So the Wednesday numbers and the scores published on the various analysts' doors, exceeded expectations. Well sort of…
The ADP jobs report numbers pitched in with a healthy 135,000 new jobs added. However, as is customary with ADP, the last set of results in April, came with the now expected revision downward.
The numbers for May came in at 135K, below expectations according to the economists polled by Bloomberg, who were anticipating a healthy move upward of 165K. And then comes the 'kicker', last month's data was revised downwards; instead of 119K in April the number was revised down to 113K. So now all eyes are set on Friday's NFP roll call. Now bearing in mind that the ADP number was the second worst 'print' since September 2012 we could be in for a surprise with regards to the NFP Friday print. So let's be careful out there traders and if you're a day trader, or intraday trader who trades a currency pair that is sensitive to the NFP print, you should know the drill by now.
Whilst on the subject of the USA labour force, an interesting print came courtesy of the USA Labour Department. Labour costs, (measured hourly), fell at their highest rate since 1947, "excuse me, did he just say 1947?" Yes, and it's a scary number when it could suggest that the phenomena of deflation is haunting the economic corridors of power and the various factories the length and breadth of the USA, factories that still provide the powerhouse of growth for the world's largest economy. Hourly compensation plunged 3.8% in the first quarter instead of rising 1.2% as initially reported. Adjusted for inflation, hourly wages fell 5.2% in the first quarter. As a result, unit-labor costs sank 4.3%.
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The ISM non manufacturing report came in at a projected and healthy 53.7, and as readers are no doubt aware figures over the critical median line of 50 indicate growth and these figures more than stumbled over the line. Imports, however, collapsed from 56 to 51.5 and factory orders missed the expectation of a 1.5% rise coming in at 1.0%.
So all things considered a fairly mixed and confusing landscape was painted by the various data supplied and the presumption was that the main market in the USA; the DJIA would do what it 'naturally' does of late and shrug of any negativity and power ahead. Well the market makers, movers and participants obviously hadn't read the script and had other ideas, the DJIA closed down a significant 1.43% with the euro, after rising once again upon data release, retreating to the daily pivot point level.
Thursday key notes and points.
Europe and the UK are the main focus of attention for Thursday, therefore naturally traders' concentration should be focused mainly on the British pound and the euro. Firstly we have Germany's factory orders which are anticipated to come in negative at -1.0% versus a 2.2% improvement in April. Despite the anticipation of a negative print this data could still serve a blow and cause a shock to the still very fragile confidence in the investment community's faith in Europe's growth.
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The UK Bank of England's monetary policy committee meets on Thursday to publish their commitment to their asset purchase facility, quantitative easing by any other name. The decision on the base interest rate will also be revealed which, once again, is expected to remain at 0.5% for a record amount of months. Naturally, any deviation from this plan, could immediately impact on traders' positions in sterling currency pairs.
In the afternoon the weekly unemployment claims are printed by the USA department responsible. On a similar note the Challenger jobs report is also published which focuses on mass lay offs. However, we have an ECB press conference and (by now) we know how statements from any of the usual suspects involved in the rate setting and policy setting can impact on the value of the euro.
The biggest question is whether or not the Eurozone decision makers will go all in 'on tilt' and instigate a negative interest rate for deposits in an attempt to encourage money to stay in the real economy versus being arguably sat in socially useless banks and being punished for the privilege.