Forex Daily Outlook – September 3rd 2009

An interest rate decision in Europe and American Unemployment Claims are the highlights of this very busy day. Will the currencies break out of the ranges?

I’m focusing on the Australian dollar, which is stuck in a perfect range. But also the world’s most popular pair, EUR/USD is in a range.  Casey Stubbs elaborates on the EUR/USD range.

Australian Trade Balance starts the day, with a disappointing  increase in the deficit. Despite having a strong and export based economy, Australia slipped into a deficit, standing at 440 million last month. The deficit grew wider than expected to 1.56 billion – double the expectations.

For more on the AUD/USD, read the Aussie Outlook.

In Britain, there is no rate decision today, but there’s an important release: Services PMI is expected to take one step further and advance from 53.2 to 53.9. After the Manufacturing PMI disappointed, there could be a bad surprise also here.

For more on the British Pound, read the  GBP/USD Outlook.

In Europe, Final Services PMI is expected to confirm the initial read of 49.5. This will be possibly shrugged off. An hour later, European Retail Sales are published. After falling last month by 0.2%, they’re expected to rise in the same scale this time.

The big event in Europe is the rate decision at 11:45 GMT: The ECB is expected to leave the interest rate at 1%. The ongoing deflation in Europe doesn’t allow for any chance of a rate hike soon. So, the focus will move the ECB Press Conference 45 minutes later. Will Trichet elaborate on the very limited Quantitative Easing scheme?  More on the Euro: EUR/USD Outlook.

During the time of the press conference, at 12:30 GMT,  American Unemployment Claims are published. They’re expected to squeeze from 570K to 563K jobless claims, giving us a last hint about the Non-Farm Payrolls tomorrow. These are very volatile moments for EUR/USD. Apart from shaking, will it escape the range?

An hour and a half later,  ISM Non-Manufacturing PMI will be released. After the  ISM Manufacturing PMI recorded an excellent rise on Tuesday, will this figure “compensate” for yesterday’s disappointing numbers?

And just before midnight, Japanese  Capital Spending is released in Japan, with an expected fall of 22.9% between the second quarter and the same quarter last year.

Happy forex trading!