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Dec 4, 2017

U.S NONFARM PAYROLLS JOB REPORT AND INTEREST RATE DECISION IN FOCUS

U.S JOBS AND INTEREST RATES

Financial markets will be focused on the upcoming release of the U.S Nonfarm payrolls job report on Friday and a host of global interest rate decisions. The United States economy is forecasted to have created 185,000 new jobs during the month of November, with the U.S unemployment rate ticking up slightly to 4.2 percent.

We also see a steady trickle of interest rate decisions across the trading week, coming from the Reserve Bank of Australia, Bank of Canada, Reserve Bank of India and People's Bank of China. The Bank of Canada interest rate decision is likely to take center stage, as the BOC have already raised rates twice in 2017, and may signal the timing for their next rate increase.

Monday December 4th, UK Construction PMI

The UK Construction Purchasing Manager's Index measures the activity level of purchasing managers in the construction industry. A reading above 50 indicates expansion in the UK construction industry, a reading below 50 indicates contraction. The UK PMI Construction PMI gives an indication about the health of the construction section within the UK.

  • The GBPUSD pair remain bullish while trading above the 1.3450 level, further upside towards 1.3550 and 1.3610 seems likely.

  • A decline below the 1.3450 level, will likely see the GBPUSD pair move to the 1.3400 and 1.3360 support areas.

Tuesday December 5th, RBA Rate Decision

Reserve Bank of Australia board members come to a consensus on where to set the rates on Tuesday, with the current rate of interest set at 1.50 percent.

The market expectation is for the RBA to leave interest rates unchanged, with the economy still facing some headwinds. Traders watch interest rate changes closely as short-term interest rates are the primary factor in currency valuation.

  • The AUDUSD pair remains bullish above the 0.7610 level, with upside targets 0.7655 and 0.7715.

  • A decline below the 0.7610 level may lead to a decline towards the 0.7590 and 0.0.7560 levels.

 

Wednesday 6th December, BOC Rate Decision

Bank of Canada governing council members come to a consensus on where to set the rate on Wednesday, with financial markets expecting the BOC to keep rates unchanged at 1 percent.

Traders watch interest rate changes closely as short-term interest rates are the primary factor in currency valuation.

  • The USDCAD pair remains bearish while trading below the 1.2750 level, further losses towards 1.2660 and 1.2540 appear likely.

  • A move above the 1.2750 level may lead to buying towards the 1.2790 and 1.2840 levels. 

Thursday 7th December, PBOC Rate Decision

The People's Bank of China Interest Rate decision is announced on Thursday, with market participants expecting the PBOC to keep rates unchanged at 4.35 percent.

If the PBOC take a hawkish stance towards the inflationary outlook of the Chinese economy and raises interest rates expectations, it is seen as positive for the CNY or Yuan currency. If the PBOC takes a dovish view on the Chinese economy and keeps the ongoing interest rate, or cuts the interest rate, it will be taken as negative development.

Friday 8th December, U.S NFP Jobs Report

The Nonfarm Payrolls job report measures the change in the number of people employed during the previous month, excluding the farming industry. Job creation is the foremost indicator of consumer spending, which accounts for the majority of U.S economic activity.

A higher than expected reading should be taken as bullish for the USD, while a lower than expected reading should be generally taken bearish for the USD.

 

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