Oct 29 – Nov 2: Forex Week Ahead – How to Trade BOE & BOJ Monetary Policy & US NFP?

Posted Saturday, October 27, 2018 by
Arslan Butt • 3 min read

During the previous week, the Greenback traded in narrow ranges against most of its peers as traders’ desire for riskier assets remained uncertain while the Euro lingered near two-month lows after the ECB (European Central Bank) failed to persuade markets that rates would rise.

Speaking of the coming week, it’s fully packed with market-moving economic events, with the US Non-farm payroll and unemployment rate topping the list. Tighten your belts for another volatile week.

Watchlist – Top Economic Events This Week

Monday – Oct 29

On Monday, the market may exhibit thin trading volume due to the lack of major economic events. However, the Asian investors may price in the stronger than expected advance GDP figures from the United States.

Tuesday – Oct 30

US Dollar – USD

CB Consumer Confidence – For all the newbies, the financial confidence is a leading indicator of consumer spending, which accounts for a majority of overall economic activity. For instance, you will spend more only if you are confident about your job or business.

Back in September, the consumer confidence surged to 138.4 points, but the figure is likely to dip to 136.3 this month. The data is due at 14:00 (GMT).

Wednesday – Oct 31

Today’s main event is the monetary policy decision from the Bank of Japan, Prelim GDP, Inflation figures from Australia and ADP Non-Farm Employment Change from the United States. In addition, the Manufacturing PMI and Non-Manufacturing PMI data from China will also be in focus.

US 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 September, ADP reported a robust gain of 230K jobs, while a lower gain of 190K is predicted for October.

Japanese Yen – JPY
Monetary Policy Report – Speaking of the BOJ Policy Rate, the Bank of Japan left it unchanged at -0.10% during the previous meeting in Sept. Honestly, the Japanese fundamentals haven’t improved over the course of this month. So, should we expect a rate hike this month? Logically, no. We can expect BOJ to keep the rates unchanged at -0.10%.

However, the BOJ Press Conference will be worth watching to determine the bullish or bearish bias of the central bank.

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. 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.

Eurozone manufacturing production

Manufacturing PMI is expected to drop from 50.8 to 50.6 previously. Whereas, the non-manufacturing figure is expected to remain unchanged at 54.9.

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 the Q3 of 2018. One month, it’s showing a rise of 0.5% while another month’s figure plunges to 0%. But it’s good for us as divergence between the forecast and actual figures give us an opportunity to catch nice moments. This month’s forecast isn’t available now, but we will surely update it in our morning reports before the release of the event. Stay tuned.

Thursday- Nov 1

GBP – Bank of England’s Monetary Policy Decision
At 12:00 (GMT), the Official Bank Rate rate will be monitored. Honestly, the odds of a change in rate are almost 0%. BOE is widely expected to keep the rate on hold at 0.75%.

So what’s there for us to trade?

Well, my friends, it’s the MPC Official Bank Rate Votes. The BOE MPC meeting minutes include the interest rate vote for all MPC members from the most recent meeting. The division of votes presents an insight into which members are shifting their stance on interest rates and how the committee is to determine a rate change in the future. For the moment, the votings are 0-0-9, it means, all the members are expected to vote to hold the rate.

Friday – Nov 2

Here comes the most awaited day of the month. Today, investors focus will remain on the US 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 releases of the month. Although only 134K jobs were added last month, this month’s figure is expected to rise to 191K.

However, the unemployment rate is expected to jump from 3.7% to 3.8%. If this happens, we may see selling in the dollar and buying in GOLD. Worse than expected figures hurt 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!

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About the author

Arslan Butt is our 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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