This weeks Economic Announcements that could impact GBP, USD and EUR
This week sees a number of economic announcements that could impact the price action of GBP, USD and EUR. Depending on the figure released on these economic announcements could have an impact on these currencies.
Additionally, depending on the data released could be reflected in the foreign exchange market. Positive data could see bullish moves for the key currencies GBP, USD and EUR.
24th October
UK Claimant Count Change(Sep)
Why does this matter?
The UK's jobless benefits claims change, released mid-month for the previous month, is an early labour market indicator. Rising claims signal a weaker economy and suggest looser monetary policy, while falling claims indicate better conditions. A higher-than-expected result tends to weaken the GBP.
The Claimant Change released by the National Statistics presents the number of unemployed people in the UK. There is a tendency to influence the GBP volatility. A rise in this indicator has negative implications for consumer spending which discourage economic growth. Generally, a high reading is seen as negative (or bearish) for the GBP, while a low reading is seen as positive (or bullish).
Employment Change(Aug)
Employment Change released by the UK Office for National Statistics represents the change in the number of people who were employed in the UK in the three months to the release period. Generally, a healthy and consistent increase of this figure is positive (or bullish) for the GBP, while a decrease is negative.
ILO Unemployment Rate (3M)(Aug)
The Unemployment Rate is the broadest indicator of Britain’s labour market. The figure is highlighted by the broad media, beyond the financial sector, giving the publication a more significant impact despite its late publication. It is released around six weeks after the month ends. While the Bank of England is tasked with maintaining price stability, there is a substantial inverse correlation between unemployment and inflation. A higher than expected figure tends to be GBP-bearish.
ECB Bank Lending Survey
The bank lending survey (BLS) for the euro area was launched in 2003. Its main objective is to enhance the Eurosystem’s knowledge of financing conditions in the euro area. The BLS provides input to the ECB Governing Council’s assessment of monetary and economic developments, on which it bases its monetary policy decisions.
HCOB Composite PMI(Oct)
The PMI monthly Composite Reports on Manufacturing and Services, released by S&P Global and Hamburg Commercial Bank (HCOB), are based on a large number of business executives in private sector manufacturing and services companies.
Data is usually released on the third working day of each month. Each response is weighted according to the size of the company and its contribution to total manufacturing or services output accounted for by the sub-sector to which that company belongs. Replies from larger companies have a greater impact on the final index numbers than those from small companies.
Results are presented by the question asked, showing the percentage of respondents reporting an improvement, deterioration or no change since the previous month. From these percentages, an index is derived: a level of 50.0 signals no change since the previous month, above 50.0 signals an increase (or improvement), below 50.0 a decrease (or contraction).
HCOB Manufacturing PMI(Oct) PREL
The Manufacturing Purchasing Managers Index (PMI) released by the S&P Global and Hamburg Commercial Bank (HCOB) captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in the Euro Zone. Usually, a result above 50 signals is bullish for the EUR, whereas a result below 50 is seen as bearish.
HCOB Services PMI(Oct) PREL
The PMI service released by the S&P Global and Hamburg Commercial Bank (HCOB) is an indicator of the economic situation in the Eurozone services sector. It captures an overview of the condition of sales and employment. It is worth noting that the European service sector does not influence, either positively or negatively, the GDP as much as the PMI manufacturing does. Any reading above 50 signals expansion, while a reading under 50 shows contraction. Usually, a result above 50 is bullish for the EUR, whereas a result below 50 is seen as bearish.
S&P Global/CIPS Composite PMI(Oct)
The PMI monthly Composite Reports on Manufacturing and Services, released by S&P Global, are based on a large number of business executives in private sector manufacturing and services companies. Data is usually released on the third working day of each month. Each response is weighted according to the size of the company and its contribution to total manufacturing or services output accounted for by the sub-sector to which that company belongs.
Replies from larger companies have a greater impact on the final index numbers than those from small companies. Results are presented by the question asked, showing the percentage of respondents reporting an improvement, deterioration or no change since the previous month. From these percentages, an index is derived: a level of 50.0 signals no change since the previous month, above 50.0 signals an increase (or improvement), below 50.0 a decrease (or contraction).
UK S&P Global/CIPS Manufacturing PMI(Oct)
The PMI manufacturing released by both the Chartered Institute of Purchasing & Supply and S&P Global is an indicator of the economic situation in the UK manufacturing sector. It is worth noting that the UK service sector does not influence, either positively or negatively. Traders want the highest possible reading as that will be taken as positive for the GBP. Any reading above 50 signals expansion, while a reading under 50 shows contraction.
UK S&P Global/CIPS Services PMI(Oct)
The PMI service released by both the Chartered Institute of Purchasing & Supply and the S&P Global is an indicator of the economic situation in the UK services sector. It captures an overview of the condition of sales and employment. It is worth noting that the UK service sector does not influence, either positively or negatively, the GDP as much as the Manufacturing PMI does. Traders want the highest possible reading as that will be taken as positive for the GBP. Any reading above 50 signals expansion, while a reading under 50 shows contraction.
EURO ECB's President Lagarde speech
The European Central Bank's President Christine Lagarde, born in 1956 in France, has formerly served as Managing Director of the International Monetary Fund, and minister of finance in France. She began her eight-year term at the helm of the ECB in November 2019. As part of her job in the Governing Council, Lagarde holds press conferences in detailing how the ECB observes the current and future state of the European economy. Her comments may positively or negatively the euro's trend in the short-term. Usually, a hawkish outlook is boosts the euro (bullish), while a dovish one weighs on the common currency(bearish).
USA S&P Global Manufacturing PMI(Oct)
The Manufacturing Purchasing Managers Index (PMI) released by the S&P Global captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in the United States. Readings above 50 imply the economy is expanding, making investors understood it as a bullish for the USD, whereas a result below 50 points for an economic contraction, and weighs negatively on the currency.
S&P Global Services PMI(Oct):
The Services Purchasing Managers Index (PMI) released by S&P Global captures business conditions in the services sector. As the services sector dominates a large part of total GDP, the services PMI is an important indicator of the overall economic condition in US. A result above 50 signals is bullish for the USD, whereas a result below 50 is seen as bearish.
Currency Pairs Price Action Charts
GBP USD
GBP is in a continuation of the downtrend from the 1.31 high in July. The market low from this trend of 1.206 is now acting as a level of support. GBP would need to break out from the falling wedge and see price go above 1.2293 to see a potential trend reversal.
GBP EUR
GBP is continuing to fall against EUR with 1.1592 acting as a point of resistance and 1.1433 as a level of support. If GBP continues to fall against EUR 1.1327 is the next level of support. GBP would need to break over 1.16 to see a reversal of this downward tend.
EUR USD
EUR has see a steep fall in price from the 1.127 high in July falling to 1.0468 in early October. There have been some signs of a recovery with price hitting 1.064, this is now acting as a level of resistance and would need to see price break above this level to have confirmation of a trend reversal.
With this week's economic announcements, there is the potential for volatility in the market.
Positive data is generally bullish for the economy and could potentially see bullish moves however negative data could potentially seen as bearish and could cause prices to fall.
Our Thoughts
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