Forex Minute Trade Plan – Fundamental Insights 30/04/2014

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Forex Minute Trade Plan - Fundamental Insights 28/04/2014

Here’s a look at the day’s key fundamental releases, and their likely impact on the global currency markets.

US ADP Nonfarm Employment Change

The day’s headline release is the latest ADP nonfarm employment change figure. The reported figure represents the monthly change in non-farm, private employment, based on the payroll data of approximately 400,000 U.S. business clients. The release comes a couple of days ahead of Friday’s government counterpart release – which is arguably the most anticipated economic release on the calendar – and many traders use it as a leading estimator of the nonfarm payrolls figure on Friday. In addition, it comes off the back of disappointing CB consumer confidence data on Tuesday. A positive figure suggests a rise in employment, which leads to a rise in disposable income, production and generally, inflation. The Fed raises interest rates to counter inflation, which are the most important short term determining factor in the value of a currency to its holders. For this reason, a higher than expected figure will generally boost the value of the USD versus its major counterparts, with the reverse being true for a lower than expected figure. Consensus forecasts the upcoming release at 210K, a small increase over the previous release of 191K, so look for >210K to boost the USD and <210K to weaken the currency.

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Canadian GDP (MoM)

The day’s next big release is the Canadian gross domestic product (GDP) figure. The figure represents the change in the total value of all goods and service produced in Canada, and is of the most revealing indicators on the economic calendar. An increase in output generally leads to higher employment, which leads to higher consumer spending and, in turn, inflation. As mentioned in the previous release, any rise in inflation will hint at the Bank of Canada favouring a near term interest rate hike. Consensus forecasts the release at 0.2%, so look for a higher than expected figure to boost the Canadian dollar and, conversely, a lower than expected figure to weaken the currency.

To contact the reporter of this story: Samuel Rae at Samuel@forexminute.com