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Market Watch: In Focus JOLTS, ECB Conference and Non-farm Payrolls- TraderFactor

Market Watch: In Focus JOLTS, ECB Conference and Non-farm Payrolls

This week, traders are gearing up for a series of pivotal economic events that could shape market dynamics. Key releases include the U.S. Job Openings and Labor Turnover Survey (JOLTS), the European Central Bank (ECB) press conference, and the highly anticipated U.S. Non-Farm Payrolls report. Each of these events holds the potential to significantly influence currency valuations and investor sentiment.

EUR/USD Consolidates Ahead of Key Economic Events

The EUR/USD pair is trading around 1.0850 as the US market opens, recovering slightly from an intraday low of 1.0827. The pair has experienced fluctuations between gains and losses throughout the day as investors prepare for several important economic releases. Following last week’s US inflation update, the focus now shifts to growth and employment figures, as well as the European Central Bank (ECB) monetary policy meeting.

Gold Holds Gains Near $2,330

Gold remains marginally higher near $2,330 in the second half of the day. The 10-year US Treasury bond yield stays below 4.5%, following the release of the Personal Consumption Expenditures (PCE) inflation data last Friday, which has helped support the XAU/USD pair.

Medium and long-term prospects for gold remain bullish, although current price action does not support an immediate resumption of the uptrend. A break above the consolidation peak at $2,362 is necessary to challenge the short-term downtrend, otherwise, further weakness is anticipated.

GBP/USD Steady Above 1.2700, Eyes on US Data

The GBP/USD pair is holding above 1.2700 in Monday’s US trading hours. The US Dollar maintains its strength following an uninspiring performance last Friday after the PCE inflation data. Investors are now awaiting the ISM Manufacturing PMI.

After modest gains towards the end of last week, GBP/USD started this week under bearish pressure, dropping to around 1.2700. The technical outlook suggests that sellers might retain control.

The US Bureau of Economic Analysis recently released data showing the core PCE Price Index rose by 0.2% in April, following a 0.3% rise in March. This lower-than-expected increase caused the US Dollar to falter, allowing GBP/USD to hold its ground.

Early Monday, the cautious market stance supports the USD, making it difficult for GBP/USD to gain traction. As we move into the second half of the day, attention will turn to the US ISM Manufacturing PMI data for fresh impetus. Analysts expect the PMI to rise to 49.8 in May from 49.2 in April. A disappointing PMI could hurt the USD and help GBP/USD rebound, while a positive surprise may bolster the USD and push GBP/USD lower.

Japanese Yen Flat Amid Investor Caution

The Japanese Yen remains steady as investors adopt a cautious stance ahead of the ISM Manufacturing PMI. The Jibun Bank Manufacturing PMI rose to 50.4 in May, marking the first expansion since May 2023. Meanwhile, the US Dollar has weakened as Fed officials signal no further interest rate hikes.

Japan’s Tokyo Consumer Price Index (CPI) rose to 2.2% year-over-year in May, up from April’s 1.8%. If nationwide inflation in Japan declines, it may deter the Bank of Japan (BoJ) from raising interest rates. The significant interest rate differential between Japan and other countries continues to pressure the JPY, supporting the USD/JPY pair.

AUD/USD Drops Below 0.6650 as US Dollar Recovers

The AUD/USD pair has slipped below 0.6650 amid the US Dollar’s recovery. Despite market speculation of further Reserve Bank of Australia (RBA) tightening, the pair fell to around 0.6635 during Monday’s European session. Investors are focused on the US ISM Manufacturing PMI for May, expected at 14:00 GMT. A figure below 50.0 suggests contraction.

The Australian Dollar’s near-term outlook remains strong as investors anticipate a potential RBA interest rate hike due to persistently high inflation data.

USD/CAD Jumps to 1.3660

The USD/CAD pair rose to 1.3660 during Monday’s European session. The Canadian Dollar strengthens as the US Dollar extends its recovery amid market uncertainty ahead of a data-packed week in the US.

The Canadian Dollar also awaits the Bank of Canada’s (BoC) interest rate decision on Wednesday. The BoC is expected to announce an interest rate cut for the first time since March 22, maintaining a restrictive policy framework due to Covid-led inflation. Investors will look for clues about the BoC’s rate-cut path beyond the June meeting.

Weekly Market Insights

Monday

Key Manufacturing PMIs will influence forex markets as the USA Final Manufacturing PMI and ISM Manufacturing PMI reports are released. These metrics provide critical insights into the health of the US manufacturing sector. A PMI reading above 50 suggests expansion, while a reading below 50 indicates contraction. Strong PMI readings can boost investor confidence and expectations of interest rate hikes, strengthening the USD. Conversely, weaker PMI data may dampen these expectations, resulting in a softer dollar.

Tuesday

Important reports to watch include the Swiss CPI month-over-month report and the US Job Openings and Labor Turnover Survey (JOLTS). The CPI measures inflation, while the JOLTS report provides insights into the US labor market. High job openings indicate a robust job market, potentially leading to higher wages and inflationary pressures, influencing the Federal Reserve’s monetary policy decisions.

Wednesday

Australia’s quarterly GDP report and the US ADP Non-Farm Employment Change report will be closely watched. The GDP report impacts the AUD, while the ADP report, serving as a precursor to the Non-Farm Payrolls report, influences the USD. Additionally, the ISM Services PMI will measure the health of the US services sector. Canada’s BoC Rate Statement will also be a focal point for traders.

Thursday

Thursday will be busy with several key economic events. The UK’s Construction PMI will impact the GBP, while the European Parliamentary elections and the ECB’s Main Refinancing Rate announcement followed by a press conference will influence the EUR. Canada’s Trade Balance report will affect the CAD, and the US weekly Unemployment Claims report and Ivey PMI will impact the USD.

Friday Market Outlook

On Friday, Canada will release its employment change and unemployment rate reports, providing crucial insights into the health of the Canadian labor market. Positive employment data can boost investor confidence in the Canadian economy, potentially leading to an appreciation of the CAD. Conversely, weaker employment figures may prompt concerns about economic growth, putting downward pressure on the CAD.

The US Non-Farm Payrolls (NFP) report will also be released on Friday. This report measures the change in the number of employed people during the previous month, excluding the farming industry. Strong NFP figures suggest robust economic activity, potentially leading to expectations of interest rate hikes by the Federal Reserve and strengthening the USD. Conversely, weaker than expected NFP data could dampen investor confidence and weaken the USD. Traders will closely analyze this report to gauge the overall direction of the US economy and adjust their positions accordingly.

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Author

  • Zahari Rangelov

    Zahari Rangelov is an experienced professional Forex trader and trading mentor with knowledge in technical and fundamental analysis, medium-term trading strategies, risk management and diversification. He has been involved in the foreign exchange markets since 2005, when he opened his first live account in 2007. Currently, Zahari is the Head of Sales & Business Development at TraderFactor's London branch. He provides lectures during webinars and seminars for traders on topics such as; Psychology of market participants’ moods, Investments & speculation with different financial instruments and Automated Expert Advisors & signal providers. Zahari’s success lies in his application of research-backed techniques and practices that have helped him become a successful forex trader, a mentor to many traders, and a respected authority figure within the trading community.

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