Investors Brace for Flurry of Important Economic Data

Last week, the US Dollar struggled, leading to a 1% drop for the US Dollar Index (I.USDX) that tracks US Dollar’s performance against other major currencies. The US Dollar weakness was driven by the last minute agreement to reopen the US government until 15 January and raise the sovereign borrowing limit until 7 February, lowering the prospects of the Federal Reserve scaling back the flow of $85-billion-a-month monetary stimulus program in its October meeting.

With the end of a 16-day US government shutdown, outstanding September Non-Farm Payrolls, remains the top economic indicators from the US economic calendar. Apart from US jobs report, preliminary UK GDP for third quarter and the flash October PMI readings from the Euro-zone and China will also be amongst major economic releases to watch-out for.

US Jobs Report – September US monthly jobs report, scheduled for release on Tuesday, will remain the spotlight of this week’s economic events from US economic calendar. Although the number of new jobs added in the US economy for the month of August was weaker than consensus estimate, however, the unemployment rate provided some positive news for the market. For the month of September, the jobs report is expected to show an addition of 179,000 new jobs and the unemployment rate is expected to hold steady at 7.3%.

US Housing Data – The release of existing homes sales figure, scheduled on Monday, is expected to show some moderation for the month of September. Following a surge to an annualized rate of 5.48 Million units in August, consensus expectations for the month of September point towards a smaller figure of  5.31 Million units. Meanwhile, new home sales data, scheduled for release on Thursday, is expected to rise to an annualized rate of 427,000 units from 421,000 units in August.

Other important economic data from the US, scheduled for release in the up-coming week, include durable goods orders for the month of September and is scheduled for release on Friday. After recording a minor rebound in the month of August, durable goods orders are expected to continue climbing for the month of September. Durable goods orders are expected to record a growth of 1.7% while core durable goods, that excludes transportation items, is anticipated to show a rise of 0.6% for the month of September.

The UK economic calendar for the upcoming week features the release of minutes from the latest MPC meeting and third quarter preliminary GDP figure. The BoE’s meeting minutes, scheduled for release on Wednesday, is always keenly watched by the market participants for a breakdown of MPC votes on the size of Asset Purchase Facility and interest rate decision. Dominant UK economic data that concludes the week is the preliminary release of the Q3 GDP figure, scheduled on Friday. The second quarter GDP data indicated accelerating UK economic recovery, with GDP expanding by 0.7%. The third quarter GDP data is expected to show further strengthening and improving economic conditions with analysts forecasting a rise in GDP growth rate to 0.8%.

This week’s Euro-zone economic calendar features key manufacturing and services PMI reading. Along with the overall Euro-zone PMI figures, PMI data from regions two largest economies, France and Germany, will be of particular interest for the market. Last month’s Euro-zone PMI showed continuing expansion for the regions services sector with the services PMI surging to the highest level since the mid of 2011. Meanwhile, manufacturing activity also continued to show expansion, although, at a slightly slower pace as compared to August. The flash version of index, scheduled for release on Thursday, is expected to indicate continued recovery for both services and manufacturing sectors. The overall Euro-zone manufacturing PMI is expected to rise to 51.4 in October from September’s reading of 51.1 and the overall services PMI for October is also expected to register a slight rise to 52.3 from 52.2 in the previous month. Meanwhile, the German manufacturing PMI is expected to reach 51.6 from 51.1 in September and the services PMI is predicted to rise marginally to 53.8 from 53.7. Similarly, analysts are expecting French PMI figures for October to register a rise from the September reading. The French manufacturing sector is expected to move into expansion territory and with the October manufacturing PMI reading expected to come-in at 50.3 from 49.8 registered in September. The French services PMI is forecast to rise to 51.2 from 51.0 in the previous month.

This week’s notable economic release also includes HSBC’s flash Chinese manufacturing PMI for the month of October. The index is expected to continue holding in expansion territory with consensus estimate of the index coming-in at 50.5 as compared to a revised figure of 50.2 in the month of September. Chinese manufacturing PMI is closely watched to gauge the economic strength of the world’s second-largest economy and for any material impact on commodity currencies including the Australian Dollar, which remains very sensitive to economic data from China.

• On the back-drop of lowered expectation of the Fed tapering in the October meeting, the US Dollar seems prepared for further bearish movement in the near-term.
• However, stronger than expected September jobs would resurface the debate of Fed tapering sooner rather than later and could possibly trigger a short-term relief rally for the US Dollar.

 

• Original Article: Admiral Markets and hyper link Admiral Markets with http://www.admiralmarkets.com/