Next week promises to be a busy week in the Forex markets as there are many reports that can impart volatility to the markets. Compounding this is the 4th of July holiday in the US, when the trading community will be depleted.
The reports start Sunday night with both the Japanese and the Chinese manufacturing indexes. The Japanese index is estimated to be a positive 3 and the Chinese index is estimated to be 50.1, barely positive. These reports will be followed on Monday with UK and US Purchase Managers Index. Here again, the numbers anticipated are barely positive.
The highlights on Tuesday will be mostly Australian reports. The Reserve Bank of Australia will announce its rate decision, expected to be unchanged at 2.75%, with a rate statement. We also get the retail sales number and the trade balance. The Chinese numbers from Sunday will also impact the A$. We also wonder if movement toward the elimination of former PM Gillard's carbon tax might positively influence the A$.
On Wednesday, the reports begin to focus on the US. The ADP Employment Change report is attempting to anticipate the Non-Farm Payroll report. Their estimate is the addition of 160K jobs, up from 135K last month. This report will be followed by the US Trade Balance. That estimate is a negative $40.15B, about the same as last month. And a final high impact report on Wednesday is the US PMI-ISM Non-Manufacturing Composite. This index is estimated to be 54, well above the negative 49.9 level.
Thursday the 4th, while the US is on holiday, both the UK and the EU Central bankers tell us what they are thinking, or perhaps what they want us to know. With the US traders thinned by the holiday, there may be more than normal volatility should there be a surprise.
Then on Friday we get important numbers from both the US and Canada. The US NFP number is estimated to be 165K, and the unemployment number a tick better at 7.5%. Canadian employment change is estimated to be a negative 5K, the unemployment rate 7.1%. This will be followed by the CA PMI-Ivey.
With this many reports, there should be ample trading opportunities. There are some things that will be interesting to watch. Should the US numbers fail to confirm a continued recovery, will this be bearish the USD as the market will anticipate Bernanke's bond buying will continue? Also, would this impact the slumping commodities markets?
There are many Australian and Canadian numbers coming out this week. Both of these currencies have recently been crushed. Currently, the A$ is trading close to .91, and the USD is now trading at over 1.05 versus the loonie (FXA, FXC, UUP). As we observed earlier today, both currencies have become popular as allocated reserve currencies. Currently, there is almost $200B held as reserve currencies. Is there a price where the central bankers will double down on their bets? They are not about to give us a heads up about their plans, but we must watch both of these currencies for a potential turn. As always, mind your money.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.