Article Highlights

  • ADP non-farm employment change up 172K vs. 158K forecast
  • U.S. Challenger job cuts down 14.1% y/y
  • U.S. initial jobless claims at 254K vs. 269K forecast, 270K previous
  • Canadian building permits down 1.9% vs. projected 2.1% gain
  • Canada’s Ivey PMI up from 49.4 to 51.7 vs. 50.2 forecast
  • U.S. crude oil inventories down 2.2 million barrels
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Forex junkies seem to be pricing in a positive surprise for today’s NFP release, thanks to stronger-than-expected leading employment indicators.

Major Events:

Leading U.S. jobs indicators – The ADP non-farm employment change report printed a higher than expected 172K increase in hiring versus the estimated 158K gain. This also reflects an improvement from the previous 168K increase. However, this release isn’t exactly the most accurate predictor of the actual NFP results so you may wanna look at Forex Gump’s rundown of other jobs figures as well.

The Challenger job cuts report showed a smaller 14.1% year-over-year reduction in joblessness compared to the earlier 26.5% drop. Lastly, initial jobless claims came in at 254K, lower than the estimated 269K figure and the previous 270K reading.

Crude oil selloff – Data from the U.S. Energy Information Administration showed yet another draw in crude oil stockpiles, further easing fears of an oversupply. Inventories fell by 2.2 million barrels compared to the projected decline of 2.1 million barrels and the previous drop of 4.1 million barrels.

Even so, crude oil prices slumped as traders dumped their commodity holdings in favor of the U.S. dollar, possibly due to positive expectations for the NFP release. WTI crude oil fell to the $45/barrel area from $48/barrel while Brent crude oil dropped from $49/barrel to a low of $46.10/barrel.

Mixed data from Canada – Economic reports from Canada printed mixed results, as building permits missed expectations while the Ivey PMI had an impressive reading. Building permits slipped 1.9% instead of showing the projected 2.1% gain in May, although the previous reading was upgraded from a 0.3% decline to show a 0.1% uptick for April.

The June Ivey PMI rose from 49.4 to 51.7 to indicate a return to industry expansion, overtaking the consensus at 50.3. The employment component climbed from 49.3 to 52.5, hinting that the upcoming Canadian jobs release could show upbeat results, while the index for inventories was higher as well.

Major Currency Movers:

USD – The Greenback chalked up significant gains against its forex rivals when jobs data came in better than expected, leading traders to predict a strong NFP rebound.

USD/JPY edged up from an intraday low of 100.59 to a high of 100.91, EUR/USD retreated from the 1.1100 level to a low of 1.1051, GBP/USD dropped from a high of 1.3043 to a low of 1.2877, and USD/CHF came within 8 pips shy of the .9800 handle.

Watch Out For:

  • 12:50 am GMT: Japanese current account balance
  • 12:50 am GMT: Japanese average cash earnings (0.5% expected, 0.0% previous)
  • 6:00 am GMT: Japan’s Economy Watchers Sentiment index (42.9 expected, 43.0 previous)

See also:

Asian Session Recap

London Session Recap

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