Welcome to another NFP week, fellas! Have you started looking for trade opportunities this week? If you haven’t, then let’s get your feet wet with these four catalysts that could cause volatility for the Aussie pairs!
1. China’s manufacturing data
China, the world’s second-largest economy, is one of Australia’s biggest trading partners. Worse-than-expected business surveys from China will support claims that the economy is facing slower growth trends. It’s also bad news for Australia because it could accelerate the decline from the mining boom peak and put more pressure on the Land Down Under’s non-mining industries.
China’s manufacturing purchasing managers’ index (PMI) report is scheduled at 1:00 am GMT on June 1 (Wednesday) and is expected to dip from 50.1 to 50.0. The Caixin or Markit release, a more preferred report among analysts, is scheduled to print its figures at 1:45 am GMT and is expected to show a decline from 49.4 to 49.3 in May. Don’t forget to read my Calendar Reports 101 for a quick lesson on how to interpret PMI reports!
2. Quarterly GDP report
In between China’s official PMIs and Caixin’s release we’ll see Australia’s GDP growth rate for the first three months of the year.
The Q1 2016 GDP is expected to mirror Q4 2015’s 0.6% growth rate although some are forecasting increases of up to 0.7% and 0.8%. Lower household savings ratio resulting to more consumer spending, higher exports of commodities like iron ore and gold, and a weak currency are some of the factors that could have pushed growth higher in the first quarter.
Oh, and keep your eyes on wage growth, will ya? Given that the RBA had recently cut its rates on the back of weak inflation, policymakers will likely pay attention to employment trends for its potential impact on consumer spending.
3. Retail sales and trade balance reports
On Thursday at 1:30 am GMT we’ll get a back-to-back feature from the April retail sales and trade balance reports. A relatively warm start to the winter is expected to have weighed on department store sales, causing a retail sales growth rate of only 0.3% against March’s 0.4% uptick.
Meanwhile, the Land Down Under is expected to show a trade deficit for the 25th month in a row, though this time with only a 2.11B AUD deficit against March’s 2.16B AUD figure. If you recall, back in March the gains in iron ore and coal prices as well as services exports have helped boost exports by 4.0% while imports also increased by 1.0%. Will the recent Aussie strength weigh on the trade figures though?
4. Uncle Sam’s NFP report
You can’t talk about potential catalysts without talking about the one report that everybody is waiting for this week. I’m talking about the U.S. non-farm payrolls (NFP), yo!
On Friday at 12:30 pm GMT Uncle Sam will print its NFP report, which is expected to show that a net of 160,000 workers had found jobs in May after already adding the same amount in April. Not only that, but the accompanying unemployment rate is also estimated to have come down from 5.0% to 4.9%.
Strong employment figures from the U.S. would fuel speculations that the Fed would raise its interest rates in a couple of months. This could likely weigh on AUD/USD. Alternatively, a significantly weak NFP could inspire profit-taking on the dollar longs and boost AUD/USD higher. Don’t wait till the last minute to prepare for this one though, as mere speculations on the NFP figure could already shift risk sentiment in either direction and could affect the Aussie before the actual release.
That’s it for my list today! Which of the events above will you likely trade?