Investor optimism prevailed this past week as equity markets continued their (bear market) rally 📈 However, upcoming economic events could change the situation radically.
Here are this week’s major economic events that need focus:
🔺 ISM Manufacturing PMI 🇺🇸
🔺 JOLTS Job Openings 🇺🇸
🔺 ADP Non-Farm Employment Change 🇺🇸
🔺 FOMC Statement, Rate and Press Conference 🇺🇸
🔺 BoE Monetary Policy Statement, Votes and Official Bank Rate 🇬🇧
🔺 ISM Services PMI 🇺🇸
🔺 Unemployment Rate and NFP 🇺🇸
👀 Let’s dive into a weekly review of economic events to improve the trading experience!
ISM Manufacturing PMI – Tuesday, November 1st
📅 The US ISM Manufacturing PMI will be released at 16:00 (GMT+3) on Tuesday, November 1.
The Purchasing Managers Index (PMI) is a diffusion index summarizing economic activity in the manufacturing sector in the US. Participants are asked to gauge activity in a number of categories like new orders, inventories, and production and these sub-indices are then combined to create the PMI.
Asset(s) Affected: of $USD and $US Stocks 🇺🇸
Why is this event important?
Investors can better understand the national economic patterns and conditions by tracking the Institute of Supply Management (ISM) Manufacturing Index. For example, in response to higher corporate earnings, investors expect a bullish stock market as the index goes up.
📈 If the released PMI number is better than the previous number and higher than the forecasted number, the US dollar tends to rally.
📉 If the PMI is lower than the previous period, it is a negative signal for the dollar and the stock market.
JOLTS Job Openings – Tuesday, November 1st
📅 On Tuesday, November 1, the JOLTS Job Openings will be released at 16:00 (GMT+3).
The Job Openings and Labor Turnover Survey (JOLTS) tells us how many job openings there are each month, how many workers were hired, how many quit their job, how many were laid off, and how many experienced other separations (which includes worker deaths).
Asset(s) Affected: $US Dollar and $US Stocks 🇺🇸
Why is this event important?
The vacancies data gauges labor demand, while the number of quits, or voluntary separations, and their rate help to measure labor force turnover. This is used for investors and economists to assess manufacturing activity as well as the state of affairs in other areas.
📈 Typically, any increase in job openings is good for the United States economy, and therefore you might expect United States stock indices to increase and where this is also good for the US dollar.
📉 However, when we see that job openings are lower, this would be bad for the United States economy and also bad for the US stock markets and the United States dollar.
ADP Non-Farm Employment Change – Wednesday, November, 2nd
📅 On Wednesday, November 2, the ADP Non-Farm Employment Change will be released at 14:15 (GMT +3).
The ADP National Employment Report is a monthly report of economic data that tracks the level of nonfarm private employment in the U.S.
Asset(s) Affected: $US Dollar and $US Stocks 🇺🇸
Why is this event important?
NFP releases have a general tendency to cause large movements in the financial markets. If the Fed decides to lower interest rates to combat high unemployment, it reduces demand for the dollar, causing it’s the dollar’s price to fall.
At the same time, an increase in the key rate often leads to an increase in demand for the national currency, but negatively affects the stock market.
FOMC Statement, Rate, and Press Conference – Wednesday, November, 2nd
📅 The FOMC Statement, Rate, and Press Conference will be held on Wednesday, November 2.
The U.S. Federal Reserve’s Federal Open Market Committee (FOMC) statement is the primary tool the panel uses to communicate with investors about monetary policy. It contains the outcome of the vote on interest rates, discusses the economic outlook, and offers clues on the outcome of future votes.
Asset(s) Affected: $US Dollar and $US Stocks 🇺🇸
Why is this event important?
The FOMC meeting is usually considered the most important date on any traders’ calendar, for one overriding reason: interest rates. Using a trio of policy tools, the FOMC can raise or lower the federal funds rate in the US.
BoE Monetary Policy Statement, Votes and Official Bank Rate – Thursday, November, 3rd
📅 The Core PCE Price Index will be released on Thursday, November 3 at 15:30 (GMT+3).
The statement of the Bank of England on monetary policy contains the key points about the economic policy of the main regulator of the country. The forthcoming statement will also contain information on the updated interest rate.
Asset(s) Affected: $GBP and $FTSE100 🇬🇧
Why is this event important?
The announcement of an interest rate change has a significant impact on the stock and currency markets.
In particular, a rate hike could support the national currency and have a negative impact on stocks in the UK. At the same time, a decrease, or retention of the key rate could provoke a rally in British equities, but lead to a decline in the pound.
ISM Services PMI – Thursday, November, 3rd
📅 The ISM Services PMI will be released on Thursday, November 3 at 15:30 (GMT+3).
The ISM manufacturing index or PMI measures the change in production levels across the U.S. economy from month to month. The report is released on the first business day of each month. Thus, it is one of the earliest indicators of economic activity that investors and business people get regularly.
Asset(s) Affected: $US Dollar and $US Stocks 🇺🇸
Why is this event important?
📈 If the released PMI number is better than the previous number and higher than the forecasted number, the US dollar tends to rally.
📉 If the PMI is lower than the previous period, it is a negative signal for the dollar and the stock market.
Unemployment Rate and NFP – Friday, November, 4th
📅 The Unemployment Rate and NFP will be released on Friday, November 4 at 15:30 (GMT+3).
The nonfarm payroll (NFP) report is a key economic indicator for the United States and represents the total number of paid workers in the U.S. excluding those employed by farms, the federal government, private households, and nonprofit organizations.
Asset(s) Affected: $US Dollar and $US Stocks 🇺🇸
Why is this event important?
📈 A higher payroll figure is generally good for the U.S. economy citing more job additions and more robust economic growth. Any release above that figure or the estimated consensus will help to fuel U.S. dollar gains.
📉 A lower employment picture is negative for the world’s largest economy and the greenback.
That’s it for this week! 👋
