Important market movers await Forex traders this week with American, Canadian, British, European and Australian Rate decisions, US Non-Farm Employment Change and further employment data from the US and Canada. Here’s an outlook on the most influential events that will shape forex trading this week.
Last week the U.S. Dollar regained strength after several weeks of declining against the other major currencies. The big market movers The FOMC Statement and Non-Farm Employment Change will certainly impact the USD. Will the Greenback continue to strengthen or rebound against the other currencies?
- US ISM Manufacturing PMI: Monday, 15:00. The relatively positive reading of 54.4% in September does not necessarily reflect on the overall picture. Growth of new orders is expected to weaken. A small drop to 54.3% is predicted this time.
- Australian Rate decision: Tuesday, 04:30. The Reserve Bank of Australia (RBA) decided to leave its official interest rate on hold at 4.5% on October 5, contrary to market expectations of a 25 basis points increase. The CPI result on November 2 is expected to be a key factor in the RBA’s next rate decision. Until then, the same rate is expected to continue.
- American ADP Non-Farm Employment Change: Wednesday, 13:15. The ADP non-farm employment report came in much worse than expected, with the private sector cutting 39k jobs contrary to analyst forecasts of 23k more jobs. The decline in private employment in September indicates a pause in the economic recovery already seen in other data. A positive improvement of 21K is predicted now.
- US ISM Non-Manufacturing PMI: Wednesday, 15:00. Activity in the U.S. non-manufacturing sector grew more than forecast in September rising to 53.2 during the month, up from 51.5 in August. Respondents’ comments continue to be mixed about business conditions, with a slight tilt towards optimism. Another rise of 53.5 is expected now.
- US Rate Decision: Wednesday, 20:15. In the previous FOMC Statement the Federal Reserve decided to leave rates unchanged to support the economic recovery and maintain its existing policy of reinvesting principal payments from its securities holdings. The same rate of 0.25% is expected to remain this month.
- Britain Rate Decision: Thursday, 13:00. The Bank of England’s Monetary Policy Committee was split three ways during its October meeting. Seven of its members voted for no change to interest rates and no additional stimulus spending, while Andrew Sentance voted again to raise rates from 0.5% to 0.75% and Adam Posen, voted to see quantitative easing called for a further £50B to be put into the QE. It is unlikely that the BOE will declare a rate hike leaving the rate at 0.50%.
- American Unemployment Claims: Thursday, 13:30. An encouraging drop in this major weekly indicator gave a positive shift in the market last week with a better than expected reading of 434K from 455K in the week before. A drop below 430K will signal a real positive transition in the Job market though claims have wavered around 450,000 for most of this year with several drops below this figure but they have always rebounded in subsequent weeks. A small rise to 437K is expected to continue the optimistic trend strengthening the USD.
- Euro-Zone Rate Decision: Thursday, 13:45. ECB decided to keep rates unchanged at 1.00% and in likely to do so again to prevent endangering the EUR/USD and upsetting economy.
- Australian RBA Monetary Policy Statement: Friday, 01:30. The previous quarterly the RBA said that the Australian economy continues to exhibit considerable resilience in the face of a very difficult international environment. Consistent with this, they upgraded their forecasts for Australian GDP growth to ½ a per cent in 2009″‘10 and 2 ½ per cent in 2010″‘11. However the pace of recovery is still expected to be modest.
- Canadian Unemployment Rate: Friday, 12:00. Unemployment rate edged down to 8.0% in September from 8.1% in the previous month as fewer people joined the job market but Canada’s Employment Report Unexpectedly Dropped 6.6K after climbing 35.8K the month prior. A similar rate of 8.0% is expected in the Unemployment data and a rise of 10.1K is predicted in Employment change.
- American Non-Farm Payrolls: Friday, 13:30. US non-farm payrolls fell by 95,000 jobs in September while the unemployment rate stayed at 9.6 per cent mainly due to government’s cutbacks in response to declining tax revenue, badly affecting the USD. Further Governmental job cuts are going to be done in the next few months having a negative effect on the employment situation despite the encouraging growth of the Private-sector. An encouraging rise of 61K is expected now.
- US Pending Home Sales: Friday, 15:00. U.S. pending home sales rose a better-than-expected 4.3% in August due to the extended closing deadline for the home-buyer tax credit to Sept. 30, 2010. It was the second straight month of gains in the index. July contracts were revised down to show a 4.5 percent increase instead of the previously reported 5.2 percent rise. A smaller rise of 3.3% is expected this time.
- Ben Bernanke Speaks: Friday at 19:00. Federal Reserve Chairman Ben Bernanke will speak at the University, in Jacksonville. With overnight interest rates already close to zero, many economists expect the Fed to launch a fresh round of bond purchases, perhaps on the order of $500 billion, to push borrowing costs lower at its next policy meeting on November 2-3. Ben Bernanke will certainly refer to this policy meeting in this speech.
* All times are GMT.
That’s it for the major events this week. Stay tuned for coverage on specific currencies.
- For EUR/USD, check out the Euro/Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Australian dollar (Aussie), check out the AUD forecast.
- For the New Zealand dollar (kiwi), read the NZD forecast.
- For USD/CAD (loonie), check out the Canadian dollar forecast.
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