May 31 - Economic Events Outlook - A Day Before the Nonfarm Payroll Release - Forex News by FX Leaders

May 31 – Economic Events Outlook – A Day Before the Nonfarm Payroll Release

Posted Thursday, May 31, 2018 by
Arslan Butt • 2 min read

The global markets are massively volatile due to an ease in the geopolitical tensions and worse than expected ADP and Prelim GDP from the U.S. This raises concern about the June 13 FOMC meeting.  The ADP non-farm dipped to 178K from the forecasted 191K, and Prelim GDP q/q grew at a rate of 2.2% vs. 2.3%. Do you think the central bank would be comfortable hiking the interest rate? I think NOT. The U.S. economy is still lagging. That’s why the nonfarm payroll should be monitored very closely to drive further sentiments about the Fed’s Policy decision.

 

Today’s main event is the Manufacturing PMI and Non-Manufacturing PMI data from China. The impact of these economic event’s is unbounded as it also influences the Australian dollar. Besides this, GDP figures from Canada will be traded.    

Chinese Yuan – CNY

Manufacturing PMI – Is a leading indicator of economic health and how quickly businesses react quickly to market conditions. The purchasing managers hold the most current and relevant insight into the company’s view of the economy. Chinese manufacturing PMI came out better than expected, rising from 51.4 to 51.9 in May.

 

Normally, better than expected Chinese manufacturing PMI underpins the Aussie, as China is Australia’s biggest trading partner but the market reacted oppositely.  The reason for this is that China’s Steel Industry PMI dropped to 50.6 from 51.7.

 

The impact of U.S. metal tariffs is taking its toll on China’s steel industry. Australia’s top exports are crude minerals such as iron ore. If China’s metal production is decreasing then demand for Australian input materials decline as a result, thereby impacting both of the countries severely.  

 

Canadian Dollar – CAD

GDP m/m  – The Canadian GDP gives us an opportunity to catch nice movements on the Loonie every month. The figures have remained shaky and highly unpredictable during the first quarter of 2018. One month it shows an increase of 0.4% while another month it plunges to -0.1%. This is good for us as divergence in the forecast while the 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.

 

U.S. Dollar – USD

Unemployment Claims – The data is about the number of individuals who filed for unemployment insurance for the first time during the past week. The data will be given at 12:30 (GMT), and economists are expecting a drop in the jobless claim to 228K from 234K from last week.

 

Crude Oil Inventories – At 15:00 (GMT), the EIA (Energy Information Administration) will report the stockpiles data. Analysts expectation is -0.4M which is much less than a 5.8M build last week. This can support crude oil today.  

 

Summing Up – Despite all the economic events discussed above, traders are likely to follow technical setups. So, the idea is to take intra-day positions before the release of U.S. labor market figures tomorrow. Stay tuned for live market updates and forex trading signals. Good luck!

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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