Article Highlights

  • U.S. ADP non-farm employment up 298K vs. 185K forecast in Feb
  • U.S. ADP figure upgraded from 246K to 261K in Jan
  • Canadian housing starts up 210K vs. 205K forecast
  • Canada’s labor productivity increased 0.4% in Q4 2016
  • U.S. crude oil inventories up 8.2 million barrels vs. 1.1 million consensus
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The Greenback was the king of pips once more, thanks to upbeat NFP expectations and stronger odds of a Fed rate hike this month.

Major Events:

Strong U.S. ADP report – The ADP non-farm employment change, which is typically considered a preview of the official NFP report, printed a much stronger than expected 298K increase in hiring for February versus the estimated 185K gain. This marked the strongest pace of increase since April 2014, as jobs gains were seen in high-paying sectors like construction and professional and business sectors.

To top it off, the January figure was upgraded to show a 261K increase from the initially reported 246K pickup. This led dollar bulls to charge on speculations that Friday’s NFP will yield similar results, potentially sealing the deal for a Fed interest rate hike next week.

Meanwhile, non-farm productivity data for Q4 was lowered from 1.5% to 1.3%, which is a good thing because a reduction in efficiency puts upside pressure on wages. With that, unit labor costs for the same period were upgraded from 1.6% to 1.7%, indicating higher pay and possibly stronger spending down the line.

Opposing factors for the Loonie – Economic data from Canada turned out better than expected, as housing starts rose by 210K versus the 205K forecast while building permits jumped 5.4% versus the 3.1% estimate. Labor productivity came in line with expectations of a 0.4% uptick for Q4 2016, indicating a slight increase in efficiency.

However, the Loonie was unable to bank on these reports as it had a stronger reaction to the U.S. EIA crude oil inventories report, which revealed a buildup of 8.2 million barrels versus the estimated increase of 1.1 million barrels. This is also significantly higher than the earlier rise of 1.5 million barrels, reviving oversupply concerns once more and dampening gains for the commodity.

Major Market Movers:

USD –  Dollar domination was the name of the game as the stars are lining up for a Fed rate hike in their upcoming meeting.

EUR/USD slipped from 1.0558 to a low of 1.0535, GBP/USD is down from 1.2177 to 1.2143, USD/JPY advanced from 114.09 to a high of 114.75, and USD/CHF is up to 1.0150.

CAD –  Crude oil oversupply concerns weighed on the oil-related Loonie even after Canada released upbeat figures.

USD/CAD is up from 1.3430 to a high of 1.3500, CAD/JPY tumbled from a high of 85.22 to a low of 84.68, EUR/CAD is up to the 1.4200 levels, and GBP/CAD climbed form 1.6328 to a high of 1.6394.

Watch Out For:

  • 12:00 am GMT: Japanese average cash earnings y/y (0.3% expected, 0.5% previous)
  • 1:30 am GMT: Chinese CPI y/y (1.9% expected, 2.5% previous)
  • 1:30 am GMT: Chinese PPI y/y (7.6% expected, 6.9% previous)
  • 6:00 am GMT: Japanese preliminary machine tool orders

See also:

London Session Recap

Asian Session Recap

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