Summary:

• The US ISM manufacturing is the key figure today
• Manufacturing PIMs for September are due for most of the world’s major economies. This morning we get the print from the UK
• There are speeches from the Fed’s and ECB’s members scheduled for today

Investors are pretty busy at the start of this trading week. Over the last weekend, we got PMIs for September from China – for both, manufacturing and services, official gauges surprised to the upside, while the Caixin manufacturing came in slightly below expectations. Moreover, there was a referendum in Catalonia on whether to split from Spain, which was marred by violence. This morning, we get UK manufacturing PMI and US manufacturing ISM in the afternoon. The key release of the week will be the US data from labour market.

8:50-9:00 am BST – the final manufacturing PMIs for September respectively for France, Germany, and the euro area. The final readings shouldn’t spur higher volatility in the market. However, it’s worth mentioning that the preliminary figures were exceptionally stellar. Today investors will digest outcomes of the vote in Catalonia, which may drag down euro somewhat.

9:30 am BST – UK manufacturing PMI for September. It’s the first (and the last) reading, so it might have some impact on GBP. The last two releases from the UK industry were solid, although one has to remember that it’s not the crucial sector of the UK economy, thus, the volatility should be limited. The reading is expected to come in at 56.4 pts, down from 56.9 pts previously.

2:45 pm BST – US manufacturing PMI for September. It’s the final print and bear in mind that in the regard to the US economy the ISM reading is more important, so the US dollar should move more vigorously 15 minutes later. The preliminary print showed 53 pts.

3:00 pm BST – US manufacturing ISM for September. It’s the first important reading ahead of NFP report due on Friday. However, the release may be distorted somehow by hurricanes. The consensus calls for 58 pts vs 58.8 pts prior.

Moreover, we have two central bankers scheduled to deliver speeches today:

• 11:15 am BST – ECB’s Praet;
• 7:00 pm BST – Fed’s Kaplan

What to watch for the remainder of the week?

NFP reports from US and Canada (Friday, 1:30pm BST)

It’s the first week of October so obviously traders warm up to the most anticipated monthly report – the US non-farm payrolls. The report came in weaker than expected last month but we warned that August has been statistically the weakest month during this decade. September has not been much better either – the third worst month on average between 2011 and 2016 after August and May. Having said that expectations are not too high and wage dynamics might be more important that the employment number after all. Furthermore the data could be affected by the hurricanes. The data from Canada will be very important as well. The CAD was the best performing G10 currency in Q3 after the Bank of Canada raised rates twice during this quarter. Expectations are already quite high so traders will need to see another strong report to keep bidding the currency. As a result USDCAD will be in the spotlight.  

 

More US data (Monday to Thursday)

The NFP report is the most important one but we will have plenty of other releases, starting from the manufacturing ISM (Monday), through the ADP report on private employment (Wednesday), through the non-manufacturing ISM (Thursday). By Thursday afternoon investors will have a good orientation on what to expect when it comes to the Friday’s NFP. Watch out for moves on USDIDX and Gold where a change in fortunes for the dollar caused quite major reversals.  

ECB minutes (Thursday, 12:30pm BST)

The ECB left investors a bit empty-handed in September. Markets expected details on QE tapering in 2018 but instead got only vague assurances that the policy will be adjusted and more will be presented either in October and December. The minutes always cast more light on internal discussion and investors will be eager to know if there are already specific plans for terminating the bond purchase program. The EURUSD lost a bit of momentum but that was mostly because of the US dollar appreciation. Details on ECB policy changes will still have a measurable impact on the euro.   

 The USD index (USDIDX on xStation5) returned above an important support. Will the string of the US data from this week allow it to break from the descending channel? Source: xStation5