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ADP report came in well below forecast

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New releases confirm the investors’ expectation of New Zeeland’s unemployment rate rising to 5.9%, a small increase since Q1’s 5.8%. Although the unemployment was in forecast, the job growth remained at 0.3% in Q2 versus the expected 0.5%. Also, a miss was the expected 69.6% in participation rate (constant from Q1), which turned out 69.3%. Regarding labor costs, the quarterly reading is +0.5% and the yearly is +1.8%, both within expectations. Statistics New Zeeland declared that the annual employment continues to be on an upward slope, even if the quarterly rise is smaller than the working-age population growth.

In the UK, the seasonally adjusted Markit PMI (Purchasing Manager’s Index) for services fell in July to 57.4 from 58.8 in June. The figure remained well over 50.0 marking a 31st successive month of expansion. This continuous rise is explained by the official report as a “perfect storm”, being backed up by high inflows of new business in the service sector companies at the same time with a slight decrease in the growth of activity, the rate of new jobs creation being the lowest since March last year (but still strong). Prices in the service industry have the strongest growth rate since February, but inflation eased towards a 3-months low, remaining also weak on the long run, according to latest surveys.

Shifting to the other side of the Atlantic Ocean, the weak ADP report over employment placed the readings lower than expected. This favored the GBP to extend its rally against the USD from 1.5525 to around 1.5650. ADP’s report had such an impact mainly because the 215K new private jobs forecasted, resulted in only 185K, meaning a gap of almost 15% between the two figures. Also, the June data was revised down 8k, from 237k to 229k. At the moment of writing GBP/USD is trading at 1.5644 (0.53% up for the day), with a high of 1.5653 and low of 1.5526. The trend is expected to remain bullish.

WTI’s (West Texas Intermediate) oil barrel lingered yesterday around the $45.00 threshold, with readings slightly below and above this value. Reaching below $45.00 hasn’t happened since March, concerns regarding the global supply glut appearing to be the sole motor for this seemingly never-ending bearish tone. EIA’s last week reported decrease of crude oil inventories (by 4.4 million barrels) seems to do nothing for the sentiment, although is not the first time a decrease is announced. Though the crude reporting is down, EIA declared an increase in gasoline inventories, neutralizing this way any turn-over in the trend.

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