Forex today: dollar catches a bid, Trump dumps Paris accord, nonfarm payrolls next catalyst
Forex today was a better performance all around Wall Street.
US benchmarks took flight, the DXY picked itself up, dusted itself off and regained territory on the 97 handle. US yields were firmer above 2.20% and the Yen was down around 0.5% in a risk-on environment.
The markets have been holding out for the nonfarm payrolls tomorrow and today's stronger-than-expected ADP employment survey was positive. The US private sector added 253,000 new jobs in May, above market's forecast of 239K and previous 174K. "Unemployment claims, however, surged in the week ended May 26, with the number of Americans filing for benefit claims reaching 248K from the previous 235K, pausing initial enthusiasm over the US employment sector's health," explained Valeria Bednarik, chief analyst at FXStreet, adding, however, that both numbers, anticipate another solid NFP report for this Friday. Similarly, the US ISM manufacturing index for May beat April’s reading, rising to 54.9 from 54.8 while the consensus had expected it to hold steady. This data from the US manufacturing also points to ongoing strong growth. Finally, Trump just ditched the Paris Accord, putting America first again.
The pound was a bit better off today although unable to capitalise on its data from earlier on due to continued pressures in the uncertainty around the UK elections next week. The polls continue to show PM's lead diminishing and bets for a hung parliament are increasing. The EUR fell to test the 1.1200 level while the worst performer came in the Aussie that fell to 0.7373, weighed down by iron ore still, down a further 2% - CAPEX and China PMI data were a weight overnight transcending through European and US markets.
The day ahead
Analysts at Westpac noted the forthcoming key events to end the week:
"US: May nonfarm payrolls are expected by WBC to post another robust gain of 170k, with the market at 180k. Given stable participation, the unemployment rate should also be unchanged after falling from 4.8% in Jan to 4.4% - below estimates of full employment. Fedspeak includes Kaplan in a Q&A, and Harker speaks on the economic outlook.
Euro Area & China: The 12th EU-China Business Summit is held in Brussels including speeches by EU President Juncker and Chinese Premier Li Keqiang."
Key notes from the US session
- Fed's Powell: Appropriate to continue gradual U.S. rate hikes
- RTRS poll: 14 of 30 economists said Conservative Party win would be best for UK on Brexit negotiations
- US: Private-sector employment increased by 253,000 from April to May - ADP
- German FinMin Schaeuble: Euro exchange rate is too low for Germany
- US: Weekly initial claims was 248,000, an increase of 13,000 from the previous week
- Moody's: Almost all emerging market economies are set for positive economic growth in 2017 and 2018
- Canada: Strong growth of manufacturing production sustained in May - Markit
- US ISM manufacturing points to ongoing strong growth - ING
- Fed’s Powell: Inflation still on track for 2% target
- EIA: U.S. commercial crude oil inventories decreased by 6.4 million barrels from the previous week
- CME Group FedWatch essentially confirms June rate hike
- Ex-FBI James Comey to testify before US Intelligence Committee on June 8 - BNO News
- Atlanta Fed: GDPNow model forecast for real GDP growth Q2 of 2017 is 4.0%
- US Pres. Trump: U.S. to withdraw from Paris Accord