Forex Market Outlook For The Week September 28 – October 02, 2020

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In the upcoming week, the first presidential election debate between Joe Biden and Donald Trump will be the main focus. Further, the last of the official rounds of Brexit talks are scheduled to be held next week. Key economic data releases scheduled for the week include the non-farm payrolls, manufacturing PMI, average hourly earnings and unemployment rate form the US. Having said that here is an outlook on a few of the key economic releases:

#1: Euro Area ECB President Christine Lagarde Speaks (09/28/2020 Monday 13:45 GMT)

Christine Lagarde, President of the European Central Bank, is scheduled to deliver an introductory statement via satellite at the European Parliament’s ECON committee in Brussels. Markets often turn volatile during her speeches as traders make an attempt to understand the direction of interest rates.

#2: Euro Area ECB President Christine Lagarde Speaks (09/30/2020 Wednesday 07:20 GMT)

Christine Lagarde, President of the European Central Bank, is scheduled to speak in Frankfurt at the ECB and its Watchers Conference hosted by the Institute for Monetary and Financial Stability. Markets often turn volatile during her speeches as traders make an attempt to understand the direction of interest rates.

#3: United States ISM Manufacturing PMI (10/01/2020 Thursday 14:00 GMT)

forex market outlookThe Manufacturing Purchasing Managers Index (PMI) reported by the Institute for Supply Management in the United States rose to 56.0 in August from 54.2 in the prior month. The reading for the month beat analysts’ expectations of 54.5. The reading for August pointed towards the largest growth in the manufacturing sector ever since November 2018. In August, manufacturing operations were carried out for a full month for the very first time after restarting supply chains and making adjustments for the return to employees to work. The new orders subindex touched the highest level ever since December 2017 and production, order backlogs, and export orders rose faster. Furthermore, employment declined at a slower rate and price pressures remained at the strongest level ever since November 2018. Inventories fell more. Fifteen out of the 18 manufacturing industries reported growth in August. Moreover, sentiment remained generally optimistic.

Forecast for September 2020: 56.0

#4: United States Average Hourly Earnings (10/02/2020 Friday 12:30 GMT)

The average hourly earnings of all employees listed on private nonfarm payrolls increased by 0.4 percent in August. The reading for the month beat analysts’ expectations that the average hourly earnings will show no growth. The average hourly earnings of nonsupervisory and production employees in the private sector rose by 18 cents, following the decline of 10 cents in the previous month. The big variations in employment over the last several months, especially in industries that employ lower-paid workers, are complicating the analysis of trends in average hourly earnings.

Forecast for September 2020: 0.5 percent

#5: United States Non-Farm Employment Change (10/02/2020 Friday 12:30 GMT)

The US economy hired 1.371 million workers in August, easing from the previous month’s figure which was revised downward to 1.734 million. The reading for the month came in slightly below analysts’ expectations of 1.4 million. However, the payrolls remained 11.5 million below the pre-pandemic level due to the fact that as many as 22 million workers became jobless in March and April. Government jobs accounted for 25 percent of the employment gain. This largely reflected the temporary hiring of workers for the 2020 Census. Retail trade hired 249,000 workers with approximately 50 percent of the growth attributable to general merchandise stores. The business and professional services hired 197,000 workers, while the leisure and hospitality sector added 174,000 jobs. Employment in the health services and education sectors rose by 147,000 and the transportation and warehousing industries added 78,000 jobs. The financial and manufacturing sectors added 36,000 and 29,000 jobs, respectively.

Forecast for September 2020: 900,000

#6: Unemployment Rate (10/02/2020 Friday 12:30 GMT)

In the US, the unemployment rate dropped to the 8.4 percent level in August from the 10.2 percent level reported in the prior month. The reading for the month came in below analysts’ expectations of 9.8 percent. This marked the fourth straight decline after hitting the all-time high unemployment level of 14.7 percent. The number of jobless people in the US declined 2.8 million to 13.6 million. This is because many businesses continued to take back employees following the lifting of coronavirus-related lockdowns. However, the unemployment rate remains well above the 3.5 percent level reported in February before the onset of the pandemic hit. The unemployment level, however, remained lower than the 10 percent peak registered during the 2008-2009 Global Financial Crisis. The official figures are likely to be far off from reality. This is because many people, even though they are absent from work, are considered to be employed.

Forecast for September 2020: 8.2 percent

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