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June 28, 2021

The Week Ahead: NFP, GDP & OPEC-JMMC

Bart Kurek

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

(CAD) GDP

A Gross Domestic Product (GDP) report is a measure of the size and health of a country's economy over a period of time. The figure sums up the country's performance in terms of trade, consumer activity, government spending and investment during a particular period.

Analysts are expecting the Canadian economy to print a negative reading for their next monthly GDP reading at -0.8%, which is much slower compared to last months reading at 1.1%. A reading that is stronger than forecast is generally supportive for the CAD, while a weaker forecast reading is generally negative for the CAD. The outcome of this event is used as an indicator of the national economy state and of the standard of living.

OPEC-JMMC Meetings

Every month, the Organisation of Petroleum Exporting Countries (OPEC) and the Joint Ministerial Monitoring Committee (JMMC) have a meeting to discuss the outlook of Oil and its performance. OPEC aims to control the price of oil by adjusting supply volumes. If its members want to increase the price of oil, they can revise their production quotas downwards to limit supply.

WTI Crude Oil is currently hovering at around $70/barrel, oil traders are keen to find out what the OPEC are planning next. Any indication that they're looking to adjust its output deal might revive oversupply concerns, which will likely weigh on crude oil prices.

(USD) NFP

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.

Analysts are expecting hiring to print at 700k versus last months weaker-than-expected 559k gain. This is also expected to bring the unemployment rate down by 0.1% from 5.8% to 5.7%.

The past couple of NFP reports haven't turned out as well as expected, and the FOMC acknowledged the pickup in inflation but warned that they need to see stronger employment figures before they can just monetary policy. Traders are looking for clues whether the Fed could taper soon and hence this event is likely going to cause great volatility on Friday on major pairs.

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