Uneventful trading ahead of US Non-Farm data

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Yesterday was a fairly quiet day for sterling across the board. The only piece of significant data from the UK yesterday was Markit Manufacturing PMI which was expected at 55.4. The figure beat consensus coming in at 57.3. Manufacturing PMI is seen as high importance as it’s a leading indicator of economic health, with a figure above 50 indicating industry expansion.

Following the Manufacturing data release sterling strengthened against the Euro to a high of 1.2186. Today we have medium impact data by way of Construction PMI at 9:30am. It is worth noting that although medium impact data, particularly Construction PMI, will not generally impact the markets in a positive or negative way, however, recently medium impact data has reflected quite heavily in the Pound’s position within the market.

Construction PMI shows business conditions in the UK construction sector. Although this isn’t a huge contributor to UK GDP compared to manufacturing it is definitely worth keeping an eye on.

With the Bank Holiday across Europe yesterday the Euro was exposed to external trading sources and data. Due to it being Labour Day yesterday a sizeable amount of liquidity wasn’t traded – resulting in very little movement on EUR/USD, the markets most traded currency pair.

EUR/USD subsequently traded within a 25pip range, despite the short move we did however see the Euro reach the strongest level in almost three weeks versus the dollar amid speculation investors were reducing bets on the European Central Bank unveiling an asset-purchase plan to boost price growth. Today we have the release of medium impact Manufacturing PMI from the Eurozone’s 4 major economies (Germany, France, Italy and Spain).

A figure better than expected will be seen as a positive for the Euro as it’s a leading indicator of economic health. We also have the release of Eurozone Unemployment rate at 10:00am. The Unemployment Rate is the number of unemployed workers divided by the total civilian labour force. It is a leading indicator for the European Economy. If the rate is up, it indicates a lack of expansion within the European labour market. The figure is forecast at 11.9%.

Although we had a host of US data out yesterday, it was uneventful across the board for the Dollar. We had ISM manufacturing data out at 2:00pm GMT which was seen as high impact as it’s a significant indicator of the overall economic condition. The figure posted was at 54.9, a rise from the previously forecast 54.3; however did little to rock the markets as it was too close to expectation to act as a catalyst ahead of the Non-Farm payrolls today.

The Non-Farm Payrolls are released from the US today at 1:30pm GMT. They present the number of people on the payrolls of all non-agricultural businesses. The monthly changes in payrolls can be excessively volatile. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish).

The figure forecast is 210k, previously at 192k. See how to trade the NFP with EURUSD.

We also have the US Unemployment rate out at 1:30pm which measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month. Consensus sits at 6.6% a 0.1% decrease from the previous month. A decrease of the figure is seen as positive (or bullish) for the USD, while an increase is seen as negative (or bearish).

Courtesy of FC Exchange

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