Forex Weekly Outlook October 3-7

The third quarter ended with mixed moves in currencies. A full buildup to the US Non-Farm Payrolls, a rate decision in Australia and other figures fill the first week of the last quarter. These are the main events on forex calendar. Join us as we explore the market movers of this week.

While the final US GDP figure beat expectations, growth remained weak at 1.4%. Q3 seems better, but signals were mixed: Consumer confidence reached the highest level since 2007, but durable goods orders were unconvincing. Yellen’s testimony in Washington did not rock the boat. Elsewhere, worries about Deutsche Bank weighed on sentiment, but a tentative OPEC agreement boosted oil prices and improved the mood. The US is in the limelight now. Let’s start:

1. US ISM Manufacturing PMI: Monday, 14:00. The US manufacturing activity contracted in August to 49.4 from 52.6 in July. Only six of 18 industries reported economic growth, while Eleven industries reported contraction. The New orders index plunged to 49.1% from 56.9 in the prior month. The Production Index declined to 49.6% in August, down from 55.4% in July and the Employment Index registered 48.3% last month, down from 49.4% in July. The weakness may be attributed to the upcoming elections. Manufacturing PMI  is expected to reach 52.1 in September.

2. Australian rate decision: Tuesday, 3:30. The Reserve Bank of Australia has kept the official cash rate on hold at 1.5%. After two rate cuts this year, the hold decision was widely anticipated. The central bank sees further rate cuts in 2017 but said it is too soon to determine the effects of the last rate cut on the market. Policy officials also noted the RBA’s adjustment of the interest rate is mainly a tool for restraining high inflation and are less sure of its other merits. No change in rates is expected this time. This is the first rate decision made by the new governor Philip Lowe.

3. US ADP Non-Farm Employment Change: Wednesday, 12:15. ADP private sector payroll report showed job creation of 177,000 in August compared to 179,000 in the previous month, broadly in line with expectations. This report is regarded as a kind of warm-up to government employment nonfarm figures expected on Friday. The ADP report is expected to show a 166,000 jobs gain in September.

4. US ISM Non-Manufacturing PMI: Wednesday, 14:00. The Institute for Supply Management non-manufacturing index plunged in August to 51.4 from 55.5 in July. This was the lowest reading since February 2010 raising concerns over the overall economic outlook, cancelling expectations for a September rate hike. Business activity index fell to 51.8 from 59.3 in the prior month also still in expansion. New orders declined sharply to 51.4 from 60.3 in the previous month.11of the industries reported growth for the month, while seven reported a contraction. non-manufacturing activity is expected to reach 53.1 in September.

5. US Crude Oil Inventories: Wednesday, 14:30. U.S. crude oil stocks continued their decline for the fourth straight week. Crude inventories fell 1.9 million barrels contrary to analysts’ expectations for an increase of 2.4 million bpd. The main reason for this drop is a significant decline in stocks on the East Coast.

6. US Unemployment Claims: Thursday, 12:30. The number of Americans filing first-time claims for unemployment benefits increased by 3,000 in the week ended Sept. 24 but remained at a low level indicating healthy labor market. The reading was better than the 260,00 forecast. The four-week moving average declined by 2,250 to 256,000. Initial jobless claims have now remained below 300,000 for 82 consecutive weeks indicating layoffs are as low as they have been in a long, long time. The number of new claims is expected to register 255,000 jobs gain this week.

7. Canadian employment data: Friday, 12:30. Canadian job market has rebounded from its July plunge, gaining 26,200 jobs in August vs. a 31,200 contraction in July. However, despite the substantial jobs increase, the unemployment cate increased to 7% from 6.9% in July as more people entered the job force. Economists expected a smaller gain of 16,000 jobs and the unemployment rate to remain steady at 6.9%. Canada’s employment figures are volatile lacking a continuous trend. Therefore, the data cannot produce the meaningful amount of new jobs. Based on this jobs report the BOC decided to keep rates unchanged at 0.5%.

US Non-Farm Payrolls: Friday, 12:30. Non-Farm Payrolls report in August showed a 151,000 gain missing predictions for an 180,000 jobs addition. The unemployment rate remained unchanged at 4.9% while expected to decline to 4.8%. Wage growth inched up just 3 cents at an annualized pace of 2.4%. The positive side is that full-time jobs increased by 319,000, while part-time positions declined by 388,000. The number of new jobs in September is expected to be 171,000 while the unemployment rate is forecasted to remain at 4.9%. Wages are projected to rise by 0.2% m/m.

That’s it for the major events this week. Stay tuned for coverage on specific currencies

*All times are GMT.