- 16.06.2021 06:45 am
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AUD, NZD Slump, EMS Drop, USD/JPY Soars Above 110.
Summary: A robust increase in US private payrolls by 978,000 jobs in May boosted the Dollar against its Rivals. The ADP National Employment report showed its biggest increase since June 2020 and overwhelmed median forecasts of a 650,000 gain. This followed a fall in US Weekly Jobless Claims to 385,000 from 405,000 and forecasts of 400,000. The Dollar Index (USD/DXY), a measure of the value of the Greenback against a basket of 6 major currencies, rose 0.63% to 90.47 (89.92 yesterday). Against the Japanese Yen, the Dollar soared above 110, closing at 110.28, its highest finish since early April. The risk leading Australian Dollar slumped to an overnight and April low at 0.7446, settling at 0.7660 (0.7750 yesterday). The NZD/USD pair lost 1.2% to 0.7140 from 0.7235 yesterday and 0.7315 a week ago. Sterling slid to 1.4105 from 1.4168 while the Euro fell 0.66% to 1.2128 (1.2208). The Greenback’s rally was broad-based, advancing against the Asian and Emerging Market currencies. USD/CNH extended its advance yesterday to a 6.3985 finish from 6.3850 yesterday and 6.3517 earlier in the week. The benchmark US 10-year bond yield rose 4 basis points to 1.62%. Other global bond yields were also up but to a lesser degree. Germany’s 10-year Bund rate was last at -0.19% (-0.20% yesterday). Wall Street stocks were lower. The DOW closed at 34,587 (34,600) while the S&P 500 was last at 4,191 (4,207).
Other data released yesterday saw Australia’s May Trade Surplus increase to +AUD 8.03 billion from +AUD 5.57 billion in April, but lower than forecasts of +AUD 8.35 billion. China’s May Caixin Services PMI fell to 55.1 from 56.3 in April, and lower than median forecasts at 56.3. European (French, German, Italian, Spanish) and Eurozone Services PMI’s mostly matched or were better than forecasts. UK Final Services PMI printed at 62.9, bettering expectations of 61.8. US ISM Services PMI climbed to 64.0 in May from 62.7 in April and beating median estimates at 63.0.
On the Lookout: Welcome to Payrolls Friday! And it’s all about tonight’s US NFP report. The robust increase in US private payrolls set the stage for tonight’s much-awaited employment data. Economists are forecasting May’s Payrolls to climb to a median range from 645,000 to 664,000 from April’s disappointing 266,000. ACY’s Finlogix is expecting NFP up by 650,000 jobs. The Unemployment rate is expected to fall to 5.9% from a previous 6.1% (April). Wages (Average Hourly Earnings) are widely forecast to slow to 0.2% from 0.7% (ACY Finlogix)
Other data released today sees Japan’s Household Spending report (annual) for April. Our ACY Finlogix is forecasting a rise to 9.3% from 6.2% annually. Europe sees the Eurozone’s April Retail Sales (f/c -1.2% from 2.7%). Canada also releases its Employment report, which unlike that of its US neighbour is expected by most analysts to see a loss of jobs. Canada’s renewed lockdown has contributed to a recent slowdown in jobs growth. Employment Change for May in Canada is forecast to -20,000 jobs from April’s -207,100. Canada’s Unemployment Rate is forecast to climb to 8.2% from 8.1% (ACY Finlogix).
One factor which should not be overlooked is the employment component of last night’s US ISM PMI report. According to the US ISM the Employment Index fell to 55.3% from April’s 58.8%, down 3.5%. While all the other components rose, the crucial Employment component fell. The stage is set for some dramas tonight. We would have to see a very good Payrolls report, say a Jobs gain of 1 million or higher to really set the Greenback on fire. If the NFP rise is at or lower than medians forecasts, the Dollar will fall back again. Watch the bond market’s reactions too. Tin helmets on folks, we may be in for one of those nights. Happy days !
Its Friday so take it easy, save your bullets for tonight. And hopefully we may just be singing the lyrics of that classic 1963 hit song by Frankie Valli and the Four Seasons. “Oh What a Night”.
Happy Friday and trading all.