August 30, 2021

The Week Ahead in FX (Aug. 30 – Sept. 3): All Eyes on NFP

 This week is filled with top-tier releases from Uncle Sam, including the highly-anticipated NFP report.

Here’s what you should look out for.

Don’t forget to review which factors drove forex market price action last week, too.

Major Economic Events:

Australian Q2 GDP (Sept. 1, 1:30 am GMT) – The Land Down Under could get the ball rolling when it comes to exciting price action this week, as the Q2 2021 GDP is up for release.

The economy is projected to have grown by only 0.6% during the quarter, which would be a third of the previous period’s expansion. Some analysts even estimate a slight contraction for Q2, as net exports likely turned lower then.

OPEC-JMMC meetings (starting Sept. 1) – With crude oil prices edging lower in the past couple of months, the technical committee of the OPEC might need to revisit the cartel’s output targets until the end of the year.

Recall that the OPEC agreed to increase production by 400K barrels per day starting in August until December, but this comes at a time when the Delta variant spurred another wave of lockdowns all over the globe.

Any recommendation to scale down output might be bullish for the commodity in the near-term while demand is likely to stay subdued.

U.S. non-farm payrolls report (Sept. 3, 12:30 pm GMT) – Last but certainly not least is the NFP release on Friday, during which Uncle Sam might print a slowdown in hiring for August.

After seeing a gain of 943K in July, employment likely increased by only 750K last month. Still, this might be enough to bring the jobless rate down from 5.4% to 5.2%.

Leading indicators such as the ADP report and ISM manufacturing PMI are due Wednesday (Sept. 1) and would probably offer some clues on how the actual NFP might turn out.

Keep in mind that the Fed is still hoping to get more signs of a labor market pickup before acknowledging that it’s time to reduce stimulus, so a disappointing NFP figure could mean downside for the dollar.

Forex Setup of the Week: USD/CHF

With the U.S. NFP coming up, I’m keeping close tabs on this potential triangle breakout on USD/CHF!

The pair has formed lower highs and higher lows inside a symmetrical triangle formation, and price is currently testing the bottom.

A bounce could still take it back to the triangle top near the .9200 handle, but I’m more inclined to wait for a bigger move.

Technical indicators are looking mixed so far, with the 100 SMA above the 200 SMA to suggest that support might hold. Stochastic is heading lower, indicating that sellers have the upper hand.

A break below the triangle bottom could set off a drop that’s at least the same height as the chart pattern, which spans around 150 pips.

If you’re planning on trading this one during the NFP release, make sure you check out the leading U.S. jobs indicators earlier in the week, too!