ADP Employment report

BoE between a rock and a hard place. 

By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank  

As widely expected, the Federal Reserve (Fed) maintained its interest rates unchanged at this week's meeting and President Jerome Powell cited that the recent surge – especially in the long end of the US yield curve – helped tightening the financial conditions in the US. Powell repeated that the Fed is proceeding carefully but that they are 'not confident that inflation is on path toward 2%' target'. US policymakers redefined the US economic outlook as being 'strong', from being just 'solid'. 

In summary, the latest Fed decision was not dovish, unsurprisingly hawkish, and did not impact appetite in US bonds which got a boost from the Treasury's announcement of a slightly lower-than-expected quarterly refunding auction size for the 3, 10 and 30-year maturity bonds next week. Cherry on top, the US Treasury said that they now expect one more step up in quarterly issuances for the lon

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US Nonfarm Payrolls Decline, Strong Job Growth in Canada; Bank of Canada Rate Hike Expected

Kenny Fisher Kenny Fisher 11.07.2023 08:25
US nonfarm payrolls decline Canada adds 60,000 jobs Bank of Canada expected to raise rates on Wednesday The Canadian dollar is trading quietly at the start of the week. In the North American session, USD/CAD is trading at 1.3286, up 0.07%. On Friday, the Canadian dollar gained 0.68% on the back of soft nonfarm payrolls and a strong Canadian jobs report.   US nonfarm payrolls decline There was plenty of drama ahead of Friday’s nonfarm payrolls. The consensus estimate for June stood at 225,000 and this was close to the actual reading of 209,000 but much lower than the downwardly revised reading of 306,000 in May. So why the excitement? The reason was the ADP Employment report prior to nonfarm payrolls. ADP is not considered a reliable precursor to NFP, but the markets couldn’t ignore the massive ADP reading of 497,000. This prompted speculation of a banner NFP which would force the Fed to keep tightening. In the end, nonfarm payrolls performed as expected, renewing speculation that the Fed may soon wind up its rate-hike cycle if there are additional signs of the US economy cooling down. Canada also released the June employment report on Friday, with job growth showing strong gains. The economy produced 59,900 jobs, smashing the consensus estimate of 20,000 and bouncing back from the May reading of -17,300. Even more impressive, the economy created a massive 109,600 full-time jobs, as part-time employment fell by 49,800. At the same time, there were indications that the economy is cooling – the unemployment rate climbed to 5.4%, up from 5.2% and wage growth slowed to 4.2%, down from 5.1% in May. The numbers show a mixed employment report, raising the question of what will be the Bank of Canada’s takeaway from the job numbers ahead of Wednesday’s rate announcement. The BoC has stopped providing forward guidance about its rate plans, instead saying that rate decisions would be based on economic data, particularly inflation and employment numbers. The BoC is expected to raise rates by 0.25% at the Wednesday meeting, which would bring the cash rate to 5.0%.   USD/CAD Technical USD/CAD is testing resistance at 1.3289. Next, there is resistance at 1.3375 1.3191 and 1.3105 are providing support    
Pound Sterling: Short-Term Repricing Complete, But Further Uncertainty Looms

