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3 Economic Themes Coming Your Way Next Week

May 31, 2011 10:39 AM ET
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What if the crazy price action we saw last week was just a warm-up for next week's salvo of big-hitting economic reports? Here's why you should pay attention to the three groups of reports coming your way next week.

1. Commodity Perplexity Last week we saw commodity-related currencies like the Aussie, Loonie, and Kiwi break their Siamese triplets-like synchronization as each comdoll reacted to different bits of news. For one, we saw the Kiwi climb against the dollar like there was no tomorrow when New Zealand popped up a bullish economic report after another.

The question is, can New Zealand keep up its pace next week? Its trade balance report will kick off the week today at 10:45 pm GMT, while we'll also see the big NBNZ business confidence report at 1:00 am GMT.

Kiwi win!

Speaking of trade balance, Australia will also release its own version on Thursday at 1:30 am GMT. Recall that the Aussie bulls and bears played tug-o-pips last week when anti-dollar sentiment wrestled with a bit of risk aversion in markets. Let's hope a clear trend emerges with next week's big Australian reports!

Aside from Australia's trade figures, the GDP report out on Wednesday 1:30 am GMT might get AUD/USD moving, especially as the big retail sales report will also be released around the same time.

If you're really interested in Australia's trade, you might also want to catch China's manufacturing PMI a few minutes before Australia's GDP. See, Aussie traders also pay attention to China since it is Australia's biggest trade partner. In fact, wasn't it just last Monday when HSBC's worse-than-expected estimate of China's PMI spooked the Aussie bulls?

Of course, we can't talk about comdolls without talking about the Loonie! Though USD/CAD's price action was tighter than Big Pippin's dance pants last week, I have a feeling that we're about to see big movements next week.

Aside from the big GDP report on Monday at 12:30 pm GMT, we'll also get hold of the BOC's interest rate decision. The GDP is only expected to tick 0.2% higher in March from February's 0.5% rise, while the BOC is seen to keep its interest rates at 1.00%. But be sure to be on your toes for any surprises, aight? You'll never know when volatility in black crack prices will hit you!

2. Euro Woes? More like Euro... Whoa! As in whoa, boy! You need a chill pill! After making fresh record lows against the franc last week, the euro region hardly needs economic reports to clarify what many market junkies are already speculating - Greece will default on its debts, the euro block will be dissolved, and Justin Bieber will get another tattoo. Okay, maybe some predictions aren't that dramatic and the last one was unrelated, but you know what I mean.


Until the Euro Zone officials hustle some muscle and lay out concrete plans to address Greece's restructuring (or "reprofiling" as they want to call it - as if they're fooling anyone), the euro's upside move might be limited.

Unless credit ratings agencies make more American Idol-like downgrade decisions, next week's focus will be on Germany's retail sales on Tuesday at 6:00 am GMT, followed by its employment figures at 7:55 am GMT. Traders closely watch Germany's figures because the economy surpasses most of the other euro zone economies. Imagine what traders would think if the region's strongest economy suddenly shows weak reports!

3. U.S. NFP Weak Nope, you're not seeing a typo in the headline. Last week we saw the dollar's price action reflect the investors' unwillingness to buy up the euro...and the dollar. Heck, with weak GDP and initial jobless claims highlighting the U.S. economy's sluggish recovery, it's no wonder USD/CHF made fresh record lows!

Well, it's the start of another month, and you know what that means - it's NFP week! The Greenback will get a chance to bring the sexy back if next week's big economic reports print to the upside. Wall Street warriors will start the week chillin' like ice cream fillin' on a holiday on Monday, but they'll get back in action on Tuesday when the CB consumer confidence is released at 2:00 pm GMT.

NFP report

On Wednesday we'll start to see employment-related figures like the Challenger jobs cut at 11:30 am GMT, followed by the ADP non-farm employment change at 12:15 pm GMT. As much as PMI numbers are important in the U.S. economy, more traders will be focusing on employment numbers as they usually signal the direction of spending, optimism, and future economic activity.

If jobs numbers are important, then you must pay close attention to the big non-farm payrolls (NFP) report on Friday at 12:30 pm GMT, which will be released together with the U.S. unemployment rate. Market analysts are betting that this month's NFP figure will be lower than April's 244,000, but keep an eye out for any surprises in volatility!

So which of these sets of economic reports are you planning on trading this week? Feel free to give a shoutout on the box below, or bug me and the other Babypips bloggers on @BabyPips Twitter and Facebook!


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