Weekly Outlook: Oct 03 - 10; Last NFP Report Before November's FOMC Meeting!

Hard Brexit, U.S. Politics, and Deutsche Bank turmoil have shaken the market last week. The U.K. Prime Minister Theresa May stated that she will start separating the nation from the European Union the first quarter of 2017 and she is tending a “Hard-Brexit”. Deutsche Bank closed up 6.4% on Friday while the debate from U.S. Presidential Elections revealed various developments.

In the week ahead, the most important event is the NFP on Friday! It’s one of the three NFP reports left before December’s FOMC meeting, when market majority expects a rate hike from Fed. On Monday morning, the Reserve Bank of Australia will announce its interest rate decision and on Wednesday, the U.S. ADP employment change for September will be published.

The week is starting with the release of the retail sales for September in Switzerland. After that, in Germany, we are waiting the Markit manufacturing PMI to be published with the forecast to remain the same as the first estimate at 54.3. The Markit manufacturing PMI will be announced for Eurozone as well, and is estimated at 52.6 the same as the preliminary figure. Later on, the Bank of England Financial Policy Committee will publish its meeting minutes while at the same time the Markit manufacturing PMI in U.K. will be released with the forecast to be 52.1 from 53.3 flash. Moreover, in U.S., the Markit manufacturing for September is expected to remain unchanged at 51.4, as initially forecasted. Although, attention usually focuses on the ISM Manufacturing index which is forecasted to rose to 50.5 from 49.4 before. In the midnight, the RBA will announce its interest rate decision which is forecasted to stay at 1.5% since May’s rate cut. The RBA rate statement will be released with some more details on the decision taken and the current economic situation. At the same time, RBNZ Governor Wheeler will have a speech.

On Tuesday, in the morning, U.K. PMI construction for September will be announced and is forecasted to be a bit lower that last months’ figure, to 49.0 from 49.2 before. Eurozone’s PPI for August is expected to remain unchanged at 0.1% mom. In U.S., the IBD/TIPP economic optimism for October is coming out. Overnight, Australia will release its retail sales for August and the expectation is to rise by 0.2% mom from 0.0% the previous month.

On Wednesday, one of the market-affecting events of the day is the non-monetary policy’s ECB meeting early in the morning. Later on, in Germany, the Markit services and composite PMIs will be released and both of them are forecasted to remain the same as their initial forecasts. Also, Markit services PMI in U.K. is forecasted to fall to 52.0 from 52.9 the first estimate. The next important market affecting event of the day is the U.S. ADP employment change which is expected to show that companies added 165K jobs in September vs 177K in August.


Meanwhile, the U.S. trade deficit is estimated to grow at $-41.40 billion in August from $-39.47 billion the month before. Furthermore, the U.S. Markit services PMI in September are estimated to meet initial estimate of 51.9, completing the figure for the Markit composite PMI. A bit later the ISM non-manufacturing PMI is forecasted to rose to 53 from 51.4 before.

Early on Thursday, the German factory orders of August are forecasted to have been up 0.3% mom, from 0.2% mom in July. The focus of the day is the ECB Monetary Policy Meeting Accounts. In addition, in the U.S., the weekly initial and continuing jobless claims are coming out.

On Friday, all eyes will be on the NFP! The NFP number forecast seems to be stronger in September than in August which was at 176K. This may have a bullish effect on the dollar, which could add further pressure to the EUR/USD and the other USD cross pairs. Three U.S. employment reports left until December’s Fed policy meeting when most market participants anticipate an interest rate hike, and September report is one of them. Thus, each indicator on that report and especially the headline Non-farm payroll number will be under the microscope of investors and FOMC members. The average hourly earnings are also coming out with an expectation to rise by 0.2% mom, instead of the previous month which rose 0.1% mom, while the unemployment rate is estimated to remain unchanged at 4.9%.

The day is starting with the industrial production in Germany which is estimated to rose by 0.8% mom in August from a drop of 1.5% in the month prior. In the U.K., industrial production is estimated to have increased by 1.3% mom in August, a slower pace than the previous month that increased 2.1% mom. The nation’s manufacturing production, for the same month, is forecasted to rise by 0.4% mom from a drop of 0.9% mom. Even more, the housing starts in Canada will be published as well as the unemployment rate which is expected to be the same as the previous month. In the U.K., the NIESR GDP estimate for the three months to September will be released. The week is ending with the FOMC Member Mester speech a few hours after the NFP report.