European Markets React to US Rating Downgrade and Economic Concerns

Michael Hewson Michael Hewson 02.08.2023 08:22
European markets set to open lower after US rating downgrade     We saw a negative start to August for European markets with the DAX leading the way lower, having only put in a new record high the day before, after poor manufacturing PMIs and disappointing earnings prompted profit taking.   Yesterday's weakness appears to have been prompted by concern that the economy is a little bit weaker than perhaps people would like, raising concern for earnings growth heading into the second half of the year. US markets also finished the day lower, although closing well off the lows of the day with the Dow managing to eke out a gain. US yields also finished the day higher, on the rising realisation that rates may well have to stay at current levels for quite a while yet.     This profit taking has continued overnight after Fitch downgraded the US credit rating to AA+ from AAA, while simultaneously boosting demand for haven assets, with Asia markets falling sharply, and which looks set to translate into a sharply lower European open.   The increase in crude oil prices over the past 4 weeks is also raising concern that the falls in input prices that we've seen over the last few months might start to hit a floor and start rising again. Yesterday we got another snapshot of the US labour market as US job openings (JOLTS) fell to their lowest levels since April 2021, although they are still well above the levels, they were pre-pandemic. The latest employment component in the July ISM manufacturing survey also slowed to its lowest level since July 2020.     Today we get the latest insight into private sector hiring with the ADP employment report for July which is unlikely to repeat the bumper 497k seen in the June numbers. We should also be prepared for a downward revision to that report with July expected to see a more moderate 190k, as we look towards Friday's more important non-farm payrolls numbers. While stocks slipped back yesterday the US dollar rose to a 3-week high, gaining ground across the board on the grounds of the broader resilience of the US economy.     EUR/USD – still finding support at the 1.0940 lows from last week with further support at the 50-day SMA as well as the 1.0850 area. Resistance currently at last week's high at 1.1150.     GBP/USD – has continued to slide lower towards trend line support from the March lows at 1.2710, and the 50-day SMA at 1.2700. While above this key support the uptrend from the March lows remains intact. Resistance at the 1.3000 area.         EUR/GBP – popped briefly above the resistance at the 0.8600 area, before slipping back again, with the risk of a return to the recent lows at 0.8500/10. We need to see a concerted move above 0.8620 to target the July highs at 0.8700/10.     USD/JPY – continues to move through the 142.00 area, with the next target at the previous peaks at 145.00. Support comes in at this week's lows at 140.70.     FTSE100 is expected to open 30 points lower at 7,636     DAX is expected to open 88 points lower at 16,152     CAC40 is expected to open 36 points lower at 7,370   By Michael Hewson (Chief Market Analyst at CMC Markets UK)  
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European Markets React to US Rating Downgrade and Economic Concerns - 02.08.2023

Michael Hewson Michael Hewson 02.08.2023 08:22
European markets set to open lower after US rating downgrade     We saw a negative start to August for European markets with the DAX leading the way lower, having only put in a new record high the day before, after poor manufacturing PMIs and disappointing earnings prompted profit taking.   Yesterday's weakness appears to have been prompted by concern that the economy is a little bit weaker than perhaps people would like, raising concern for earnings growth heading into the second half of the year. US markets also finished the day lower, although closing well off the lows of the day with the Dow managing to eke out a gain. US yields also finished the day higher, on the rising realisation that rates may well have to stay at current levels for quite a while yet.     This profit taking has continued overnight after Fitch downgraded the US credit rating to AA+ from AAA, while simultaneously boosting demand for haven assets, with Asia markets falling sharply, and which looks set to translate into a sharply lower European open.   The increase in crude oil prices over the past 4 weeks is also raising concern that the falls in input prices that we've seen over the last few months might start to hit a floor and start rising again. Yesterday we got another snapshot of the US labour market as US job openings (JOLTS) fell to their lowest levels since April 2021, although they are still well above the levels, they were pre-pandemic. The latest employment component in the July ISM manufacturing survey also slowed to its lowest level since July 2020.     Today we get the latest insight into private sector hiring with the ADP employment report for July which is unlikely to repeat the bumper 497k seen in the June numbers. We should also be prepared for a downward revision to that report with July expected to see a more moderate 190k, as we look towards Friday's more important non-farm payrolls numbers. While stocks slipped back yesterday the US dollar rose to a 3-week high, gaining ground across the board on the grounds of the broader resilience of the US economy.     EUR/USD – still finding support at the 1.0940 lows from last week with further support at the 50-day SMA as well as the 1.0850 area. Resistance currently at last week's high at 1.1150.     GBP/USD – has continued to slide lower towards trend line support from the March lows at 1.2710, and the 50-day SMA at 1.2700. While above this key support the uptrend from the March lows remains intact. Resistance at the 1.3000 area.         EUR/GBP – popped briefly above the resistance at the 0.8600 area, before slipping back again, with the risk of a return to the recent lows at 0.8500/10. We need to see a concerted move above 0.8620 to target the July highs at 0.8700/10.     USD/JPY – continues to move through the 142.00 area, with the next target at the previous peaks at 145.00. Support comes in at this week's lows at 140.70.     FTSE100 is expected to open 30 points lower at 7,636     DAX is expected to open 88 points lower at 16,152     CAC40 is expected to open 36 points lower at 7,370   By Michael Hewson (Chief Market Analyst at CMC Markets UK)  
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RBA Policy Statement: Inflation High but Ebbing, Markets Eye US Nonfarm Payrolls

