Headline PMIs And Jobs Report To Offer Another Volatile Week

Februari 29, 2016 12:02

Eighteen month high US Durable Goods Orders' growth, followed by upbeat GDP print, helped the US Dollar Index (I.USDX) carry its previous weekly gains forward during the last week. The greenback managed to rally across the board on the speculation that improvement in headline economics could support the Fed in announcing future rate-hikes; however, rising Crude prices, mainly due to production freeze talks between the Russia and the Saudi Arabia, helped the CAD register a positive weekly closing against its US counterpart. The Euro remained fragile as weaker inflation reading, coupled with talks at G20, favored need of ECB's additional monetary easing while GBP maintained its downtrend as some of the influential UK leaders continue supporting the 'Brexit' move. Moreover, the JPY also liquidated some its weights to the USD due to absence of major economic details and an on-going greenback buying.

Following positive prints of the headline US details, market players would closely observe February month US job details, scheduled during the current week, in order to determine chances of the Federal Reserve's interest-rate lift-offs. Moreover, headline PMIs from UK, US and China, coupled with monetary policy meeting by the RBA and the Australian GDP, are some of the important data-points/events that could continue fueling the Forex market volatility during the current week.

US Labor Market Details To Portray USD Moves

With recently printed upbeat US economic details reigniting concerns for the Fed's interest-rate hike, monthly details of the US labor market, namely the Unemployment Rate, Non-farm Payrolls (NFP) and the Average Earnings, would gain additional attention from the market players as sustained labor market strength indicates only few obstacles in the Federal Reserve's four rate-hike a year plan.

Even as the January month NFP dropped to the lowest levels in four months, the Unemployment rate maintained its decline and marked fresh eight year low while the Average Earnings rallied to a year's high, indicating overall strength of the US labor market. Considering forecasts relating to Friday's scheduled job details, the NFP is likely printing a near 200K mark with 195K against its prior 151K while the Unemployment Rate is expected to remain steady at 4.9% lows. Moreover, the Earnings may reveal a bit of weakness with 0.2% growth against 0.5% mark disclosed during prior month and the Wednesday's ADP Non-farm Employment Change, an early signal for headline labor market details, is also expected to print a weaker 185K number versus the prior 205K mark.

Other than the Friday's headline labor market details, Monday's Chicago PMI and Pending Home Sales, Tuesday's ISM Manufacturing PMI and the Thursday's Factory Orders, are some of the additional data-points that USD traders might be interesting in to forecast near-term greenback trend. While Pending Home Sales is expected to continue signaling robust US housing market, with seven month high of +0.6% against +0.1% prior, the ISM Manufacturing PMI is likely printing 48.5 mark versus 48.2 previous and the consensus relating to Chicago PMI indicates a weaker 52.1 number compared to its 55.6 prior. Further, the factory orders might reverse their prior -2.9% loss with +2.1% mark, testing the highest levels since May 2015.

After the US GDP rejuvenated expectations of further Fed-rate hike, strong job numbers can provide an echo to these speculations, which in-turn can help the USD stretch its recent up-move.

GBP Traders Should Observe 'Brexit' Talks And Leading PMI Numbers

Although British PM announced a referendum to vote on 'Brexit' on June 23 and EU leaders are also trying their hard to preserve the UK into region, noticeable UK leaders, including the British Mayor, have been observed to opine on UK exiting from the EU region and hence forcing the GBP further towards south. Though, the deadline is still far away and forces market players to observe developments in regard to possible chances of UK waving good-bye to the troubled region.

In addition to the 'Brexit' talks, headline UK PMIs, namely the Manufacturing, Construction and Services, can provide important quantitative details to forecast near-term GBP trend. Even as the Wednesday's Construction PMI is expected to mark 55.5 number against 55.1 prior, other two important PMIs, namely the Manufacturing PMI and the Services PMI, scheduled for Tuesday and Thursday respectively, are likely printing weaker marks with 52.3 and the 55.1 stats as compared to their 52.9 and 55.6 previous releases.

As 'Brexit' talks started gaining support from influential political leaders and the economic data-points are also expected to print weaker marks, chances of GBP maintaining its south-run becomes brighter.

The Critical Chinese PMIs And Australian Details/Events

While global attention recently shifted away from the Chinese economic crisis, February month details of the official Manufacturing and Non-Manufacturing PMI, together with the Caixin Manufacturing PMI, scheduled for publish on Tuesday, could flash important signals for commodity traders and industrial players. Although, both the Manufacturing PMIs, the official and the Caixin version, are expected to maintain their previous levels of 49.4 and the 48.4 respectively, coupled with the upbeat Non-Manufacturing PMI at 53.5, the Caixin Manufacturing PMI continue remaining below the 50 mark, indicating contraction of the manufacturing activity at the world's largest industrial player.

Off-late upbeat Australian economics, coupled with the Reserve Bank of Australia's (RBA) resistance from an interest-rate cut, continued helping the Australian Dollar (AUD) to mark near 1% gains against its US counterpart during the month of February. However, this week's monetary policy meeting by the RBA, scheduled for Tuesday, followed by the Q4 2015 Australian GDP, up for Wednesday release, seems crucial for the AUD traders as cues for the global economic threat affecting the Australian economy would be looked for in these events.

Though the Australian central bank isn't expected to alter its current monetary policy and the GDP growth is also likely to dip down with 0.5% mark against 0.9% previous reading, another stream of hawkish comments from the RBA Governor, coupled with possible improvement in Chinese PMIs, might help the AUD in maintaining its up-move.

Canadian GDP And Ivey PMI Are The Rest To Observe

Profit-booking in Crude prices, backed by talks of oil production freeze at the Russia and Saudi-Arabia, off-late helped the Canadian Dollar (CAD) advance against majority of its counterparts; however, monthly details of GDP and Ivey PMI, scheduled for Tuesday and Friday respectively, might offer addition help to foresee near-term CAD moves. While December month GDP is expected to print 0.1% mark against 0.3% prior, the Ivey PMI recently rallied to the highest levels since March 2012 with 66.00 reading. Given the Russian-Saudi Arabian agreement on production freeze succeeds, chances of the Crude, main Canadian export, witnessing further upside can't be denied. Moreover, welcome numbers from the Canadian economic calendar can provide additional support to the CAD in marking positive closings across the board.

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