Market Update – November 1st, 2016

Market Update – November 1st, 2016

One of the most important trading weeks of the year and definitely the most important one for the end of 2016 is still ahead of us, even though one trading day is already behind us. Important economic data is going to govern trades and a spike in volatility is to be expected by the time the week comes close to an end.


On top of that, next week we’re going to have the US Presidential election, an event that is characterized by sharp moves in the US dollar, the world’s reserve currency. Therefore, this period is one to be treated with caution and traders should mind both the size of a trading account as well as the overall market exposure.


Later in the trading day, we’ll have the ISM Manufacturing in the United States followed by inflation expectations in the New Zealand. If the Australian inflation is to be a model for the New Zealand one, then upside surprises might be in store as well.


The main event of the week is the FOMC statement and interest rate decision tomorrow. While no one is expecting for the FED to hike now, as the general consensus is for a new rate hike to be delivered at the December meeting, one can never tell how the dollar is going to move.


Because it is the first week of November, jobs data is going to govern trading. ADP on Wednesday and NFP on Friday will move markets as traders will look for clues to see if this new data will influence FED’s December decision.


Furthermore, Bank of England is due Thursday and I won’t be surprised to see another rate cut as the UK economy will have many troubles leaving the Eurozone. As the GDP showed last week, the economy seems to be still in need for some sort of a stimulus from the central bank.


Canadian jobs data on Friday as well as the Ivey PMI will end the week, but by the time the NFP release is going to be out, traders will look to position for the important US election next week. That is the main event for the rest of the year as the FED’s hike in December is most likely already priced in.


All in all, look for volatility to pick up this week as uncertainty about US election will grow by the day. Trading small sizes and using pending orders may be the way to get through this week.

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