Errante’s The Week Ahead: 2nd – 6th September 2024
Errante’s The Week Ahead: 2nd – 6th September 2024
Errante’s The Week Ahead: 2nd – 6th September 2024
Highlights of the Week:
Central Bank Decisions: The Bank of Canada (BoC) and the Reserve Bank of Australia (RBA) will be in the spotlight with their respective rate decisions and statements, setting the tone for the AUD and CAD.
Labor Market Data: A series of crucial labor market reports from the US and Canada, including the Non-Farm Employment Change and Unemployment Rate, will provide fresh insights into the economic outlook of these countries.
Inflation and Economic Growth: Key inflation data from Switzerland and PMIs from the US, alongside GDP figures from Australia and Switzerland, will help shape expectations around future monetary policy moves.
Now What?
As we move into the new week, here is Errante’s The Week Ahead: 2nd – 6th September 2024, the financial markets are gearing up for a series of impactful economic releases and central bank meetings. The focal points this week will be the Bank of Canada’s rate decision, which could influence the CAD’s performance significantly, and the RBA’s commentary, which may sway the AUD.
In the US, labor market data, including the Non-Farm Employment Change, is expected to be a crucial driver for the USD. This data, coupled with the ISM Manufacturing and Services PMIs, will provide a comprehensive view of the US economic landscape. Market participants will be closely watching these indicators to gauge the Federal Reserve’s next steps, especially given the mixed signals from recent economic reports.
Market Events and Announcements
The times below are GMT +3.
Monday, September 2, 2024:
No significant data release
Tuesday, September 3, 2024:
9:30 AM – CHF CPI m/m: An important indicator of inflation in Switzerland, which can influence the SNB’s monetary policy stance.
10:00 AM – CHF GDP q/q: Measures the economic growth in Switzerland, a key factor for monetary policy decisions.
5:00 PM – USD ISM Manufacturing PMI: A leading indicator of economic health in the US manufacturing sector.
5:00 PM – USD ISM Manufacturing Prices: Reflects inflationary pressures in the manufacturing sector.
Wednesday, September 4, 2024:
4:30 AM – AUD GDP q/q: Quarterly economic growth data for Australia, crucial for RBA rate decisions.
Tentative – GBP Monetary Policy Report Hearings: Provides insights into the Bank of England’s monetary policy outlook.
4:45 PM – CAD BoC Rate Statement: Announcement of the BoC’s interest rate decision, crucial for the CAD’s trajectory.
4:45 PM – CAD Overnight Rate: Current interest rate set by the BoC.
5:00 PM – USD JOLTS Job Openings: A measure of job vacancies in the US, indicating labor market strength.
5:30 PM – CAD BoC Press Conference: Offers further insights into the BoC’s economic outlook and policy decisions.
Thursday, September 5, 2024:
5:00 AM – AUD RBA Gov Bullock Speaks: Insights into the Reserve Bank of Australia’s view on the economy and monetary policy.
11:30 AM – GBP Construction PMI: An indicator of the economic health of the UK construction sector.
3:15 PM – USD ADP Non-Farm Employment Change: A precursor to the official NFP, providing an early glimpse into labor market health.
3:30 PM – USD Unemployment Claims: Weekly measure of jobless claims, important for gauging labor market conditions.
4:45 PM – USD Final Services PMI: Reflects business conditions in the US services sector.
5:00 PM – USD ISM Services PMI: Another key indicator of the health of the US services sector.
Friday, September 6, 2024:
3:30 PM – CAD Employment Change: Indicates the change in the number of employed people, a key economic health indicator.
3:30 PM – CAD Unemployment Rate: Measures the percentage of the total workforce that is unemployed and actively seeking employment.
3:30 PM – USD Average Hourly Earnings m/m: Reflects changes in labor costs, closely watched for inflationary trends.
3:30 PM – USD Non-Farm Employment Change: The most closely watched indicator of employment in the US.
3:30 PM – USD Unemployment Rate: A key gauge of US labor market health.
5:00 PM – CAD Ivey PMI: Provides insight into business conditions in Canada.
Market Insights: Key Charts to Watch
Chart 1: US30 (Dow Jones Industrial Average) on Weekly Chart
The US30 index is currently in an upward trend on the weekly chart, trading above the 34 and 100 moving averages. Market risk appetite, strong economic performance, and a robust labor market have pushed buyers to challenge the all-time high of 41,449.
Should the bullish momentum continue, breaking above the 41,449 resistance could open the path towards higher targets at 42,275 and 43,517. Strong economic data from the US, including positive labor market reports, could further fuel this upward movement.
Alternative Scenario:
If the price reverses from the all-time high, immediate support is seen at 40,289, near the 61.8% Fibonacci retracement level of the previous upward swing. A break below this support, particularly below the 38,412 mark, could shift the outlook to bearish, especially if economic indicators suggest a slowdown.
Impactful Events:
US Economic Data: Strong employment figures and positive ISM PMIs could support the bullish trend.
Federal Reserve Policy: Any hints of dovish policy moves or interest rate cuts could impact risk appetite, influencing the index’s trajectory.
Key Levels:
Resistance: 41,449, 42,275, 43,517
Support: 40,289, 38,412
Chart 2: USD/CAD on Weekly Chart
USD/CAD is testing a descending trendline after four consecutive weeks of declines, suggesting the formation of a potential new downtrend. The direction of oil prices, influenced by Middle East tensions, and the BoC’s policy stance will be critical for the pair’s next move.
If sellers succeed in breaking the ascending trendline at 1.34913, the next targets could be 1.33457 and 1.32321, aligning with a broader downtrend. Continued strength in oil prices and a hawkish BoC could support this bearish scenario. However, it is highly likely that the Bank of Canada will cut interest rates by 25 basis points, which could delay the decline of the Canadian dollar.Top of FormBottom of Form
Alternative Scenario:
Conversely, if the ascending trendline holds, buyers could push the price towards 1.35881. A break above this level could see the pair testing the 34-week moving average around 1.37241, suggesting renewed bullish momentum.
Impactful Events:
Bank of Canada Decision: A dovish tone could weaken the CAD, pushing USD/CAD higher.
Oil Prices: Rising oil prices typically benefit the CAD due to Canada’s status as a major oil exporter.
Key Levels:
Resistance: 1.35881, 1.37241
Support: 1.34913, 1.33457, 1.32321
Errante’s Weekly Newsletter brings you critical market insights to keep you ahead in the financial world. Stay informed and make strategic decisions with Errante.
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