Capital Properties FX
Capital Properties FX

Forex Trading Fundamental Analysis – The U.S. Dollar in Focus

This week marks the beginning of September. It means summer is over and Forex trading fundamental analysis will change.

The start of a new month brings a lot of high-impact data releases.  And the upcoming week is no different.

We have the NFP (Non-Farm Payrolls), average hourly earnings, and the ISM Manufacturing PMI as the most important Forex trading fundamental analysis to interpret. All lined up and ready to hit the markets.

But regardless of that, the main focus remains on the FOMC meeting on the 21st of September. Ms. Yellen’s speech indicated that a rate hike in 2016 is still on the table.

Forex Trading Fundamental Analysis

Forex Trading Fundamental Analysis – Higher Rates In Focus

The FED may make its move earlier than the market currently anticipates. This means the upcoming three weeks might be difficult to trade. Every piece of information regarding FED’s next step will influence the U.S. dollar more than usual.

The Federal Reserve kept the rate hike plan under the spotlight for the entire year now.  And, from a certain perspective, if the FED wants to keep its credibility, it has no chance but to increase the Federal Funds Rate.

Otherwise, the market simply won’t take them seriously anymore. On every meeting since the beginning of 2016, the message has been the same – we will move forward with the tightening cycle. but so far, as we all know, they haven’t done anything but in the same time, they haven’t changed the message either.

But, so far, as we all know, they haven’t done anything. Moreover, they haven’t changed the message either.

Keep an Eye on the NFP

The U.S. dollar’s reaction to the policy change is very difficult to predict. But given the fact that the market was aware of the possible rate hike for nine months now, the hike is priced in.

The labor market is under the FED’s watchful eye ever since the crisis started back in 2008. Today, according to the data, the United States reached the so-called full employment.

Moreover, the labor market is in very good shape. As such, Forex trading fundamental analysis changed.

A close look at the NFP chart from 2003 to the present day, shows that job creation was steady. Even compared to the pre-crisis era.

However, the upcoming jobs report holds a lot of weight. If the numbers should come in weaker than expected (186K), the U.S. dollar will take a hit. As such, the rate hike odds for September will also go down with it.

While job creation and unemployment rate look very good, there is one bad apple in the basket. That is the labor force participation rate.

For whatever reason, people who left the job market do not come back. This keeps the labor force participation rate around sixty-three percent. Keep in mind that the people that left the job market are not part of the unemployment rate calculations.


No doubt, the last four months of this year will be volatile and full of surprises. When it comes to the Forex trading fundamental analysis, there’s plenty to consider.

The Fed meeting schedule is critical. The Fed most likely will move on with its tightening cycle.

Also, the RBNZ (Reserve Bank of New Zealand) and RBA (Reserve Bank of Australia)  signaled they will cut rates in the near future. Then there’s the BOJ (Bank of Japan) that may introduce something new to restart Japan’s economy once again.

Finally, we shouldn’t forget the ECB (European Central Bank) nor the BOE (Bank of England)either. Both may change their policies s well before the year ends.

It’s going to be fun, that’s for sure!