Major economic news Next week 5 sep – 2 sep 2016 (FOREX MARKET OUTLOOK)

Below is the outcome of last week’s high impact economic events;

Event Day Expected Outcome
US Consumer Confidence Tuesday 97 10.1
Germany, Unemployment change Wednesday -5K -7K
Italy, Unemployment data Wednesday 11.6% 11.4%
Eurozone Consumer Price Index Wednesday 0.9% 0.8%
US ADP Non-Farm Payrolls Wednesday 175K 177K
Canada GDP Wednesday 0.4% 0.6%
US Crude oil inventories Wednesday 0.921M 2.276M
ChinaNon-Manufacturing PMI Thursday 53.5
UK Markit Manufacturing PMI Thursday 49 53.3
US Initial jobless claims Thursday 265K 263K
US ISM Manufacturing PMI Thursday 52 49.4
US Non-Farm Payrolls Friday 180K 151K

Table; High impact economic events outcome (29th August – 02 September)

Fed Chair, Yellen stole the highlight for major FOMC (Federal Open Market Committee)’s members speechearlier at the Jackson Hole Symposium. A week later Non Farm Payroll report for August disappointed with a 151K figure versus the expected 181K figure. This caused a big reaction with the USD loosing against the majors. However; it quickly recovered as the figures revealed an increased probability for a rate hike during the September FOMC meeting. This was mainly attributed to Yellen’s speech alluding that any figure above 100K would be satisfactory;

“To simply provide jobs for those who are newly entering the labor force probably requires under 100,000 jobs per month,” Yellen.
The figure below shows the greenback recovering against the EUR following the NFP news impact loss last Friday;


EURUSD NFP impact Sept 2 2016

Figure; 2ndSeptember Non-Farm Payroll Impact on EURUSD (15min Chart)

This strengthens the probability of a rate hike with the current probability for a rate hike this month standing at 79% for a 0.25-0.5 rate and 21% for a 0.5-075 rate as per the Fed watch tool by CME Group.

probability or a rate hike by CME

Figure; Rate hike probabilities (Data CME Group)


Last Week’s CFTC COT Report (30th August 2016);

Currency Net Commercial Positions (previous) Net-Large Speculators Positions (previous) Net-Small Speculative Positions (previous)
EURO 100,808 (91,174) -81,925 (-76,658) -18,883 (-14,516)
AUS -47,061 (-49,989) 42,566 (42,757) 4,495 (7,232)
GBP 114,454 (114,580) -92,485 (-94,978) -21,969 (-19,602)
CAD -34,035 (-31,617) 22,400 (16,734) 11,635 (14,883)
JPY -57,204 (-56,237) 66,661 (60,316) -6,457 (-4,079)
CHF 4,722 (1,051) 8,208 (1,885) -12,930 (-2,936)

Table; COT Report for 30th August 2016 (Data CFTC)

The EURO large speculative net bearish positions increased from 76,658 to 81,925as the currency declined for the week. Bearish shorts has been decreasing for 5 consecutive weeks since July 26 which led to a bullish trend in the Euro. The decrease follows a bearish reversal pattern (dark cloud cover on the Euro futures daily charts).

EURO cot report chart analysis

Figure; Euro Analysis Based on COT Data (Chart courtesy of http://www.timingcharts.com/).

Another currency that showed increase in bearish positions is the AUS; however the increase was very slight. The GBP bearish positions decreased from 92, 485 to 94,978 with CAD, JPY, and the CHF all showing an increase in their long bets.



Most Important Economic Events Week Ahead


Event Date Previous Expected Outcome
BOJ Governor Kuroda Speech Monday, 02.30 GMT
UK Markit Services PMI Monday, 08.30 GMT 47.4 50 52.9
Australia rate decision Tuesday, 04.30 GMT 1.5% 1.5% 1.5%
Switzerland GDP Tuesday, 05.45 GMT 1.1% 0.9% 2.0%
Eurozone GDP Tuesday, 09.00 GMT 0.3% 0.3% 0.3%
US Non- Manufacturing PMI Tuesday, 15.00 GMT 55.5 55 51.4
FOMC Member Williams Speech Wednesday, 01.45 GMT
Australia GDP Wednesday, 01.30 GMT 3.1% 3.2%
Canada interest rate decision Wednesday, 14.00 GMT 0.5% 0.5%
Japan GDP Wednesday, 23.50 GMT 974.4B 2090B
Australia Trade Balance Thursday, 01.30 GMT -3195M -2750M
ECB interest rate decision Thursday, 11.45 GMT 0% 0%
US Building permits Thursday, 12.30 GMT -5.5% 3%
US Initial jobless claims Thursday, 12.30 GMT 263K 265K
Switzerland Unemployment rate Friday, 05.45 GMT 3.3%
Canada Unemployment rate Friday, 13.30 GMT 6.9% 6.9%

Table; High impact economic events (5th – 9th September 2016)

Australia Gross Domestic Product:Wednesday, 01.30 GMT. The previous figure of 1.1% beat the previous estimates of 0.6% with a previous reading of 0.7% at the end of 2015. The expected reading is still 0.6%.

Canada rate decision: Wednesday, 14.00 GMT. Amidst improvement in the economy, the bench mark rate in Canada is expected to be held constant at 0.5% for the second consecutive time after two rate cuts this year.

ECB interest rate decision: Thursday, 11.45 GMT. Interests rates in the Eurozone are expected to remain at 0% until the Brexit decision reveals a slowing effect on the economy.

Initial Jobless Claims: Thursday, 12.30 GMT. The number of Americans filing for employment for the first time this week is expected to be 265K. The previous reading was 263K which was better than the expected figure of 265K. Building permits are expected to rise from -5.5% to 3%.

Canadian unemployment rate: Friday, 13.30 GMT. The rate of employment in Canada is expected to remain constant at 6.9%, however, the net change in employment is expected to rise to 3200 from a previous negative change of 31.2K.

You can view all the events scheduled this coming week in Economic Calendar

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