Key Fundamental Factors this Week (2/2-2/6)

0
148
Key Fundamental Factors this Week (2/2-2/6)

Last week, we saw the USD return to strength after a relatively hawkish FOMC statement. The euro was able to show some resilience despite disappointing inflation data. The RBNZ sounded a bit dovish and the NZD tanked. Let’s see what’s in store for us this week in terms of fundamental factors.

Monday 2/2

UK Manufacturing PMI (Jan)
Forecast: 52.9
Previous: 52.5
uk manufacturing pmi jan.
(click to enlarge; source: forexfactory.com)
After slowing down in the middle of 2014, manufacturing in the UK has kept growing. We might even start to see stronger growth which should eventually help support the pound. This week, the pound should be consolidating ahead of Thursday’s BoE statement.

US ISM Manufacturing PMI (Jan)
Forecast: 54.9
Previous: 55.5
us manufacturing pmi
(click to enlarge; source: forexfactory.com)
Manufacturing in the US have been strong in 2014 until stalling a bit later in the yea.  It is expected to slide further, but remain above 50. The FOMC provided an upbeat projection of the economy despite some disappointing data points that came out in January. It is understandable that the fed is not going to change stance over just a few bad data points. But if they start to add up, the market is going to expect the FOMC to change stance.

Tuesday 2/3

AUS Building Approvals (Dec.) m/m
Forecast: -4.8%
Previous: 7.5%
AUS Trade Balance (Dec.) 
Forecast: -0.85B
Previous: -0.93B
The RBA Monetary Policy Statement: The Reserve Bank of Australia is expected to hold its official cash rate at 2.50%. The market has been bearish on the AUD recently, as it tries to front run a possible rate cut surprise. If there is a rate cut, we can still expect some further decline in the Aussie, but we should be aware that part of the rate cut is being priced in, so if the RBA does not at least sound relatively dovish to previous statements, the AUD might pullback in a bullish correction.

NZ Employment Change q/q (Dec.)
Forecast: 0.8%
Previous: 0.8%
nz employment change
(click to enlarge; source: forexfactory.com)
Employment change data out of New Zealand has been decent in 2013-2014, especially when compared to the previous years. We are seeing some consistent growth, but the rate of employment change has been sliding. If the reading can be above 0.8% however, we could see some support for the ailing Kiwi.
NZ Unemployment Rate (Dec.)
Forecast: 5.3%
Previous: 5.4%
RBNZ Gov. Wheeler will speak at the Canterbury Employer’s Chamber of Commerce. The market is starting to look for subtle hints regarding opening the door to rate cuts. Look for NZD to be pressured unless Wheeler gives a positive review on the existing jobs data as well as an optimistic outlook for the labor industry for the rest of 2015.

Wednesday 2/4

UK Services PMI (Jan.)
Forecast: 54.5
Previous: 54.3

US ADP Non-Farm Employment Change (Jan.)
Forecast: 221K
Previous: 241K
Often a poor predictor of Friday’s NFP, ADP jobs data does not always have impact on the market, certain no where close to the impact of Friday’s data. Still, the expectation is that jobs are still growing, but the focus has now turned to wage growth.

CAN Ivey PMI (Jan.)
Forecast: 55.9
Previous: 55.4
Business conditions are still expected to be positive in Canada. The market will be eyeing Friday’s employment data, so this data point will have limited impact on the loonie.

US ISM Services PMI (Jan.)
Forecast: 56.6
Previous: 56.2
us services pmi
(click to enlarge; source: forexfactory.com)

Thursday 2/5

AUS: Retail Sales m/m (Dec.)
Forecast: 0.3%
Previous: 0.1%

BoE Monetary Policy Statement: The Bank of England is expected to hold its benchmark interest rate at 0.50% and keep pace with its asset purchase program. In the last meeting, the vote to hold rates became unanimous after the previous 5 votes were 7-2, with 2 dissents voting for a rate hike. The bank has become more dovish and the GBP has been pressured. At this point, the market is expecting the BoE to hold rates throughout 2015 and looking to see if the bank will project positive economic recovery as well as rising inflation later in the year, which can make a rate hike possible in early 2016.

CAN Trade Balance (Dec.)
Forecast: -1.0B
Previous: -0.6B

US Trade Balance (Dec.)
Forecast: -38.0B
Previous: -39.0B

US Jobless Claims
Forecast: 277K
Previous: 265K
Jobless claims is back under 300K. This has become the expectation, so the attention has now turned to wage growth.

Friday 2/6

AUS Monetary Policy Statement: The market has been fading the AUD and part of the reason is that after so many central bank’s being dovish, cutting rates and increasing stimulus, the market is on its toes when central banks make their monetary policy statements. The RBNZ’s statement last week was interpreted to be slightly dovish and the NZD plunged afterwards. Will this happen to the RBA and Aussie?

CAN Employment Change (Jan.)
Forecast: 5.1K
Previous: -4.3K
CAN employment change
(click to enlarge; source: forexfactory.com)
CAN Unemployment Rate (Jan.)
Forecast: 5.6%
Previous: 5.6%

US Non-Farm Employment Change (Jan.)
Forecast: 231K
Previous: 252K
NFP Jan 2015
(click to enlarge; source: forexfactory.com)
US Unemployment Rate (Jan.)
Forecast: 5.6%
Previous: 5.6%
Average Hourly Earnings m/m (Jan.)
Forecast: 0.3%
Previous: -0.2%
average hourly earnings
(click to enlarge; source: forexfactory.com)

Jobs data in the US has been decent in terms of the number of jobs being added. It is not as impressive anymore and the attention is on wages. Average hourly earnings fell sharply in December, and if we don’t get at least the 0.3% forecast, we can see some pressure on the USD, especially if the NFP also reads below 230K. If the NFP is above 300K, and the average hourly earnings data is 0.3% or above, we can see another push in the USD, especially if it has been consolidating ahead of Friday’s jobs data.

Previous Post by Author: Assessing the EUR/GBP’s Price Bottom Attempt

SHARE
Previous articleDigitalBTC Dissolves Supply Agreement with CloudHashing
Next articleUS Stocks Dip in Choppy Trading
Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.