May 28 – June 1: Forex Week Ahead – U.S. Dollar Dips Before NFP Week
Arslan Butt • 4 min read
During the previous week, the greenback took a bearish reversal after Trump called off a historic summit with the North Korean leader, fueling the demand for haven assets. Consequently, gold soared above $1,307 and the dollar index plunged to $93.20.
However, trading on Friday turned into favor U.S. dollar investors as it rose against a basket of peers to finish the week at its strongest since mid-November. Is it likely to continue its bullish trend? Well, this week is fully packed with market-moving economic events, with the U.S. non-farm payroll and unemployment rate topping the list. Tighten your belts for another volatile week.
Watchlist – Top Economic Events This Week
Monday – May 28
On Monday, the market may exhibit thin trading volume as most of the U.S. markets will remain closed in the observance of Memorial Day.
Tuesday – May 29
U.S. Dollar – USD
CB Consumer Confidence – For all newbies, the financial confidence is a leading indicator of consumer spending, which accounts for the majority of overall economic activity. For instance, you will spend more but only if you are confident about your job or business.
Back in April, the consumer confidence surged to 128.7 points and that figure is likely to hold on to current levels. The data is due at 14:00 (GMT).
New Zealand Dollar – NZD
RBNZ Financial Stability Report – The report is due to come out at 21:00 (GMT) and it provides insights into the bank’s view of inflation, growth, and other economic conditions that will affect interest rates in the future. Investors are advised to look for clues about the next policy meeting.
Wednesday – May 30
Today’s main event is the monetary policy decision from the Bank of Canada, Prelim GDP and ADP Non-Farm Employment Change from the United States.
Japanese Yen – JPY
BOJ Gov Kuroda is scheduled to speak at the Bank of Japan-Institute for Monetary and Economic Studies annual conference in Tokyo at 0:00 (GMT). Fellas, the speeches from central bank officials mostly drive fluctuations in the market. So, better be prepared for it.
U.S. Dollar – USD
ADP Non-Farm Employment Change – The Automatic Data Processing, Inc. will be releasing the ADP Non-Farm Employment Change at 12:15 (GMT). It’s an estimated change in the number of employed people during the previous month, excluding the farming industry and government. In April, ADP reported a robust gain of 204K jobs while a lower gain of 186K is predicted for March.
Prelim GDP q/q – Recalling the preliminary GDP for Q1 2018, the economy stalled to an annualized growth rate of 2.3%. A decline in economic activity is quite common, yet the U.S. growth rate is above the GDP of the eurozone and the U.K. Anyways Prelim GDP is expected to remain at 2.3%. But we may see massive fluctuations in the U.S. dollar on divergence in data releases.
Canadian Dollar – CAD
Monetary Policy Report – Speaking about the overnight rate, the Bank of Canada left it unchanged at 1.25% during the previous meeting in April. Honestly, Canadian fundamentals haven’t improved over the course of this month. So, should we expect a rate hike this month? Logically, no. I’m expecting the same kind of response from the Bank of Canada.
However, BOC Rate Statement will be worth watching at 14:00 (GMT) to determine the bullish or bearish bias of the central bank.
Thursday- May 31
Today’s main event is the Manufacturing PMI and Non-Manufacturing PMI data from China. The impact of these economic events is boundaryless as it also influences the Australian Dollar. Besides this, GDP figures from Canada will be traded.
Chinese Yuan – CNY
Manufacturing PMI and Non-Manufacturing PMI are due to be released at 1:00 (GMT). These are the leading indicators of economic health and businesses react quickly to market conditions and their purchasing managers hold perhaps the most current and relevant insight into the company’s view of the economy.
Manufacturing PMI is expected to remain unchanged at 51.4 vs. 51.4 previously. Whereas, the Non-manufacturing figure is expected to be 54.8.
Canadian Dollar – CAD
GDP m/m – The Canadian GDP gives us an opportunity to catch nice movements in the Loonie every month. The figures have remained shaky and highly unpredictable during Q1 of 2018. One month it’s showing a rise of 0.4% while other months’ figure plunges to -0.1%. But it’s good for us as divergence in the forecast and actual figures give us an opportunity to catch nice moments. In May, the GDP is expected to drop to 0.2% vs. 0.4% previously.
Friday – June 1
Here comes the most awaited day of the month. Today, investors’ focus will remain on the U.S. NFP (Non-Farm Employment Change) and unemployment rate.
US Dollar – USD
Labor Market Report – The Nonfarm employment change is one of the most awaited and watched economic data of the month. Although only 164K jobs were added last month, this month’s figure is expected to rise to 190K.
However, the unemployment rate is expected to remain unchanged at 3.9 vs. 3.9%. If this really happens, we are going to see massive buy in the dollar and sell off in Gold. Better than expected figures affirm the sentiments that Powell will hike the rate four times in 2018.
All the best traders and be careful with your trades as the market can remain unpredictably volatile due to a large number of economic events. Stay tuned to FX Leaders for exciting trade setups and forex trading signals. Have an awesome weekend.