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As the manufacturing and services sector and Non-farm Payrolls will be released, the event risk for the forex market is in US dollar side. Because of the rate decisions made by the Bank of England and the European Central Bank, the British pound and euro face wide fluctuation but the further announcement and press conference will most likely have the greater influence on the market.
- US ISM Manufacturing
The Supply Management facility should be reporting at 10:00 EDT that appraise in the manufacturing sector pulled back to hold near a five-year low of 48.5 in May from 48.6. According to the data from the Philadelphia and Richmond Federal Reserve regions, a downtick has not stopped its way during the month. The risks are titled to the downside for the ISM manufacturing release.
- US ISM Non-Manufacturing
US non-manufacturing sector's conditions are predicted to worsen slightly in May as the Institute for Supply Management index is estimated to fall to 51.0 from 52.0. It's almost impossible to gain back the confidence from consumer as the Board's measure fell to a 15½ year low during the same month. It's important to focus on if ISM Non-Manufacturing falls below the 50 mark. If the index would improve, then Federal Reserve might leave rates stable.
- Bank of England Rate
For the second month row, the Bank of England is expected to have the rates stable on Thursday at 5.00 percent as heavy inflation pressures prevent the Monetary Policy Committee from concentrating on tougher credit conditions and the tailspin of the UK housing sector. The decision of the rate will be ready at 7:00 EDT but a monetary policy statement might not be issued since the MPC will most likely to leave the rates as it is. The currency rate may rise on the rate announcement on Thursday if US economic indicators is going to be disappointing enough to come heavy on the British pound.
- European Central Bank
For the twelfth consecutive meeting, European Central Bank is also expected to leave rates steady at 4.00 percent. At 7:45EDT the rate announcement will be made but the main announcement will be at 8:30 EDT the same time ECB President Jean-Claude Trichet is giving his press conference. It's interesting to see if he will continue to be militant or try to adjust instability in the market slightly better. It was estimated that Euro-zone CPI in May recover by 3.3 percent. As the energy and food costs remain high, it's above the ECB's 2 percent target. For Trichet, "price stability" will most likely be the main concern. However, if he suggests that price pressure will slow down, there might be sell-offs among majors. Bottom line is everything will depend on the announcements.
- NFP Day
Non-farm Payrolls (NFPs) refers to US labor market report. The news release at 8:30 EDT is a strong market –mover. To be a little bit expert on how the data will fare, it is wise to go through NFP Preview on Thursday. It is likely that NFPs may fall negative the fifth consecutive month, but if NFPs rises, there might be a chance for the US dollar to recover dramatically.
We should also keep our eyes out for another labor market report: the Canadian net change in employment at 7:00 EDT. This data is also a strong market-mover for the Canadian dollar. Last month, the net employment change improved and led the USD/CAD pair to tumble down right after the news. Traders should be ready to expect volatility this time around.
19:47
Posted on Jun-02-2008
