With Central Banks adopting a data dependent stance on making monetary policy move, today’s data will be key in determining the direction of currencies and better than expected data usually results in an appreciation of the respective currency wile worse than expected data usually results in a depreciation of a respective currency. Also making today's data key is the recent volatility in the fx markets which has seen large moves, notably the 6% drop in GBPUSD this morning and also the pure display of dominance of the USD as markets price in a possible rate hike by years end, which has set the USD on a diverging path to its counterparts who remain neutral to dovish in their monetary policy.
The pound is still reeling from its flash drop today, which markets are still trying to figure out, with some saying that French president Hollands comments were enough to cause the drop while others blame human error and others blaming algorithms for the sudden and severe drop. This said, as concerns for the UK economy continue to heighten, today's data will offer some insight, with bull’s hoping for better data as we end the week and enter the BOE week.
The US has seen its currency appreciate against the board as the dollar index rises, with markets showing optimism in the green back. Today’s key data, most notable the NFP number will be on everybody's watch list, from currency to commodities to equity traders as the figure is regarded as the leading indicator for recovery and one that the FED will watching closely in making its monetary policy decisions. Better than expected data will see the USD continue to strengthen while gold and equities fall in value while in the other hand a worse than expected release is likely to see the USD give back its recent gains while equities rise and gold bounces off the 1250 support level. In addition, we might see further volatility going into the end of the week as we see several FOMC members deliver speeches which markets will remain sensitive to.
Today’s key economic data is as follows:
- Halifax HPI m/m expected at 0%
- Manufacturing Production m/m expected at 0.4%
- Goods Trade Balance expected at -11.1B
- Ivey PMI expected at 53
- Employment Change expected at 8.5k
- Unemployment Rate expected at 7%
- BOC Business Outlook Survey
- Gov Council Member Wilkins Speaks
- Average Hourly Earnings m/m expected at 0.2%
- Non-Farm Employment Change expected at 171k
- Unemployment Rate expected at 4.9%
- FOMC Member Fischer Speaks
- FOMC Member Mester Speaks
- FOMC Member George Speaks
- FOMC Member Brainard Speaks