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May 3, 2021

The Week Ahead: NFP, RBA, Employment Data & BoE

Bart Kurek

Let's look at the news event's we've got lining up this week...

RBA Rate Statement

The Reserve Bank of Australia (RBA) is the central bank of Australia which is responsible for the stability of the Australian Dollar currency, full employment, and economic prosperity and welfare of the Australian people.

In this rate statement, the RBA is expected to keep rates on hold at 0.10%. RBA policymakers might acknowledge the recent improvements in economic data, as well as progress on vaccinating its citizens. There is an optimistic bullish outlook for the Aussie Dollar as this is keeping traders hopeful for an RBA hike in months to come.

Employment Change Q/Q

The Quarterly Employment Change report is being released by "Statistics New Zealand" and is a measure of the change in the number of employed people in New Zealand. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity. The number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labour-market conditions.

It is forecasted we see a slower pace of growth for the first quarter at 0.3% versus the previous 0.6% gain, and this should be enough to keep the unemployment rate steady at 4.9%. If we see an uprise in the actual figure then this could increase strength in the NZD and puts the Reserve Bank of New Zealand (RBNZ) closer to tightening monetary policy.

Monetary Policy Summary

The Bank of England (BoE) is releasing minutes of their meeting, which is expected to indicate a unanimous vote amongst the Monetary Policy Committee (MPC) members to keep policy unchanged.

There's also no actual changes to asset purchases at £895B. Some traders are expecting an optimistic statement from the central bank, given the recent progress the UK has with vaccination rates and the economy finally opening up from recent lockdown easing measures.

Non-Farm Employment Change

The Non-Farm Payroll (NFP) or also known as Non-Farm Employment Change data, released by the Bureau of Labor Statistics, is a key economic indicator for the US economy which represents the number of jobs added to US citizens, excluding farm, government, private household and non-profit organisation employees.

NFP data always causes a commotion in FX as it is an important indicator for the Federal Reserve Bank. When unemployment is high, policymakers tend to have an expansionary (stimulatory, with low-interest rates) monetary policy with the goal to increase economic output and increase employment.

This month we are seeing another strong month of hiring in the US, with the NFP expected to print a 975k increase versus the previous 916k increase last month, and the unemployment rate to tick lower to 5.7% from 6.0%. Huge strength in the USD is expected on Friday if we do see these figures come out as expected or better than expected.

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