Ed Moya Ed Moya 07.08.2023 09:02
RBA policy statement says inflation high but declining Money markets betting on a pause in September US nonfarm payrolls expected at 200,000 The Australian dollar has stabilized but it has been a rough week, with losses of 1.37%. In Friday’s European session, AUD/USD is trading at 0.6558, down 0.04%. RBA says inflation high but moving in right direction The Reserve Bank of Australia released its quarterly policy statement earlier today. Investors looking for clues as to the RBA’s next steps may be disappointed as there were no interesting disclosures. Still, the statement provides a useful summary of the RBA’s thoughts on inflation, which remains its primary focus. The statement noted that inflation remains “high and broadly based” and voiced concern over high wage growth and strong services and core inflation. The statement added that inflation is moving in the right direction and is consistent with the RBA’s forecast that the 2% target will be achieved in 2025. RBA Governor Lowe said at this week’s meeting that future rate decisions will “depend on the data” and the statement reinforced this stance. The RBA’s message to the markets is that a rate hike remains on the table, but the money markets are more dovish and have priced in another pause at 95%, according to the ASX RBA Rate Tracker. If the RBA decides to pause for a third straight time at the September meeting, I would expect to see increased speculation about rate cuts.   The US releases nonfarm payrolls, one of the most important US releases, later today. In June, a massive ADP employment report fuelled expectations that nonfarm payrolls would also soar. In the end, nonfarm payrolls fell to 209,000, down sharply from a downwardly revised 306,000. ADP sparkled again this week with a reading of 324,000. We’ll have to wait and see if nonfarm payrolls come in around the consensus estimate of 200,000 or follow ADP and move sharply higher. . AUD/USD Technical AUD/USD tested resistance at 0.6573 earlier in the day. Above, there is resistance at 0.6697 There is support at 0.6449 and 0.6375    
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Mixed Job Data Leaves CAD and USD Awaiting Clarity

Kenny Fisher Kenny Fisher 07.08.2023 09:04
Canada added a negligible 1700 jobs in July US nonfarm payrolls almost unchanged at 187,000 The Canadian dollar is showing limited movement on Friday. In the North American session, USD/CAD is trading at 1.3360, up 0.06%. Canadian and US job numbers were soft today, but the Canadian dollar’s reaction has been muted. Canada’s economy sheds jobs After a stellar job report in June, the July numbers were dreadful. Canada’s economy shed 6,400 jobs in July, compared to a 59, 900 gain in June. Full time employment added a negligible 1,700 jobs, following a massive 109,600 in June. The unemployment rate ticked up to 5.5%, up from 5.4%. Perhaps the most interesting data was wage growth, which jumped 5% y/y in June, climbing from 3.9% in May. The rise is indicative of a tight labour market and will complicate the Bank of Canada’s fight to bring inflation down to the 2% target. US nonfarm payrolls slips below 200K It was deja vous all over again, as nonfarm payrolls failed to follow the ADP employment report with a massive gain. In June, a huge ADP reading fuelled speculation that nonfarm payrolls would also surge, and the same happened this week. Both times, nonfarm payrolls headed lower, a reminder that ADP is not a reliable precursor to the nonfarm payrolls report.   July nonfarm payrolls dipped to 187,000, very close to June reading of 185,000 (downwardly revised from 209,000). This marks the lowest level since December 2020. The unemployment rate ticked lower to 3.5%, down from 3.6%. Wage growth stayed steady at 4.4%, above the consensus estimate of 4.2%. What’s interesting and perhaps frustrating for the Fed, is that the jobs report is sending contradictory signals about the strength of the labour market. Job growth is falling, but the unemployment rate has dropped and wage growth remains strong. With different metrics in the jobs report telling a different story, it will be difficult for the Fed to rely on this employment report as it determines its path for future rate decisions. . USD/CAD Technical There is resistance at 1.3324 and 1.3394 1.3223 and 1.3182 are providing support    
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Job Data Divergence: Canadian and US Employment Trends

