Possibly A Highly Volatile Week Ahead

Following its previous week’s weakness immediately after the Federal Reserve’s surprise decision of maintaining the pace of its monthly asset purchase program at $85 billion, the US Dollar’s performance last week remained subdued against most major currencies as US debt ceiling concerns continued to weigh on investor sentiment. Adding to the pressure for the US Dollar was weakening economic data that continues to strengthen the case for the Federal Reserve not moving to scale back its bond-purchase program before 2014.

Apart from the fiscal worries that the US lawmakers struggle to reach an agreement over raising government borrowing capacity to keep the government running beyond September 30 and avert a historic default, September Non-Farm Payrolls remains the top economic indicators from the US economic calendar.

US Monthly Jobs Report – Labor market conditions has always played a vital role in the Fed Reserve’s monetary policy decision and hence September monthly jobs report will remain the spotlight of this week’s economic events from the US. In the month of August, US economy added 169,000 new jobs as compared to 162,000 in July but still weaker than consensus estimate of 178,000 jobs. However, market did get minor positive news from the report, with the unemployment rate declining to 7.3%, although due to lower participation rate. Given the recent improvement in the weekly jobless claims, the non-farm payrolls data, scheduled for release on Friday, is expected to show improving US labor market with an addition of 179,000 new jobs for the month of September. The unemployment rate, however, is expected to hold steady at 7.3%.

ISM PMI Data – Leading up to the critical jobs report important economic data featuring the US economic calendar includes the Institute for Supply Management’s (ISM) PMI data. This week’s important US economic data starts with the release of ISM Manufacturing PMI, scheduled for release on Tuesday. In the month of August, the US manufacturing sector expanded at its fastest pace since April 2011 and the ISM manufacturing index ticked up to 55.7 from 55.4 reading in July. For September, the ISM manufacturing index is anticipated to show some moderation and is expected to register a slight drop to 55.3. Meanwhile, the ISM’s non-manufacturing PMI, scheduled for release on Thursday, is also anticipate to register a small decline for the month of September to 57.2 from August reading of 58.6, the highest level since Feb. 2011.

Other important economic data from the US, scheduled for release in this week, include ADP report that shows the number of private jobs created in the month of September and is scheduled for release on Wednesday.

Central Bank Monetary Policy Decisions

This week’s monetary policy decisions from the Reserve Bank of Australia (RBA), European Central Bank (ECB) and Bank of Japan (BoJ) will also be on investors watch-list.

Following a decision in the August meeting, to cut its key policy rate by 25 basis points (0.25%) to a record low 2.5%, RBA kept its key lending rates unchanged at in their September meeting. This time also, economists are not expecting any rate action from the RBA, scheduled to announce its interest rate decision on Tuesday.

On Wednesday, ECB is scheduled to announce its monetary policy decision. Markets are anticipating ECB to leave its interest-rate or monetary policy unchanged. However, after last week’s comments by ECB President Mario Draghi, indicating the central bank’s readiness to increase its monetary stimulus to protect interest rates from rising, investor will focus on the ECB press conference where hint of introducing another round of Long Term Refinancing Operations (LTRO) would possibly drive the Euro.

On Friday, BoJ is scheduled to announce its monetary policy decision and most of the economists expect a little in terms of any major policy action from the central bank. Central bank’s views about the economic conditions will be closely scrutinized to see if the central bank continues to show willingness to expand its economic stimulus measures further.

Other Important Data Releases

Here is a brief on other major market moving events in the upcoming week’s global economic calendar.

Important economic data featuring this week’s Australian economic calendar includes release of Retail sales data, schedule on Tuesday; and Trade Balance data, scheduled for release on Thursday.

Further, being Australia largest trading partner, official Chinese Manufacturing PMI, scheduled for release on Tuesday, will be watched for any material impact on commodity currencies including the Australian Dollar.

This week’s UK economic calendar features key PMI readings for the month of September. The manufacturing PMI data is scheduled for release on Tuesday, Wednesday’s key event include construction PMI and release of services PMI is scheduled on Thursday.

• Lingering concerns over the political disagreement regarding the US debt ceiling continues to weigh on investor sentiment. Further, with major central bank decisions and several important macroeconomic releases on tap, including the closely watched nonfarm-payrolls report and various PMI readings, the upcoming week has the complete recipe of being amongst the most volatile weeks for the Forex market.

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