A week to watch for the Dollar

The US dollar will have a volatile week leading into the event the markets wait all month for. If the Nonfarm Payroll result is as expected, we could see the dollar push over the recent four year high.

The week has already seen personal spending and personal incomes come in higher than a month ago, up 0.3% and 0.5% respectively. The US Dollar Index reached a four year high ahead of these results, however, pulled back when pending home sales figures showed a -1.0% fall from a month ago.

Later on today we will see the Chicago PMI, which is expected to dip from 64.3 to 61.6. This has been slightly volatile as of late with July’s figure surprising which a disappointing 52.6. This seems to have been a blip, however, today’s result will tell. We also will see the S&P/CS Composite-20 HPI which tracks house prices in 20 major US cities. This is expected to show 7.5% y/y growth, down from 8.5% last month. Consumer Confidence will round out today and is expected to dip from 92.4 to 92.2. This index has shown fairly consistent growth since the low of 25.0 in 2009, however, is still short of the highs over 110 in 2007.

Wednesday will see the ADP Non-farm Employment survey, which is not the government figures, but a report designed to give an advanced indication of it. This is expected to show 206k jobs were added last month, however, it must be taken with a grain of salt as they often do not reflect the government data. The ISM Manufacturing PMI follows with the market expecting it to fall from 59.0 to 58.6.

On Thursday we will have the weekly Unemployment Claims data which has been consistently holding under the 300k claims number. It is expected to once again come in under this mark (just) at 299k. Anything lower will give a nice boost to the US dollar heading into Friday.

Friday will see a whole raft of data released that any other day would move the market by themselves, but are going to be overshadowed by the Nonfarm data. The Trade Balance, Unemployment rate and ISM Non-Manufacturing PMI are all released on Friday but the market will only take note of the Non-farm Payroll. This is expected to show 216,000 jobs were added to the US economy in September, which will be a big jump from the disappointing 142k we saw last month. The trend has pointed slightly downwards in the last few months, however, the market is confident it will bounce back.

Nonfarm Payroll Change

There is plenty to keep dollar traders busy this week with the data culminating in the Non-farm Payroll data on Friday.