Ed Moya Ed Moya 07.08.2023 09:08
USD/JPY declines on expectations BOJ will let rates rise quickly Fed rate cut bets fully priced in by March meeting; implied rate stands at 5.123% Fed’s Bostic noted US employment gains are slowing in an orderly manner, no need for tightening   NFP Day  The US economy should continue to gradually weaken as the labor market softens.  This labor market report showed 187,000 jobs were added to the economy, while wage pressures heated up, and as the unemployment rate dipped to 3.5%.  This NFP report should support the argument that the Fed is done raising rates.  Fed speak post payrolls poured cold water over the hot bond market selloff.  Fed’s Bostic said that the job gains are slowing orderly  and that they have no reason to hike again. Fed’s Goolsbee added that they are getting positive numbers with inflation and that the job market is cooling a little bit.  The risks for more Fed tightening are going away, but that could change with next Thursday’s inflation report.   USD/JPY     Price action on the USD/JPY daily chart show that the potential bearish ABCD pattern that formed a couple days ago is tentatively respecting trendline support at the 141.50 region.  If bearish momentum remains in place downside could target the 140.00 zone.  With the BOJ’s minor tweak to YCC in place and steady US data that supports the economy is weakening, the dollar-yen could see bearishness remain intact.  To the upside, 144.00 remains key resistance     Apple disappoints and Amazon Delivers The last two major tech giant earnings delivered diverging stories.  Amazon crushed it in the second quarter, while delivering financial discipline with lower spending.  The outlook impressed for both ecommerce and their cloud services, while the lower headcount made this a perfect earnings report. Apple told a different story than Amazon as their outlook devices weakened, which is prompting concerns that this might be as good as it gets over the short-term for share prices.  A weakening consumer and a similar fourth quarter is not inspiring investors.  
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EUR/USD: Euro's Swings Amid Soft German Data and Awaited US Nonfarm Payrolls

