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Next week's economic calendar will be dominated by US economic reports, so the US dollar could see very choppy price action induced by reports like consumer confidence, Q2 GDP, ISM Manufacturing, and non-farm payrolls.
• UK Gross Domestic Product (2Q F) - September 29, 04:30 ET
The UK will face their third and final round of growth results, and this upcoming GDP reading is anticipated to be revised up to -0.6 percent in Q2 from Q1, compared to previous estimates of -0.7 percent. Likewise, the year-over-year rate of growth is projected to be revised up to -5.4 percent from -5.5 percent, which would still mark a record low but would suggest that the UK's recession isn't quite as bad as previously though. The last time we saw news similar to this was upon the preliminary (second) release of Q2 GDP on August 28, as the quarterly rate was surprisingly revised up to -0.7 percent from -0.8 percent. At that point, the British pound rallied into the start of the US trading session, but subsequently ran into resistance and ended the day lower. This suggests that if GDP is revised higher than -0.6 percent, the British pound could gain, but ultimately, readings in line with expectations shouldn't have a large impact on trade.
• US Conference Board Consumer Confidence (SEP) - September 29, 10:00 ET
The September reading of the Conference Board's measure of US consumer confidence is expected to rise up to a one-year high of 57 from 54.1 in August, but overall, there are some upside risks for this report. Indeed, the final reading of the University of Michigan's consumer confidence index show that sentiment improved greatly in September, with the index hitting a 21-month high of 73.5 from 65.7. A breakdown showed that as the economic conditions component rose to a 1-year high of 73.4, while the economic outlook jumped to a 2-year high of 73.5. In light of these positive signs, disappointing numbers could have especially negative repercussions for risk appetite, but if the index rises in line with expectations or proves to be surprisingly strong, FX carry trades could gain and weigh on the US dollar.
• US Gross Domestic Product (2Q F) - September 30, 08:30 ET
The third round of US Q2 GDP estimates is due to hit the wires, but the results will only be market-moving if we see surprising revisions. The final reading is forecasted to be revised down to -1.2 percent from -1.0 percent, though this would still represent a sharp improvement from Q1, when GDP plunged 6.4 percent. Readings in line with expectations may not have a very big impact on price action, but better-than-anticipated results could lead carry trades higher, especially in light of speculation that the recession may have ended in Q2. On the flip side, surprisingly weak numbers could crush these hopes and trigger another bout of risk aversion.
• US ISM Manufacturing (SEP) - October 1, 10:00 ET
On Thursday, the ISM manufacturing index is projected to rise for the ninth straight month in September to 54 from 52.9, which would be the highest reading since April 2006. With 50 being the point of neutrality, this would also be the second month that the index signals an expansion in activity, adding to evidence that the sector is experiencing a recovery in business activity. The last release didn't have much of an impact on the US dollar, as risk aversion dominated the day, leading the currency higher. However, the report will still be useful because of its employment component as a leading indicator for Friday's US non-farm payrolls report.
• US Non-Farm Payrolls (SEP) - October 2, 08:30 ET
The US non-farm payrolls (NFPs) index is forecasted to show job losses for the 21st straight month in September, though the rate of decline is anticipated to slow further. At the time of writing, Bloomberg News was calling for NFPs to decline by 187,000, which would be the smallest drop since August 2008. Meanwhile, the unemployment rate is projected to edge up to 9.8 percent from 9.7 percent, but ultimately, the NFP result will be the event to watch as it is extremely volatile and is one of the sole reports that impacts the US dollar from a pure fundamental point of view. A better-than-anticipated result is likely to provide a boost to the US dollar, but it will be interesting to see the impact of disappointing results as weak US data tends to weigh on risky assets and push the greenback higher amidst flight-to-quality.
See the DailyFX Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators.
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