The Forex Week Ahead: September 5th – 9th

The Forex Week Ahead: September 5th – 9th

Mon: GBP – Services & Composite PMI’s, EUR – EZ Retail Sales & Investor Confidence
Tue: CHF – GDP, USD – ISM Non-Manufacturing, EUR – EZ GDP 2Q F
Wed: AUD – GDP 2Q, GBP – Industrial & Manufacturing Production, BOE Members Speak in London, NIESR GDP Estimate, CAD – BOC Rate Decision
Thu: CNY – Trade Balance, FDI, JPY – Trade Balance, GDP, EUR – ECB Rate Decision,
Fri: CNY – CPI, GBP – Trade Balance, Construction Output, CAD – Unemployment Rate

Overview

USD The August Non-Farm Payrolls were a clear disappointment, printing just 151k on the month against expectations of 180k. The reading was a clear departure from recent positive momentum in the labour market indicator and alongside a weak wage-growth reading saw USD sold sharply in response. Despite the poor data however, the US Dollar recovered into the close retaining support from comments made by Fed chair Yellen who noted that recent economic data supports the case for a further rate hike this year. Whilst the number was indeed below expectations, Fed officials have previously noted that breakeven jobs growth is around 100k a month. Not much in the way of key US data this week with ISM Non Manufacturing the only noteworthy print.

EUR Mixed data keeps the Euro pinned down ahead of the ECB rate decision this week with EuroZone PMI’s broadly positive but EuroZone Consumer Confidence significantly weaker than expected over August. EuroZone flash CPI estimate for August was below expectations at 0.2% vs 0.3%. Expectations are mixed ahead of the central bank meeting this week following the neutral tone of the bank’s statement in July.

GBP Sterling was supported by stronger Manufacturing data in August which warded off concerns that the British economy would suffer in the wake of Brexit. Looking ahead this week we have Industrial and Manufacturing Production data as well as Trade Balance data.

JPY Standard & Poor’s Ratings Services last week confirmed Japan’s A+/A-1 sovereign debt rating and maintained a stable outlook despite its heavy debt burden, saying political stability and stable financial system offset fiscal woes. Final 2Q GDP will be the key data focus this week alongside comments from BOJ’s Kuroda who speaks this week.

AUD Australia’s retail sales was flat in July, after climbing 0.1% MOM in June. Sales figure registered no growth for the first time in five months, signalling that consumer spending may have lost momentum at the turn of the third quarter. Attention this week will be on a raft of key China data.

CAD The Canadian Dollar strengthened despite a slump in Oil prices last week as over-supply concerns once again exerted pressure on energy prices. The Bank of Canada meet this week for their monthly rate decision but are widely expected to keep rates on hold. Later in the week traders turn to the Unemployment rate.