Ed Moya Ed Moya 07.08.2023 09:27
German Factory Orders jump 7.0% US nonfarm payrolls expected to dip to 200,000 The euro is almost unchanged on Friday, trading at 1.0952. We could see some movement in the North American session, with the release of US nonfarm payrolls. The euro has shown sharp swings lately.  EUR/USD climbed to 1.1275 on July 18th, its highest level since February 2022. It has been all downhill since then, with the euro tumbling over 300 basis points.   Soft German PMIs reflective of weak eurozone economy It hasn’t been the best week for Germany, the largest economy in the eurozone and the bellwether of the bloc. The July PMIs pointed to deceleration in both services and manufacturing. The Services PMI remained in expansion territory but slipped from 54.1 to 52.3, its lowest level since February. Manufacturing is in terrible shape, with the PMI falling from 40.6 to 38.8, its weakest reading since May 2020. German retail sales declined 0.8% in June, down from 1.9% in May. The week did end with some good news, as German Factory Orders jumped 7.0% m/m in June, up from 6.2% in May and blowing past the consensus estimate of -2.0%. We’ll get a look at German Industrial Production on Monday and CPI on Tuesday. For the ECB, the weak numbers out of Germany are an indication that the central bank’s tightening cycle is working, but what comes next is a tricky question. Inflation has slowed to 5.5%, but that is much higher than the 2% target. The ECB hasn’t paused its rate hikes since the tightening cycle began in July 2022 but there is some pressure on the ECB to take a break at the September meeting in order to avoid a recession. ECB President Lagarde is keeping mum, saying that a pause or a hike are both on the table. With no guidance from the ECB, about all investors can do is keep an eye on inflation and employment releases, which will be crucial to the ECB’s decision at the next meeting.   Markets expect soft US nonfarm payrolls All eyes are on nonfarm payrolls, one of the most important US releases. In June, a massive ADP employment report fuelled expectations that nonfarm payrolls would also soar. In the end, nonfarm payrolls fell to 209,000, down sharply from a downwardly revised 306,000. ADP again soared this week with a reading of 324,000. We’ll have to wait and see if nonfarm payrolls come in around the consensus estimate of 200,000 or follow ADP and move sharply higher. . EUR/USD Technical 1.0924 remains under pressure in support. Below, there is support at 1.0831 There is resistance at 1.1037 and 1.1130  
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New Zealand Business Confidence Surges as Inflation Expectations Hold Steady

Akash Girimath Akash Girimath 01.09.2023 11:26
New Zealand business confidence rises ADP Employment Change falls to 177,000 The New Zealand dollar is almost flat on Thursday, trading at 0.5958 in Europe.   New Zealand Business Confidence improves again New Zealand’s ANZ Business Confidence index accelerated for a fourth straight month in August. The index improved to -3.7, up from -13.1 in July. Business Confidence has been in negative territory for 26 consecutive months, but the August print was the highest since June 2021. The consensus estimate stood at -1.9 and the New Zealand dollar didn’t react. If the upswing continues, we should see a positive reading in the next month or two, which would be a milestone and likely give a boost to the New Zealand dollar. The business confidence report noted that inflation expectations dipped very slightly, from 5.14% to 5.06%. This is clearly incompatible with a 2% inflation target but the key question is whether the Reserve Bank of New Zealand will pause for a third straight time in October, in the hope that the benchmark rate of 5.50% will further cool the economy and push inflation lower. The RBNZ doesn’t meet until October 4th, with only one tier-1 event prior to the meeting, which is GDP on September 20th. The central bank will also be keeping a close eye on events in China, where the economy has been deteriorating. On Thursday, China’s Manufacturing PMI rose in July to 49.7, up from 49.3 in June, but this marked a fifth straight contraction.   In the US, the markets await the non-farm payrolls release on Friday. The ADP employment report fell sharply to 177,000, down from an upwardly revised 371,000 and shy of the estimate of 195,000. The ADP release isn’t a reliable precursor to nonfarm payrolls but still attracts attention as investors hunt for clues ahead of the nonfarm payrolls release. The markets are expecting nonfarm payrolls to fall to 170,000 in August, compared to 187,000 in July. . NZD/USD Technical There is support at 0.5927 and 0.5866 0.5968 is a weak resistance line. Above, there is resistance at 0.6029        
The December CPI Upside Surprise: Why Markets Remain Skeptical About a Fed Rate Cut in March"   User napisz liste keywords, oddzile je porzecinakmie ChatGPT

