A busy week for the euro to dollar with the three main events being the FOMC meeting and rate decision on Wednesday, which is followed on Friday by the Non Farm Payroll data as we are now starting a new month ( how time flies!!) Sandwiched between this of course is the ECB rate decision on Thursday, so a packed week of high profile news. The forex markets, and broader financial markets in general will be watching the statement from the FED on Wednesday VERY closely, following the figures from last week which suggested that the US economy has finally emerged from recession and into growth once again. It is far too early to expect a rate increase of course, but the wording of the statement will be dissected and analysed for any clues that interest rates may now rise sooner rather than later, with any such signal being helpful to the US dollar, which is currently languishing at the bottom of a waterfall on the US dollar index chart. Indeed any comments to this effect could signal the long awaited shift in market sentiment towards the US dollar which is currently occupying the position of the low yielding currency of choice for the carry trade, a place once taken by the Japanese Yen. Should the statement on Wednesday, be confirmed by some good numbers on Friday with the NFP data, then this could signal a revival for the US dollar, and fall in the euro as a result.
Monday’s fundamental news kicks off in Europe with the Final Manufacturing PMI data, a relatively minor news item, followed in the afternoon by a raft of US housing data including Pending Home Sales, Construction Spending, along with two sets of data from the ISM, one for Manufacturing Prices and the other for Manufacturing PMI. Tuesday is an extremely quiet day as the markets wait for Wednesday which also includes the ADP Non Farm Employment numbers which often provide an excellent guide to the more significant NFP figures on Friday, with the former having been compiled from payroll data – a relatively accurate measure of the numbers of people employed and the changes during the month.
Thursday is all about the ECB, and once again not so much the rate decision with the ECB once again keeping interest rates on hold, but more about the accompanying statement to the decision which is released 45 minutes after the rate announcement, and it is the statement itself which will be closely watched for any clues or signals of changes in policy. Finally we have Friday and a crowing end to a busy week with the NFP data, which may well set the tone for the US dollar over the next few months, particularly if it provides a confirmatory message to the statement on Wednesday – so a decisive week for the euro vs dollar of fundamental news on the economic calendar.
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