Your Weekly Fundamental View (July 31–August 4)

Need to Know

The US NFP report, GBP MPC Official Bank Rate Vote, and Australian Cash Rate Decision will be in focus this week. The NFP is expected to show a decrease of 35k jobs (from 222k to 187k), which will be clarified by the ADP report on Wednesday. The RBA is expected to leave the rate unchanged (1.5%). The BOE is also expected to leave the official bank rate at 0.25%.

Coming Up

CNY Manufacturing PMI out on Monday, 31 July

The data represents the level of the diffusion index based on the surveyed purchasing managers in the manufacturing industry.

Why should you care? It's a leading indicator of economic health. The data should move Chinese equities and Forex Asia-Pacific crosses.

AUD RBA Rate Decision and Statement Released on Tuesday, 1 August

There should be no rate hike or rate cut. The RBA is expected to leave the rate unchanged. Traders should be paying attention to the statement as a hawkish or a dovish statement might open trading opportunities.

Why should you care? Traders could benefit from short-term volatility in AUD crosses once the report has been released.

GBP Manufacturing PMI Due on Tuesday, 1 August

The result above 50 should indicate industry expansion, while a number below 20 indicates contraction.

Why should you care? Traders might want to trade the news based on a deviation above or below 50.

NZD Employment Change and Unemployment Rate Due on Wednesday, 2 August

Labour market data is an important gauge of the overall economy's health because the consumer spending is highly correlated with labour market conditions.

Why should you care? These reports should bring volatility to NZD crosses and provide trading opportunities. Asian session traders should be paying attention to the NZD/JPY currency pair.

USD ADP Due on Wednesday, 2 August

The data precedes the NFP as an early 'sneak peek' at the employment growth.

Why should you care? Job creation is an important gauge of consumer spending that translates to a majority of overall economic activity.

USD Crude Oil Inventories Due on Wednesday, 2 August

A build-up in crude oil inventories usually signals a decreasing demand from refiners. On the other hand, a drop would signal that refiners are still producing at elevated levels, and the inventory overhang in oil products could continue.

Why should you care? This is primarily a US indicator, but it also affects the CAD due to Canada's huge energy sector.

GBP MPC Bank Rate Decision with MPC Meeting Minutes on Thursday, 3 August

The vote is normally reported in the 'X-X-X' format. The first number shows how many MPC members voted to increase interest rates; the second number, how many voted to decrease rates; and the third, how many voted to hold rates. Any deviation from the forecast (3-0-5) should provide stronger volatility in the GBP currency basket. Additionally, the rate should remain unchanged (0.25%).

Why should you care? Short-term interest rates are an extremely important factor in currency valuation. News traders should benefit from the GBP currency basket volatility if they aim to trade the event.

AUD RBA Monetary Policy Statement Released on Friday, 4 August

The statement can be neutral, hawkish, or dovish. It provides a valuable insight into the bank's view of economic conditions and inflation.

Why should you care? The statement will provide traders and investors with the key factors that might shape the future of monetary policy decisions and influence the interest rate decisions.

CAD Trade Balance Released on Friday, 4 August

The trade balance represents the difference in value between the imported and exported goods during the reported month.

Why should you care? A positive number indicates that more goods were exported than imported.

USD Non-Farm Employment Change and Average Hourly Earnings Released on Friday, 4 August

Source: NFP Employment Change, HighCharts.com

The NFP data represents the overall change in the number of the employed during the previous month, excluding the farming industry, while average hourly earnings represent the change in the price businesses pay for labour, excluding the farming industry.

Why should you care? The Federal Open Market Committee and traders usually pay more attention to the core data. The actual report coming better than the forecast is great for the currency. This is possibly the most traded news release. The key test for the Fed is to ensure that inflation is improving and full employment is maintained. However, if the NFP is bulging above 200k, it may give incentive to hike sooner rather than later.