The private payrolls report from ADP is due for release later this afternoon. Expectations are for the US economy to have added 183k private jobs in the month of October, modestly lower from the 200k jobs added a month ago. Although private payrolls in recent months has not shown any strong correlation with the NFP payrolls data, the markets will regardless pay attention to the numbers. ADP payrolls peaked in January and July this year with 241k and 237k jobs being added respectively but has declined since August to 185k but has managed to rise steadily since then, posting a three month consecutive gains. A beat on the estimates would no doubt bring some optimism to the markets.
The ADP report is however likely to be overshadowed by Fed Chair Janet Yellen who is due to testify before the senate banking committee today. Given that the recent FOMC meeting was not followed by the press conference, the markets will be looking to Ms. Yellen’s comments today. The testimony to the senate will also give the committee members a chance to dig deeper on the prospects of the rate hike and Ms. Yellen’s comments to this could definitely swing the markets.
Considering that the Fed released a very hawkish tone at the October meeting, it is unlikely that there will be any dovish connotations today for the most part. As such Ms. Yellen’s comments should be supportive of the US Dollar in the near term.
Gold prices declined strongly yesterday to settle near 1115.18 after prices briefly traded near session highs of 1137. Any recovery in Gold in the short term is likely to be met with resistance based on the outcome of today’s event. The equity markets which saw a strong rally yesterday, on the other hand is starting to show signs of easing momentum as the S&P500 futures decline off session highs made today at 2107. Prices are trading close to the short term support at 2096, which is broken could see the S&P500 post a considerable correction with lower support at 2025 being the most likely target.
Across the Atlantic, the ECB remains in a wait and watch mode as the markets being to price in the expansion to the ECB’s QE program. Draghi delivered his opening remarks at the Frankfurt forum on banking supervision but refrained from going into the details.The ECB Chief merely stated that the Central Bank would keep its price stability mandate while noting that the Central bank will consider all options at its December meeting, which comes ahead of the Fed’s decision.
EURUSD remains weak for the most part, and is currently down 0.34%, trading at 1.092, maintain a three day low. The intraday charts in EURUSD do point to a possible upside correction to at least 1.10. Combining the short term correction due in Gold, and the potential decline in the S&P500 and a correction in EURUSD to 1.10, the bias is currently inclined to a dovish reaction from the markets today.
Other economic releases for the day include the US ISM non-manufacturing PMI data.
