Your weekly fundamental view (Oct 31-Nov 4)
Need to know
November not only offers the start of a new trading month but also hosts the 2016 US Presidential Elections. On Tuesday, 8 November 2016, the American voters will choose between the Democratic candidate Hillary Clinton and the Republican candidate Donald Trump. The winner will replace the current US President Barack Obama on January 2017. For more information and analysis regarding the US elections, please visit our extensive blog article and two live webinars before and after the election day. Other major event this week include the FOMC statement and NFP figures in the US.
Coming up
Chinese, US and British Manufacturing PMI on Tuesday, 1 November. The Purchasing Managers' Index (PMI) captures the views of these managers on various economic topics, including employment, production and new orders. Why should traders care? An expansion above 50.0 indicates industry growth, whereas levels below 50.0 show contraction. China has a forecast of 50.2 (versus 50.1 previous), the U.S. has a forecast of 51.7 (versus 51.5 previous) and Great Britain has a forecast of 54.5 (versus 55.4 previous).(*)
Australian interest rate on Tuesday, 1 November. The official interest rate is an important factor in the overall currency evaluation. Why should traders care? The official rate is one of the major drivers of long-term price movements. The decision is often explained in a related press conference and statement, which are the primary tools of RBA Board communication with investors about monetary policy. The Reserve Bank of Australia (RBA) is expected to keep the interest rates at the current level of 1.5%.(*)
New Zealand employment change and unemployment rate on Wednesday, 2 November. The employment figures of New Zealand will kick off a new trading day on Wednesday. The figures will show whether the economy and labour conditions are improving on the island nation. Why should traders care? The unemployment rate is expected to remain at 5.1%, whereas the employment change is forecasted at 0.6% versus 2.4% last time.(*)
British construction PMI on Wednesday, 2 November. This number is similar to the first PMI but is focused on managers in the construction industry. Why should traders care? Traders can monitor the economic development of the United Kingdom after the Brexit vote. The forecast is 51.8 versus a previous figure of 52.3.(*)
US ADP figures on Wednesday, 2 November. The ADP National Employment Report measures levels of non-farm private employment. The report is based on the actual payroll data from about 24 million employees processed by the Automatic Data Processing, Inc. It represents the estimated change in the number of employed people during the previous month, excluding the farming industry and government. Why should traders care? Job creation is an important leading indicator of consumer spending. ADP data usually predicts weaker or stronger NFP reading. This month's forecast is 165k, whereas the figure showed 154k last month.(*)
US interest rate and FOMC statement on Wednesday, 2 November. The official interest rate is an important factor in the overall currency evaluation. The Federal Open Market Committee (FOMC) statement discusses the board's views on the economic development and their expectations regarding future monetary policy such as interest rate decisions. Why should traders care? The FOMC is expected to keep rates at the current level of 0.5% due to the presidential elections, which are taking place on 8 November 2016.(*)
Great British interest rate, inflation report and official bank rate votes on Thursday, 3 November. The official interest rate is an important factor in the overall currency evaluation. During the event, the Bank of England (BoE) also releases its projections for inflation and economic growth, its monetary policy summary and the official bank rate. Why should traders care? BoE is also a major news event, which will take place during Thursday morning's trading. The interest rate is expected to remain at 0.25%.(*)
US Non-Farm Payroll (NFP) and unemployment rate on Friday, 4 November. NFP data represents the overall change in the number of employed people during the previous month, excluding the farming industry. Average Hourly Earnings represent the change in the price businesses pay for labour, excluding the farming industry. Why should traders care? The Federal Open Market Committee (FOMC) and traders usually pay more attention to the core data. If the actual report comes better than the forecast, it will be good for the currency. The current unemployment rate is expected to drop from 5.0% to 4.9% and the Non-Farm Payroll figures are forecasted at 175k versus the previous figure of 156k.(*)
