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ECB, RBA and BOC To Hold Monetary Policy Meetings, Fed Speakers Awaited

Sep, 04th 05:08

The U.S. dollar recovered from a short slump to push higher against a basket of the other major currencies on Friday in spite of a weaker-than-expected U.S. Non-farm Payrolls. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, edged 0.25% higher to close at 92.82 late Friday after initially having fallen to as low as 92.05.

The U.S. economy was reported to have added 156,000 jobs in August from the prior month, which failed to reach economists’ expectations calling for the economy to add 180,000 new jobs last month. According to the report released by the Labor Department, the unemployment rate ticked up to 4.4% from 4.3% last month which was also the expected reading for August.

The dollar found some support after another report from the Institute for Supply Management showed that manufacturing activity in the U.S. reached the strongest level in the last six years in August. U.S. manufacturing index of August climbed to 58.8% from 56.3% in July. That is not only the highest reading since April 2011 but also surpassed economists’ forecast for a reading of 56.8%.

In the week ahead, the U.S. Institute of Supply Management is to release data on August service sector activity on Wednesday amidst expectations for a rise of 1.4 points to 55.3. U.S. markets will be closed in observance of Labor Day Besides the services PMI on Monday.

The coming holiday-shortened week will see comments from a handful of Fed speakers including influential New York Fed President William Dudley, Governor Lael Brainard and Dallas Fed President Robert Kaplan.

Turning to the Euro, the single currency lost 0.41% to close at $1.1859 on Friday, after rising to a two-and-a-half year high of 1.2069 on Tuesday. The European Central Bank’s latest interest rate decision is due on Thursday with no major policy changes expected.

President Mario Draghi’s press conference which will be held 45 minutes after the announcement will draw market attention,  as investors look for fresh clues on when and how the central bank would start unwinding its massive quantitative easing program.

Also on Tuesday, the Reserve Bank of Australia is to announce its benchmark interest rate and publish a rate statement which outlines economic conditions and the factors affecting the monetary policy decision.

On Wednesday, the Bank of Canada’s interest rate decision is due with most experts expecting the central bank to hold its benchmark rate at 0.75% as the central bank did hike rates for the first time in seven years at its previous meeting in July. The BOC also left the door wide open to further moves, causing investors to price in at least one more rate increase by the end of this year.

Besides the BOC, market participants will focus on monthly trade figures, as well as the closely-watched jobs report which are scheduled to be posted on Friday.

The U.K. will release readings on August construction sector activity on Monday, followed by a report on the service sector on Tuesday and one on July manufacturing production on Friday. While the construction PMI is forecast to tick higher to 52.0 from 51.9 a month earlier, a survey on Britain’s giant services sector is forecast to edge down to 53.5 from 53.8 last month.

China is scheduled to release August trade figures amidst expectations that the country’s trade surplus widened to $48.6 billion last month from a surplus of $45.7 billion in July. Exports are forecast to have climbed 5.1% in August from a year earlier, after having increased by 7.2% a month ago, while imports are expected to rise 10.0%, following a jump of 11.0% in July.