Forex Weekly Outlook Sep. 30 – Oct. 4 – Full buildup to the Non-Farm Payrolls

After a turbulent week that saw some USD strength, the fourth-quarter begins with a blast. A full buildup to the all-important Non-Farm Payrolls and many other events await traders. Here the highlights for the upcoming week.

Euro-zone PMIs are pointing to an outright recession in the old continent, and this weighed on the euro. The US-Sino trade talks did not go anywhere fast and soured the general sentiment.

1. Chinese PMIs: Monday, official PMI at 1:00, independent Caixin figure at 1:45. The world’s second-largest economy’s manufacturing sector is slowing down due to the trade war with the US, but also due to its shift towards services and consumption. The official forward-looking Purchasing Managers’ Index stood at 49.5 points in August – just below the threshold that separates expansion from contraction. The independent Caixin survey stood at 50.4 points – just above the threshold. If both data fall below 50, the mood may sour – boosting the dollar and the yen.
2. UK GDP (final): Monday, 8:30. According to the initial data, the British economy stagnated in the second quarter after rising due to Brexit stockpiling in the first quarter. The final figure will likely confirm the 0% growth rate.
3. Australian rate decision: Tuesday, 4:30. The Reserve Bank of Australia has left its interest rate unchanged at 1% in the past two meetings, after lowering it in both June and July. While the RBA has left its door open to further cuts down the road, it will likely hold its fire once again. Comments about the domestic and global economies will be of interest.
4. Euro-zone inflation: Tuesday, 9:00. Inflation was subdued in the euro area long before the recent slowdown – but that economic softness has further depressed price rises. The preliminary Consumer Price Index for September will likely remain around 1% that was recorded in August. Core CPI – which is garnering more and more attention – is set to hover around 0.9% recorded beforehand. Any deterioration may weigh on the euro.
5. Canadian GDP: Tuesday, 12:30. Canada publishes Gross Domestic Product figures on a monthly basis – allowing a close follow up of the economy. Growth has exceeded expectations in the past four months. The most recent figure for June showed an expansion of 0.2%. The upcoming publication provides a first look into the third quarter.
6. US ISM Manufacturing PMI: Wednesday, 14:00. While the manufacturing sector is relatively small in the US – it is of high importance. ISM’s forward-looking PMI badly disappointed in August with a drop to 49.1 points – reflecting a contraction in the sector. A rise back above 50 would alleviate concerns of a recession – but that is far from being guaranteed.
7. US ADP Non-Farm Payrolls: Wednesday, 12:15. Wednesday, 12:15. Automated Data Processing (ADP) is America’s largest provider of payrolls. Its early publication of private-sector job growth helps shape expectations for the official Non-Farm Payrolls report. The report surprised in August with an increase of 195K positions. A more moderate growth rate is likely now.
8. UK Services PMI: Thursday, 8:30. Markit’s series of three PMIs culminates with the publication for the services sector – Britain’s largest. Contrary to the manufacturing and construction sectors, services continued enjoying growth in August. The PMI stood at 50.6 points – in growth territory. A drop below the 50-point threshold cannot be ruled out now.
9. US ISM Non-Manufacturing PMI: Thursday, 14:00. Contrary to the manufacturing sector, services have been shining in the US as well. ISM’s gauge surprised with 56.4 points in August. A similar figure is on the cards now.
10. US Non-Farm Payrolls: Friday, 12:30. The “king of forex indicators” is set to rock markets and shape the next decision by the Federal Reserve. Job growth has slowed down in America, with a somewhat disappointing increase of 130K in August, following another unimpressive rise of 159K in July. An increase of over 200K is needed to convince markets that the labor market remains robust. On the other hand, wage growth accelerated with an increase of 0.4% in August, pushing the annual increase to 3.2% – a solid pace. A more moderate monthly increase is likely now.

*All times are GMT

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Further reading:

• EUR/USD forecast – for everything related to the euro.
• GBP/USD forecast – Pound/dollar analysis
• USD/JPY forecast – the outlook for dollar/yen
• AUD/USD forecast – projections for the Aussie dollar.
• USD/CAD forecast – Canadian dollar predictions

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