Market News & Analysis


Top Story

Week Ahead: US-China trade talks could overshadow RBA, NFP

After a relatively quiet week, the week ahead is going to be a busier one. For one, the economic calendar is full of market-moving data and the Reserve Bank of Australia looks set to cut rates one more time on Tuesday. For another, Q3 is officially ending on Monday, meaning there will be some portfolio rebalancing and window dressing operations from portfolio managers to provide extra volatility. All this is happening at a time when Brexit talks are entering a crucial stage, while the US-China trade talks are set to resume in early October.

But judging by the latest headlines that were released on Friday afternoon – i.e. that Trump was supporting a review of investment limits on China and considering delisting Chinese companies from the US stock exchanges – there is no guarantee that a deal will be reached any time soon. Now China is on holiday the whole of next week. But the markets could open with gaps, should the war of words intensify over the weekend.

With regards to Brexit, reports on Friday suggested that the EU believes negotiations have stalled and that the possibility of reaching an agreement in October is very limited. So, everything is up in the air and a lot could happen.

So, volatility should remain elevated, which should be good news for traders. On the data front, the key highlights are listed below:

  • Monday: Chinese manufacturing PMI
  • Tuesday: RBA meeting and US Manufacturing PMI
  • Wednesday: ADP Employment report
  • Thursday: US Non-Manufacturing PMI
  • Friday: NFP

By the time we get to Friday’s nonfarm payrolls report, a lot could have happened. But those employment figures will likely be the week’s main scheduled event. With jobs growth slowing over the past few months, another disappointing showing could increase bets on further rate cuts from the Fed and, in turn, derail the dollar’s rally. Or will there be a surprise pick-up in wage growth? If that’s the case, the USD could remain supported for a while yet.

Ahead of Friday’s US jobs report, we will have had the latest manufacturing PMIs from both China and the US. After a shocking German PMI this week, growth concerns could really come to the forefront should manufacturers at the world’s largest economies also paint a bleak picture. So, commodity dollars could be in for a wild ride.

Speaking of commodity FX, the Aussie will clearly be in focus in the week ahead with the publication of not only key Chinese data but the small matter of a rate decision from the Reserve Bank of Australia. The market is 80% confident that rate setters at the RBA will trim the Cash Rate by 25 basis points to a new record low of 0.75% from 1.0%. Now 80% is 20 shy of 100 percent, meaning there should be some market reaction if the RBA does indeed cut rates, as the decision is not fully priced in. Obviously, the bigger surprise would be inaction from the central bank at this particular meeting.



Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.