Forex : Brace for RBA decision, UK services PMI, and US non-farm payrolls
The Federal Open Market Committee’s latest monetary policy meeting may be behind us, and another rate hike delivered as expected, but the focus will remain on US monetary policy this week. The latest FOMC communiqués indicated that more hikes would likely be appropriate – suggesting policymakers aren’t willing to bow down to the demands of President Donald Trump and leave monetary policy alone.
This week’s top-tier US ISM manufacturing PMI, composite PMI, ADP employment change, and of course Friday’s non-farm payrolls report, could therefore create significant volatility not just for the US dollar, but for the pound, euro and high-yield currencies by proxy.
Switching focus to Europe, research company IHS Markit releases its latest round of monthly UK PMIs, culminating with the vital services index for September on Wednesday. This covers over three quarters of the UK’s entire economic output, so the result could distract focus away from Brexit for a short while at least.
The Eurozone is also set to publish a few pieces of notable data, including German retail sales and the Eurozone unemployment rate on Monday, and Eurozone retail sales on Wednesday. The European Central Bank was surprisingly upbeat during its latest monetary policy meeting, but without some solid numbers to support their view that inflation is still going to meet the target on time, the euro could see demand dwindling. Strong retail sales figures are therefore important if the outlook for inflationary pressures is to remain strong.
As well as the Reserve Bank of Australia’s latest interest rate announcement on Tuesday, we’ll also get several other insights into the health of the Australian economy with Wednesday’s building permits, Thursday’s construction index, and Friday’s trade balance figures.
Friday also sees Canada publish its latest balance of trade, employment change, and unemployment rate data, so volatility is likely for CAD pairings.