Key Fundamental Factors this Week (11/3-11/7)

Key Fundamental Factors this Week (11/3-11/7)

October ended with some shake ups in the equity markets, and in the forex markets. The 2 main fundamental themes in the currency markets last week, were the FOMC announcing the end of QE and the Bank of Japan surprising everyone by introducing more stimulus measures.

This week is shaping up to be another busy one, we have some manufacturing PMIs, lots of employment data, and a few central bank decisions.

Monday 11/3

UK Manufacturing PMI (October)
Forecast: 51.5
Previous 51.6

US ISM Manufacturing PMI (October)
Forecast: 56.5
Previous: 56.6
We are starting to see some leveling in terms of manufacturing growth according to the PMI readings, but only after seeing a multi-year high for August with a print of 59.0. A reading above 50.0 is still indicative of manufacturing growth, but if the reading misses forecast and drops below 56, we might see the USD lose its impetus to continue rallying after months of gains in anticipation of a mid-2015 rate hike.

Tuesday 11/4

AUS: Retail Sales m/m (September)
Forecast: 0.3%
Previous: 0.1%
RBA Interest Rate Decision:
Forecast: 2.50%
Previous: 2.50%
The RBA is expected to maintain its official cash rate at 2.50%, and should continue to display concern of a possible housing market bubble. Growth has been moderate, but the bank remains uncomfortable with the strength of the AUD. We should not expect much of a shake up, but if the RBA does not talk about AUD being too strong, the AUD/USD for example, has some room to correct to the upside.

US Trade Balance (September)
Forecast: -40.0B
Previous: -40.1B

Wednesday 11/5

NZ Employment Change q/q (Q3)
Forecast: 0.6%
Previous: 0.4%
nz employment change q3 2014

(click to enlarge; source:
NZ Unemployment Rate (September)
Forecast: 5.5%
Previous: 5.6%
The unemployment rate has been sliding to mult-year lows, but the participation rate has been dropping. While job growth has been persistent in 2014, the historic chart shows that the rate of growth has been declining. Still, despite the caveats, the general trend of NZ’s employment market is positive, and the RBNZ need not to worry about adjusting monetary policy to boost job growth at the moment.

UK Services PMI (October)
Forecast: 58.5
Previous: 58.7

US ADP Non-Farm Employment Change (October)
Forecast: 214K
Previous: 213K
ISM Services PMI

Thursday 11/6

AUS Employment Change (October)
Forecast: 10.3K
Previous: -29.7K
aus employment  oct. 2014

(click to enlarge; source:

AUS Unemployment Rate (October)
Forecast: 6.1%
Previous: 6.1%
The AUD/USD is at the cusp of making October’s price action a price bottom. Strong AUS jobs data should help the pair do so. A reading above 10.0K would be in-line with expectations and help the pair building a price bottom. Otherwise, a reading below 10K could limit the AUD/USD’s bullish outlook in the coming week or two.

BoE Interest Rate Decision
Forecast: 0.50%
Previous: 0.50%
As we approach the end of 2014, the BoE will be increasingly pressured to raise rates. It has projected a possible rate hike at the end of the year, but economic data has not be encouraging, and the situation in European is also a concern that suggests the BoE will not consider raising rates until 2015, possibly at the end of Q1, or beginning of Q2.

ECB Minimum Bid Rate
Forecast: 0.05%
Previous: 0.05%
The ECB has introduced some stimulus measures in terms of asset-back purchases. However, further economic weakness in the Eurozone, especially in Germany will pressure the ECB to do more, such as implementing full-scale QE. The bank will likely take some time before this next step, but if the economy does not pick up in Q4, we can see more stimulus measures soon in 2015.

US Jobless Claims:
Forecast: 285K
Previous: 287K

CAN Ivey PMI (October)
Forecast: 59.2
Previous: 58.6

Friday 11/7

CAN Employment Change (October)
Forecast: 0.4K
Previous: 74.1K
CAn Employment Change Oct. 2014

(click to enlarge; source:

CAN Unemployment Rate (October)
Forecast: 6.8%
Previous: 6.8%
The market is expecting a bit of leveling off after a strong jobs report in September. If we can a negative reading, the CAD might remain pressured as it has already been in months. But if we get strong data like a 3.0K+ reading, the CAD should find some reprieve. As we can see in the historical chart, data is volatile, but the negative readings have been less steep, and the positive readings have been growing. When commodity prices start to stabilize, the CAD has strong fundamentals for a rebound.

US NFP Employment Change (October)
Forecast: 229K
Previous: 248K
US NFP Oct. 2014

(click to enlarge; source:

US Unemployment Rate (October)
Forecast: 5.9%
Previous: 5.9%
The NFP is usually a big market mover. But there is a sense that employment data is not the main focus these data, except for wage growth, or unless the data is extreme. The expected 229K reading is decent, and in-line with the current job growth trend. A reading below 200K might limit the USD-gains, while a reading above 250K should help push the USD along, but strong jobs growth data at the moment might not enough for the USD to sustain a rally outside of the very short-term.

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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