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The last trading session for the forex market today is full of US economic data, and now that we have the FOMC interest rate decision, with revised rising inflation expectations and an upbeat assessment of the economy made by the Fed, the US Dollar key driver for its trend direction is now the unemployment rate and the state of the labor market. There are expectations about 3 interest rate hikes in 2018 by the Fed, and probably the first one could be in March 2018. For today moderate to high volatility is expected for the majority of US Dollar currency pairs as the anticipated monthly non-farm payrolls will be released.

These are the main economic events for today in the forex market to focus on:

European Session

  1. UK Markit/CIPS Construction PMI

Time: 09:30 GMT

Higher than expected or rising readings for the Markit Construction PMI are positive for the British Pound, as they reflect an expanding manufacturing activity. The forecast is for a reading of 52.0, slightly lower than the previous reading of 52.2. Any reading above the 50.0 level is considered to indicate expansion in the construction industry, while the 50.0 level is considered a neutral level.

American Session

  1. US Unemployment Rate, Non-farm Payrolls, Average Hourly Earnings and Weekly Earnings, Factory Orders, Durable Goods Orders, University of Michigan Sentiment

Time: 13:30 GMT, 15:00 GMT

The unemployment rate for the US is expected to remain unchanged at 4.1%, but an increase in non-farm payrolls is expected after the large miss in the previous month. The forecast is for a reading of 180K, higher than the previous reading of 148K. An increase in job creation is positive for the US economy and the US Dollar as when more people are employed, consumer spending is increasing, and this leads to higher economic activity and growth. Also, higher than expected or rising figures for average hourly earnings, factory orders, durable goods orders and a higher reading for the University of Michigan Consumer Sentiment Index, will all be positive and supportive for the US Dollar.

The University of Michigan Consumer Sentiment Index reflects the current and future economic conditions and is expected to increase having a reading of 95, higher than the previous reading of 94.4. The factory orders which indicate the state of manufacturing sector are expected to decline having a reading of 0.9%, lower than the previous reading of 1.3%, but the average hourly earnings which provide useful information and insights of future consumer spending and inflation rate are expected to increase marginally to 2.6%, higher than the previous reading of 2.5%. Any surprises either positive or negative in the actual versus the expected readings, especially for the non-farm payrolls have the potential to add significant volatility for the US Dollar against other currencies.

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