous days.

Weekly fundamental outlook: NFP – Friday

We will finish the week with the most important data of US Non-Farm employment. Market participants will again try to judge December Fed rate hike probability based on employment numbers. Average Hourly Earnings m/m should be in focus as employment rate has long been strong. See how to prepare for NFP data.

Going into the release, we can expect the market to trade calmly. But after the immediate NFP aftermath, further trading should be avoided as four Fed member speeches will follow.

Also see: CIP deviation implications for financial stability & FX market

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