The US Non-Farm Payroll data, scheduled for release on Friday, is set to dominate the holiday-shortened week as markets brace for the Federal Reserve’s expected rate cut later this month. The stakes are high, with any significant deviation from expectations likely to send shockwaves through the markets.
Concurrently, the Bank of Canada is on course for yet another rate cut, oil prices continue to face downward pressure, and China’s manufacturing sector remains under scrutiny with more data releases on the horizon.
Key Events for the Week Ahead along with us non-farm payrolls
Monday
Caixin Manufacturing PMI (China)
China’s manufacturing sector is expected to sluggish, with the Caixin Manufacturing PMI expected to come in at 49.8 for July, down from 50 in the previous month.
Supply continues to outpace demand, with output expansion slowing to its weakest pace in nine months. Although there’s some improvement in services activities (52.1 vs. 51.2 previously), the overall PMI reading still reflects a mixed economic outlook.
Tuesday, September 3
ISM Manufacturing and Services PMI (US)
Last month, the ISM Manufacturing PMI dropped to 46.8, marking the sharpest contraction in US factory activity since November 2023 and the 20th decline in the past 21 months.
This highlighted the impact of high interest rates on goods demand. The upcoming data is expected to rise slightly to 47.5, which could weigh on the dollar.
Wednesday
Q2 2024 GDP (Australia)
Australia’s GDP grew by 0.1% in Q1 2024, up from an upwardly revised 0.3% in the prior quarter, leading to an annual growth rate of 1.1% YoY. While this marks the tenth consecutive quarter of GDP growth, it’s the softest pace in six quarters, compared to an average of 2.4% over the past decade. The upcoming data is expected to show a slight increase to 0.2%, which could positively impact the Australian dollar.
Bank of Canada Policy Meeting
The Bank of Canada is widely expected to deliver its third consecutive rate cut, lowering the benchmark rate from 4.50% to 4.25%. The central bank has already trimmed rates twice since June, and markets are anticipating two more cuts by year-end after September. This could have a negative impact on the Canadian dollar.
US JOLTS Job Openings
The JOLTS Job Openings data is expected to decrease slightly to 8.0 million, down from the previous 8.18 million, which could also negatively affect the US dollar.
Thursday
ISM Services PMI US
The ISM Services PMI, representing the resilient and crucial sector of the US economy, rebounded to 51.4 in July from 48.8, alleviating slowdown fears. This month, the ISM Services PMI is expected to ease slightly to 51.2, while the Manufacturing PMI is forecast to rise to 47.5.
US Unemployment Claims
Unemployment claims are expected to increase to 229,000, compared to 232,000 in the previous week. Additionally, the ADP Non-Farm Employment Change is forecasted to rise to 136,000 from 122,000, which could positively affect the US dollar.
Friday- US Non-Farm Payrolls
The unemployment rate, currently at 4.3%, has exceeded the Fed’s June projections of a median 4.2% in 2025 and 4.1% in 2026, indicating that economic risks might be greater than anticipated. With market sentiment having fully recovered from the early-August job scare, partly due to distortions from Hurricane Beryl, this week’s data will be closely watched for signs of labor market strength. Expectations are for a rebound in job additions to 164,000 in August, up from 114,000 in July.
The unemployment rate is expected to tick lower to 4.2%. Any unexpected surge in the unemployment rate could renew growth concerns and dampen the ongoing risk rally.
Canada Employment Data
Canada’s Employment Change is expected to rise by 25.6k, up from a previous decline of 2.8k, while the unemployment rate is projected to increase slightly to 6.5% from 6.4%. These developments could introduce volatility in the Canadian dollar.
Happy trading!
Commodity Samachar Securities
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