The Most Commanding Forces in the Forex Market Today

Following US’s Labour Day saw the opening of markets, ISM recorded a surprise on its non-manufacturing index leaving the dollar tumbling. One company indicated that service index for the previous week was weaker with a slight contraction of 0.90% (more than the predicted 0.40%) was witnessed in the manufacturing sector. The PMI report showed that the August index was 51.4 which was way below the market estimates. In fact, the PMI index had dropped below that of July which was 55. The services division was improving, albeit gradually.

 

What Was the Impression on the Market?

The markets construed the data as an indicator of a losing economy making the investors to turn their back on the greenback. Silver and gold prices rose in no time while the price action exposed a quick change of events in the market.

However, on Friday that week, greenback made a comeback while in the UK, services and manufacturing PMI saw a rebound, and the services sector continued to expand.

The main beneficiary of this positive data was the British pound while its counterpart the Sterling lost the grip as the BoE inflation report was being heard.

 

The European Central Bank Meeting

So much had been anticipated for the meeting that was held on Thursday. There was an expectation for the ECB to bring to light on its QE and their possible action, or even clarify on the bond shortage issue. Along with the predictions, also came the staff economic forecasts (the possible market movers) which needed to be addressed.

 

What Happened at the ECB Meeting?

During the ECB meeting, important data was released. It is predicted that inflation will grow at 0.20 per cent while next year an addition of 1 per cent. On the other hand, GDP growth rate is expected to be at 1.70 per cent, which is a bit higher than 1.60 per cent, an estimate made in June.

 

A Glance on the UK market

Next week the attention will be on the UK. The BoE will be meeting on September 22 and the world expects it to be a non-event. So much is expected from the Bank of England’s Governor Carney, though he is unlikely to let go of his easing partiality.

Previously, following the hearing of the BoE’s inflation report, Governor Carney indicated that he was happy with the central bank’s actions after the Brexit. The BoE will meet just before Tuesday when the inflation data will be made public; it is, however, predicted to be higher than last month’s.

Other major events for the week ahead include the economic releases including the retail services for August. After the Brexit, UK consumers kept on with buying goods and services, all these were attributed to the decreased exchange rate. Then came August, the sterling managed to maintain stability in spite of being lower.

The unemployment rate in the UK has maintained at 4.9 per cent with the earning index continually increasing. The cases of unemployment have really been kept low, a clear indicator that the labour sector is yet to experience the impact of the Brexit.

 

Other Markets across the Globe

Important information on US market will also see greater analysis before the meeting of Fed that will be on September 21. Key information such as the retail sales will be closely monitored. With the numerous speculations made already, the meeting may attract more attention than expected.

The coming week, a lot is being expected in terms of what the market will look like. However, it is only a matter of time that all the information will come out clear regarding the market.

On the other hand, the Swiss National Bank will meet to wrap up its monetary policy; however, a press conference will not follow. Forecasts indicate that there may be no alterations to the monetary policy at the meeting.

Australia’s monthly employment report as well as the New Zealand GDP data is expected to make the headlines over the week. Nevertheless, the FOMC’s September meeting and the US dollar are expected to be the main game changers this week.

Featured image courtesy of Flickr | Jim Makos