InstaForex

October 4, 2021

The Week Ahead in FX (Oct. 4 – 8): Focus on RBNZ and NFP

Got couple of central bank decisions and the NFP lined up this week!


Is the RBNZ finally ready to hike? And will the U.S. jobs report confirm a November taper?


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


Major Economic Events:

OPEC-JMMC meetings (starting Oct. 4) – Word through the pipeline is that the oil cartel is considering bumping up production again!


After all, crude oil continues to trade at record highs and demand is expected to stay afloat in the near-term. But will they or won’t they?


Keep in mind that the OPEC already agreed to increase output by 400K barrels per day until the end of the year, so another bump higher could force the commodity to return some gains.


RBA interest rate decision (Oct. 5, 3:30 am GMT) – No actual monetary policy changes are expected from the Australian bank for now.


In their earlier decision, the RBA already started to taper asset purchases but also decided to extend the program by another three months.

Data from the Land Down Under has been mixed, with jobs figures turning out weaker than expected, so policymakers would likely sit on their hands.


RBNZ interest rate decision (Oct. 6, 1:00 am GMT) – New Zealand’s central bank is widely expected to announce an interest rate hike from 0.25% to 0.50% in this week’s statement.


Economic data has been mostly upbeat, with the latest GDP and inflation figures beating expectations, so there’s no reason for the RBNZ to delay tightening this time.


Kiwi traders might be more keen to find out if the central bank is likely to follow through with another interest rate hike in November, especially since this first hike has already been priced in a while back.


U.S. non-farm employment change – (Oct. 8, 12:30 pm GMT) – Another main event for this week is Uncle Sam’s NFP!


For the month of September, employment is projected to have increased by 490K, which could bring the jobless rate down from 5.2% to 5.1%. This follows the disappointing 235K increase reported in August.

Leading indicators due throughout the week include the ISM services PMI, which is slated to fall from 61.7 to 59.9, and the ADP report, which could show a 455K gain.


The ISM manufacturing PMI released last week climbed from 59.9 to 61.1 and featured a return to expansion for the employment component.


Canadian employment report (Oct. 8, 12:30 pm GMT) – Canada is also due to release its jobs figures for September, and a slower increase of 61.2K is eyed.


Still, this might be enough to bring the unemployment rate down from 7.1% to 6.9% for the month.


Forex Setup of the Week: USD/JPY

With the NFP coming up, I’m counting on additional volatility from this dollar pair!



USD/JPY is cruising higher inside an ascending channel on its daily time frame, and it looks like the pair is in the middle of a correction.

Price is already testing the 38.2% Fib but might still dip lower since Stochastic is just about to head south from the overbought zone.


More buyers might be hanging out at the 50% Fib, which lines up with the mid-channel area of interest, or at the 61.8% level at 110.25.


The 100 SMA is still above the 200 SMA to suggest that the uptrend is more likely to resume than to reverse, unless of course USD/JPY tumbles below the channel bottom at the 110.00 major psychological mark.