The FOREX Outlook: August 30-Sep 3
By Ilian Yotov, AllThingsForex
The U.S. Non-Farm Payrolls and Employment Situation report will take the center stage in the week ahead as investors anxiously wait to find out if the private sector of the U.S. economy would lose jobs in August for the first time this year.
In preparation for the new trading week, here is a list of the Top 10 spotlight economic events that every currency trader should pay attention to.
1. USD- U.S. Personal Income and Outlays, a measure of the income received and purchases made by consumers, released along with the Personal Consumption and Expenditures Price Index- a leading indicator of inflation preferred by the Fed because it measures a variable basket of goods and services, as opposed to the CPI-Consumer Price Index which measures a fixed basket of goods and services, Mon., Aug. 30, 8:30 am, ET.
The core PCE Index is expected to show a slight increase in inflationary pressures by 0.1% in August from 0.0% in July, while personal spending rises by 0.4% from 0.0% in the previous month.
2. CAD- Canada GDP- Gross Domestic Product, the main measure of economic activity and growth, Tues., Aug. 31, 8:30 am, ET.
Canada’s economy could see faster growth in August by 0.2% m/m from the 0.1% m/m reading in July.
3. USD- U.S. Consumer Confidence Index of consumers’ outlook on present and future economic conditions, Tues., Aug. 31, 10:00 am, ET.
Despite of the high unemployment, the consensus forecasts point to an increase in consumer confidence to 51.3 from 50.4 but, given the current deteriorating economic conditions, unexpected decline in the index would not be a major shocker.
4. AUD- Australia GDP- Gross Domestic Product, the main measure of economic activity and growth, Tues., Aug. 31, 9:30 pm, ET.
The revised estimate of the Australian GDP should confirm the expectations for faster economic growth in Q2 2010 by up to 0.9% q/q from 0.5% in the first quarter.
5. USD- U.S. ADP-Automatic Data Processing Employment Report, a measure of jobs lost or added to the private sector of the economy, also serving as a preliminary estimate for the outcome of the monthly non-farm payrolls, Wed., Sep. 1, 8:15 am, ET.
There is a division among the forecasters for the outcome of this important report, with the less optimistic ones expecting the private sector of the U.S. economy to lose up to 14,000 jobs- the first loss for U.S. companies in 2010. On the other hand, even the most optimistic forecasts point to slower jobs creation of up to 20 K jobs in August from 42 K in July.
6. USD- U.S. ISM Manufacturing Index, a leading indicator of industrial activity, where a reading above or below 50 is the dividing line between economic expansion and contraction, Wed., Sep. 1, 10:00 am, ET.
The manufacturing sector, which has been the leader of the U.S. economic recovery, could register another month of slower growth with the index pulling back to 53.6 from 55.5 in May.
7. EUR- Euro-zone GDP- Gross Domestic Product, the main measure of economic activity and growth, Thurs., Sep. 2, 5:00 am, ET.
The Euro-zone GDP revision should confirm that the economy grew by 1.0% q/q in Q2 2010, as shown by the preliminary estimate.
8. EUR- European Central Bank Interest Rate Announcement, Thurs., Sep. 2, 7:45 am, ET.
In the midst of a global slowdown and with the sovereign debt problems in the Euro-zone not completely resolved yet, the European Central Bank would not be in a position to raise rates until next year. It is likely that the ECB monetary policy will remain accommodative. Especially interesting at this ECB meeting will be to see if policy makers would follow the footsteps of the Fed and the Bank of Japan and consider additional monetary stimulus. The EUR could come under pressure if the ECB opens the door to further quantitative easing.
9. USD- U.S. Non-Farm Payrolls and Employment Situation Report, one of the most important indicators of economic health, measuring the number of new jobs created or lost in the world’s largest economy, Fri., Sep. 3, 8:30 am, ET.
This main spotlight event of the week will have the potential to disappoint investors, especially if the private sector of the U.S. economy loses jobs in August for the first time in 2010. The consensus forecasts point to slower jobs creation by U.S. companies, with private payrolls expected to add 44 K- a lesser amount than the 71 K jobs created in July. The non-farm payrolls are forecasted to show the U.S. economy losing 106 K to 120 K jobs, and the unemployment rate is expected to increase to 9.6% from 9.5% in July.
10. USD- U.S. ISM Non-Manufacturing Index, a leading indicator of economic conditions in the services industries: agriculture, mining, construction, transportation, communications, wholesale trade and retail trade, Fri., Sep. 3, 10:00 am, ET.
The ISM Non-Manufacturing Index could expose more signs of U.S. economic slowdown with activity in the services industries retreating to 53.6 from a previous reading of 54.3.
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