Fundamental Comment

Economic Week: US jobs report, PMI reports to grab attention

US jobs report, PMI reports to grab attention

After many of the world's central banks have either cut interest rates or launched economic stimulus programs, financial markets will be following a number of important reports, most notably the US jobs report.

Also, this week, the most important economic reports will be the manufacturing and services PMI that will be released from a number of major economies, where they are likely to have a significant impact on investors’ sentiment as they will give some growth signals with the beginning of the fourth quarter.

It is important to note that the manufacturing and service PMI reports from the Chinese economy are expected to be of great importance, given the negative impact of the US-China trade war.  

Dollar’s rally to depend on US NFP

Certainly, the U.S. jobs report is expected to be the most report and influential on the movement of the dollar, as it is a key indicator used by the Federal Reserve to determine the future of monetary policy.

The non-farm payrolls report may indicate that US employers created 180,000 jobs in September, and the unemployment rate fell to 3.6 percent from 3.7 percent.

The manufacturing and Service PMI reports for September will also be of interest to investors as they may give an initial impression of the shape of growth in the US economy at the beginning of the fourth quarter.

At the end of the week, Federal Reserve Chairman Jerome Powell is scheduled to make opening remarks at an event hosted by the Federal Reserve in Washington, DC.

Pound attempts to rebound ahead of PMI reports

Pound Sterling fell to a two-week low against its US counterpart last week as political instability in Britain and hints from a member of the Bank of England of a possible interest rate cut.

This week, the UK is to release its manufacturing, construction and services PMI for September, which may give the latest update on the health of the economy at the end of the third quarter.

Expectations are for improvement in the three major sectors, which, if occurred, could give some support to the pound.

Britain's GDP is expected to confirm a 0.2 percent decline in the second quarter after recording a 0.5 percent growth in the January-March period.   

Euro may follow the general sentiment

The euro is likely to be affected by the general trend in the financial markets, but it should be noted that the euro zone will also release some important economic data.

Investors will be focusing on the final eurozone Composite manufacturing and services PMI, which could confirm an ease in growth to 50.4 in September from 51.9 in August.

The euro zone flash CPI reading is expected to retreat to 0.9 percent in the year ended September from the previous 1.0 percent.  

Global growth outlook to weigh on commodities

Gold slumped last week after trading near its highest level this year, where it closed below the psychological level at $1,500 an ounce.

This week, the yellow metal will largely depend on the aforesaid important economic data from major economies. In case of a rise in concerns about the slowdown in global growth, the precious metal could find some support.

As for crude oil, prices dropped in the past week, recording a weekly loss, as a faster-than-expected rebound in Saudi production and slowing Chinese economic growth dampened expectations for oil demand.

Data on global economic growth and the return of Saudi production are expected to weigh heavily on crude prices this week.

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