Here we are, in front of an important trading week as we have two main events that would shape the forex markets this week: end of month flows as September is about to end right in the middle of the trading week and NFP (Non-Farm Payrolls) number and overall jobs data is to be released this coming Friday.
It means one should expect a bit of a different price action when compared with a regular NFP week. I say this because we are starting the week with slow-moving markets, and then an increase in trading activity is expected as we’re moving towards the NFP release. Most likely, the end of month flows will make this beginning of the trading week a bit more active, and then after September, positioning for the big release will start.
October is bringing another FOMC (Federal Open Market Committee) meeting our way, but this one is not going to be followed by a press conference. Therefore, it is hard to believe that the Fed is going to raise the interest rates without a press conference to follow, and to explain the decision but, one should not rule that out. In case a rate hike is indeed coming in October, the Fed will call a press conference on the spot to explain the decision.
Last Friday saw the Final GDP (Gross Domestic Product) in the United States being released and it should be mentioned that even though it is coming in as a red event on the economic calendar, meaning it is important, it is in reality – second-tier data, (unless the outcome is differing from the forecast). Most of the times it is not different, but this Friday it was, as the
US GDP for the last quarter has been revised higher to 3.9%. However, after an initial spike higher in the US dollar, markets reversed all the gains and the US dollar ended up having a negative day when compared with JPY and EUR for example.
Friday was the day of the EURGBP cross as it moved in a straight line by almost one hundred pips, from the 0.73 to the 0.740 area and this supported EURUSD on each and every dip. This made price action and trading for the EURUSD pair really tricky and even though the actual economic release was bullish for the dollar, each and every move lower has been met with new buyers. Bears were squeezed from the 1.1100 to the 1.1200 area.
I am still looking for the EURUSD to come down a bit lower this week. Even though I am a bull, I am interested in buying levels like the 1.1030-50 area. If those lows arrive before the NFP release, it means the release will disappoint.
Coming back to the jobs data, besides the actual numbers and the unemployment rate, all eyes should be on the labor participation rate. A move higher there should be more important than the actual NFP, as well as a continuous dip that will disappoint markets.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
