Lower than expected NFP figures, so what?
It was a week full of fundamentals and most definitely full of volatility last week. We had another week of the USD dominance. Before the lower than expected NFP figures announced, the USD index made record weekly high of 88.30.
On Monday, Aussie and Kiwi were on the stage as China’s manufacturing activity fell to its 6 month low.
On Tuesday, major development was on Euro side as a report focussing on the rising tensions within the ECB took the stage. The report covered that the heads of the central banks plan to challenge the ECB president Mario Draghi and ECB might be reducing its large scale QE program.
On Wednesday, the US ADP report came at 230K, and the US ISM Non-manufacturing PMI came 57.1 lower than forecasted 58.2 level. However the lower than expected PMI data could not reverse the longlasting USD dominance in the market. Meanwhile Eurozone’s final Service-sector PMI data came at 52.3 in October, down from the forecasted 52.4 level, putting common European currency under further pressure.
On Thursday, the ECB announced its unanimousity on its €1 trillion expansion plan. The bank announced that they have started purchasing of the covered bonds and that they would soon be stating to purchasing of the asset-backed securities. The programe would be lasting for two years and with the TLTROs the program would have a sizeable impact on the ECB’s balance sheet bringing it to the level of March 2012.
On Friday, the US Non-farm payrolls came at 214K in October lower than forecasted 235K. Meanwhile, the US unemployement rate declined to 5.8%in october, lowest since 2008, and the average hourly earnings rose to 2.0% YoY in October. The news came as a shock to the market, first read by investors negatively, then positively and finally negatively. That being said, the USD gained against almost all of its counterparts on weekly timeframe.
The upcoming week is expected to be full of volatility. In Europe the most market driving headlines are expected to be the French and the German QoQ prelim GDP figures. In the US Unemployment claims and the University of Michigan Consumer Sentiment data are expected to create the USD volatility.
Monday, November 10: The market is expected to be opening in Asia with the Chinese October Consumer and Producer inflation data and the People’s Bank of China’s New Loands and Money Supply data. In addition 2014 Asia0Pacific Economic Cooperation Summit will be kicking off in Beijing. All these should be creating volatility in Aussie and Kiwi pairs.
Later during the European session, Sentix Investor Confidence data will be announced with negative expectations.
Tuesday, November 11: Japan’s September trade data and BoJ’s October Bank lending figures will be the main fundamentals from Asia session on Tuesday. ustralia will be on the stage early on Tuesday
Meanwhile Australia is scheduled to announce the Q3 Housing Price Index and the National Australia Bank is planned to release its Business Confidence index. It is worth to mention that there are concerns within the RBA that there is a risk of housing bubble in the country.
In New Zealand, the Reserve Bank of New Zealand’s Governor Graeme Wheeler is due to hold a press conference about the Financial Stability Report.
Wednesday, November 12: It is expected to be quite in Asia on Wednesday.
Later on during the day the European session, Cable is expected to be quite volatile on a number of fundamental releases and the BOE Governor Mark Carney’s to press conference, along with other MPC members, about the UK Inflation Report.
Thursday, November 13: Fundamentally it is going to be busy on Thursday. Starting focus will be the Chinese October industrial production data and the Japanese Corporate Goods Price index.
In Europe German, Spanish, French and Italian October CPI data will be announced.
However the most important market mover will be the US Unemployment Claims data after last week’s lower than expected NFP figures.
Friday, November 14: Europe’s economic drivers will be on the stage on Friday. Preliminary Q3 GDP data for Germany, France and the other primary EU economies and the Eurozone CPI data will be announced with expected volatility in EURO pairs as the ECB struggles to set up its strategy out of the troubling crisis
Later on during the day US session we will have the US Manufacturing Sales, Retail Sales and the University of Michigan’s Consumer Sentiment announced.
Over the weekend we will have the G20 meeting taking place, which is expected to address the Russian – Ukrainian crisis.