BoE Faces Dilemma Amid Hawkish Fed and Economic Challenges: Analyst Insights

ING Economics ING Economics 02.11.2023 12:56
BoE between a rock and a hard place.  By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   As widely expected, the Federal Reserve (Fed) maintained its interest rates unchanged at this week's meeting and President Jerome Powell cited that the recent surge – especially in the long end of the US yield curve – helped tightening the financial conditions in the US. Powell repeated that the Fed is proceeding carefully but that they are 'not confident that inflation is on path toward 2%' target'. US policymakers redefined the US economic outlook as being 'strong', from being just 'solid'.  In summary, the latest Fed decision was not dovish, unsurprisingly hawkish, and did not impact appetite in US bonds which got a boost from the Treasury's announcement of a slightly lower-than-expected quarterly refunding auction size for the 3, 10 and 30-year maturity bonds next week. Cherry on top, the US Treasury said that they now expect one more step up in quarterly issuances for the long-term debt, whereas the expectation was multiple more step ups.   The US 10-year yield sank to 4.70% after the Fed decision and Treasury's much-awaited issuance calendar reveal, the 30-year yield fell to 4.90%. The fact that the US will borrow slightly less than previously thought and slightly less on the long-end of the curve doesn't mean that the fiscal outlook improved. Though lower-than-expected, the $776bn that the US Treasury is planning to borrow this quarter is a record for the last 3 months of a year. And the net interest payments on the US federal debt are rising at an eye-watering speed. In numbers, the federal debt rose more than a third since the end of 2019, and the interest expenses on that debt rose by almost 40%. That's a detail for Janet Yellen who thinks that the surge in US yields is explained by the positive economic outlook, but the market won't allow the Treasury to borrow like its pockets have no bottom if the Fed is not part of it.   Bad news, good news the sharp decline in October ISM manufacturing PMI and the softer-than-expected ADP read helped boosting sentiment in US Treasuries, as they somehow softened the otherwise strong US economic outlook. The JOLTS data unexpectedly rose but no one was out looking for reasons to sell Treasuries yesterday, so that basically went unheard. The official US jobs data is due Friday and any strength in NFP, or wages could reverse the optimism that the US economic growth will... slow. And as bad news is sometimes good news for the market, the S&P500 rebounded more than 1% and closed the session at a spitting distance from the all important 200-DMA, while the rate-sensitive Nasdaq jumped almost 1.80%.   AMD, Qualcomm gain, Apple to report On the individual level, AMD jumped almost 10% yesterday. Even though the company gave a soft guidance for Q4, they said that they expect to sell more than $2bn worth of AI chips next year. That's a lot, that's more than a third of the actual revenue they make. Qualcomm jumped nearly 4% in afterhours trading, as the world's largest seller of smartphone chips gave a better-than-expected prediction for this quarter, saying that the inventory glut in mobile-phone industry may be receding.   Today, Apple will post its Q3 earnings, after the bell. We have reservations regarding the results as the iPhone15 sales are not as brilliant as investors hoped they would be, and Huawei is apparently eating Apple's market share in China. Apple's overall revenue is seen down by around 3%. Ouch. The good news is that the morose expectations could be easier to beat. Otherwise, we could see Apple tank below the $170 per share, into the bearish consolidation zone, and become vulnerable to deeper losses.  BoE not to raise rates, but its inflation tolerance The Bank of England (BoE) is the next major central bank to announce its rate decision today, and the Brits are not expected to raise the interest rates at today's MPC meeting, but they are expected to increase their tolerance faced with above 2% inflation, instead. That's not good for central bank credibility, even less so when the BoE's credibility is not at its best since the start of this tightening cycle. If investors sense that the BoE will let inflation run hot, by lack of choice, sterling could take a significant hit.   Gold and oil  Appetite in gold eases as Israelian attacks are perceived as being less aggressive than what they could be. De-pricing of Mid-East risks could send the price of an ounce to, or below the 200-DMA, near the $1933 level. Upside risks prevail, but fresh news should gradually lose their shocker impact and the $2000 per ounce level will likely attract top sellers more than anything else.   US crude rebounded near the $80pb yesterday, as the decline toward the psychological $80pb level brought in dip buyers. We could reasonably expect the US crude to correct toward $85pb as geopolitical tensions loom, and supply remains at jeopardy.    

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