Sep 04 2008
ADP Non-Farm Employment Change On Tap
The greenback saw mixed results during yesterday’s trading session, and continued it advance against a basket of major currencies. Positive USD positions were supported by a series of events which started after the release of poor Euro-Zone fundamental data. Another help for the greenback was a drop in Oil prices as Hurricane Gustav slowly passed without causing any major damage to energy facilities in the Mexican Gulf. Yesterday, U.S. Factory Orders showed a better than expected rise of 1.3% in July, sending the EUR/USD pair to its lowest level since January at 1.4485 before tumbling even further to 1.4383. Against the JPY the USD fell 0.5% to 108.12.
The USD has continued to gain support over the last few weeks and continues to benefit from global economic worries. This is due to investors who are looking to avidly push long greenback positions rather than other currencies whose countries were further behind in terms of economic readjustment in the wake of the global credit crisis. Tomorrow the ECB and the BoE will issue separate interest-rate decisions and both are expected to keep rates on hold; This will likely contribute to more USD momentum.
Looking ahead for today, we will see a batch of US data headlined by the very important ADP Non-Farm Employment Change (NFP). Other scheduled events include: Unemployment Claims, ISM Non-Manufacturing PMI, and Crude Oil Inventories. ADP estimates the results of NFP, which measures the estimated change in the number of employed people during the previous month excluding the farming industry and government. ADP’s results are expected to be negative at -30K from a previous 9K in the last month and could halt some of the USD’s bullish momentum. It is important to note that ADP has been inaccurate for the last several months in their estimation of real NFP figures. The Unemployment Claims report, one of the most influential USD indicators, is forecasted by analysts to show a 3K decrease of jobless Americans from last weeks mark of 425K. ISM is expected to slightly decrease to 49.4 from 49.5 in the last month and will likely latch onto the previous indicators in the direction it provides for the greenback. Crude Oil Inventories is expected to remain positive and could add to the continuous bearish trend of prices. If US economic data can get through the day with no surprises, it is likely to continue to push the dollar up ahead of Friday’s big news day.
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