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WEEK AHEAD: AUGUST 29

Short Description

NFP & EURUSD Parity

Video Script

Number one:

Non-Farm Payrolls and Unemployment rate. 

The monthly NFP report alongside the unemployment rate on Friday is the major event that the markets will be closely watching. There was a robust reading for July of 528 thousand new jobs. It will be interesting if there is revision to that number. The consensus estimate from economists is for 290 thousand new jobs in August, which, if accurate, would signal some weakness in the labor market and hence could give some control back to US dollar bears. 

Number two:

Euro area annual inflation for August 

Fears of a recession caused by high energy prices and inflation have caused the euro to trade below parity with the dollar, but coming Wednesday, statistics for inflation in the euro area are released. According to Eurostat, the EU's official agency, annual inflation increased to 8.9 percent in July 2022 from 8.6 percent in June. According to forecasts, annual inflation in August may fall back to 8.6%. The idea of inflation peaking may help the EURUSD reclaim a level above parity.

Number three:

Canadian GDP for the second quarter

Despite a tiny expansion in January 2022, the Canadian GDP figures reveal that the economy has been deteriorating monthly on an annual basis since August of last year. On Wednesday of this week, traders eagerly await the yearly GDP figures from the Canadian economy. On an annual basis, the median estimates are set at around 2.70 per cent, while quarterly, there are some expectations of a modest expansion of about 0.4%. Bulls on the Canadian dollar should be refreshed by any favorable reading.

Number four:

British Manufacturing PMI 

According to a widely followed survey that was released last week, the private sector in Britain slowed in August as factory output dropped and the larger services sector managed only a slight gain, adding to indications that a recession may be on the horizon while inflationary pressures are still high.  Expectations for this week's manufacturing PMI announcement range around 52.2, which should be higher than the estimate from July and could pile further pressure on Pound Sterling.

Number five:

US earning releases to be made

Investors are waiting for a few important announcements this week even though the second quarter's earnings session is about to close. The highly anticipated announcements will come from companies like Baidu, HP, and Broadcom. 87% of the S&P 500 businesses have already released their second-quarter earnings reports. Seventy-five per cent of these firms reported actual EPS above estimates, which is good but less than the 5-year average of 77%. Q2 Earnings have on average beaten expectations by 3.4%.