Market Brief 06 July: ADP Nonfarm Employment Change is due
It’s Thursday, the day before the big Non-farm payrolls number comes out. We have three high-impact events on the calendar. Let’s see what those are.
USD 13:15 p.m. GMT +1, ADP Nonfarm Employment Change- this is a measurement of private employment data, and a useful precursor of the Non-farm payrolls which comes out every first Friday of the month. Analysts are forecasting a decrease of 68, 000 people employed from the previous period. So, we’re talking about 185,000 employed in June compared to 253, 000 people employed in the Non-farm sector for the month of May. If the actual reading is higher than expected, this should be seen as an appreciating signal for the U.S. dollar. However, if even fewer people have been employed, this should be read as a depreciating (i.e. weakening) sign for the currency.
USD 15:00 p.m. GMT +1, ISM Non –Manufacturing PMI (Jun) – this is the second highly-important market catalyst for the day. Expectations are for a gentle decrease at 56.5 for the month of June compared to the performance in May which landed at 56.9. As long as the performance of economic activity in the service sector is above the level of 50, this means that the overall economy is expanding. However, if the index level goes below 50, this would suggest contraction (which would be a bad sign for the value of the dollar, and should thus be read as a bearish sign). So, if the actual result is higher than expected, this should support the value of the dollar. And, if the result is lower than predictions, this should be read as having a negative impact on the currency.
16:00 p.m. GMT +1, Crude Oil Inventories- yesterday we saw oil prices getting smashed by more than 3 percent, thus putting an end to the longest bull run in 5 years. The fundamental reason behind the drop came from the rising OPEC exports. On top of that the appreciating dollar added to turning the sentient bearish. Analysts expect a weekly change in the number of barrels at – 2.833 M compared to last week’s 0.118 M. An increase in inventories implies higher supply and lower demand, thus prices of oil potentially going down. And, conversely- if the results shows that inventories have decreased, this means that supply is lower and thus the price of oil should increase.
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