ADP Payrolls disappoints! Will this reflect a weak NFP?
Key Notes:
- New Zealand Employment Change q/q 0.3% vs. 0.5%
- New Zealand unemployment rate 5.9% vs. 5.9%; labour cost index q/q 0.5% vs. 0.5%
- UK BRC Shop price index y/y -1.4% vs. -1.3% previously
- Australia AIG services index 54.1 vs. 51.2 previously
- Switzerland CPI m/m -0.6% vs. -0.4%
- Spain services PMI 59.7 vs. 55.8
- Italy services PMI 52 vs. 53.2
- French final services PMI 52.0 vs. 52.1
- Eurozone services PMI 54 vs. 53.8
- German final services PMMI 53.8 vs. 53.7
- Italy industrial production -1.1% vs. -0.2%
- UK services PMI m/m 57.4 vs. 58.1
- Eurozone retail sales m/m -0.6% vs. -0.1%
- US ADP nonfarm employment change 185k vs. 216k
- Canada trade balance -0.5bnbn vs. -2.8bn
- US trade balance -43.8bnbn vs.-42.8bn
Later
- Final services PMI
- ISM non-manufacturing PMI
- US Crude Oil inventories
The currency markets were cautious today after yesterday’s hawkish comments from the Atlanta Fed Chief, Dennis Lockhart and ahead of the US ADP nonfarm employment change report. The US Dollar was well supported since Lockhart’s comments with most of the currencies trading subdued to the Greenback.
The Asian trading session saw the release of New Zealand’s unemployment numbers which were not impressive to say the least. The onslaught of weak economic data puts the Kiwi under pressure as speculation rises for further rate cuts from the RBNZ.
NZDUSD opened near the lows at 0.6539 and was mostly consolidating near this level for the most part before rallying above 0.6552. AUDUSD continued to post gains despite falling from yesterday’s highs. The Aussie opened the day near 0.7377 to post session lows near 0.734 before reversing its losses to trade near 0.7389. The Aussie remains at risk to the Australian jobs report due tomorrow.
The Yen was stronger in the Asian session gaining from the opening price at 124.345 to post a daily high near 124.425. The currency was seen struggling near the highs as it posted steep declines to 124 before stabilizing. USDJPY remains supported above 124, a level the currency has been consolidating for the past few days.
The European trading session saw the releases of services PMMI data from Spain, Italy, France and Germany. The Eurozone services PMI was up for the month at 54, beating estimates of 53.7. However retail sales fell, declining by -0.6% below estimates. Italy industrial production also fell sharply, declining -1.1% for the month. EUURUSD opened on a subdued note near the lows of 1.085 but managed to gain during the US trading session to post daily highs near 1.0935.
From the UK, the services PMI fell short of expectations, rising only to 57.4, below estimates of 58.1. The Pound was however muted to the news ahead of an important day tomorrow which will see the BoE meeting, meeting minutes and inflation report hearing. GBPUSD managed to trim its losses from the daily lows of 1.55335 to gain over 0.47% for the day at the time of writing. GBPUSD was trading above 1.5648.
In the US, ADP nonfarm employment change disappointed posting 185k jobs, well below the estimates of 216k. Last month’s numbers were also revised lower from 237k to 229k. The US dollar came under pressure on the weaker jobs report ahead of the Friday’s NFP numbers.
US trade balance also widened, rising to 43.8 billion, growing by about 7.1%, posting the largest gap since the past three months. Other economic data due for release include the Final services PMI, the ISM non-manufacturing PMI and Crude oil inventories report.
