7 May 2015
US ADP data does not bode well for NFP – MP
FXStreet (Barcelona) - Dean Popplewell, Director of Currency Analysis at MarketPulse, reviews the US ADP release and comments on the price action and positioning in USD into the nonfarm payrolls data release tomorrow.
Key Quotes
“The massive position adjustments this week certainly suit a positive dollar reaction to tomorrow’s NFP (+223,000 +5.4% unemployment expected). Whether we get that is the million-dollar question.”
“The weaker dollar long positions have mostly been cleared out, and the DXY has reversed 50% of its post December 2014 rise. Yet higher U.S. rates prevail, with rate divergence being the premise for initiating these long dollar positions in the first place.”
“The USD bulls will be anticipating yields to be driven higher with a stronger headline print. They are expecting U.S. 10s to back up to +2.50% rather quickly.”
“The dollar naysayer believes support is on their side. Yesterday’s April ADP report does not bode well for a stronger April U.S. jobs print tomorrow. The ADP numbers widely missed expectations (+169,000 versus +205,000 expected) and fell to their lowest level in 18 months.”
“Virtually all the job gains were in small and midsized businesses, and were almost all in the service sector with manufacturing losing a small number of jobs. It marks the second month that numbers were below expectation, which of course signified the U.S. government reports a big miss for March (+126,000).”
“The correlation between the two reports is historically not that strong, and has not swayed too many dealers’ opinions for tomorrow’s print. However, a miss would suggest there’s some evidence to add to downside risk. The report indicated that falling oil prices and a stronger dollar is taking a toll on hiring plans.”
Key Quotes
“The massive position adjustments this week certainly suit a positive dollar reaction to tomorrow’s NFP (+223,000 +5.4% unemployment expected). Whether we get that is the million-dollar question.”
“The weaker dollar long positions have mostly been cleared out, and the DXY has reversed 50% of its post December 2014 rise. Yet higher U.S. rates prevail, with rate divergence being the premise for initiating these long dollar positions in the first place.”
“The USD bulls will be anticipating yields to be driven higher with a stronger headline print. They are expecting U.S. 10s to back up to +2.50% rather quickly.”
“The dollar naysayer believes support is on their side. Yesterday’s April ADP report does not bode well for a stronger April U.S. jobs print tomorrow. The ADP numbers widely missed expectations (+169,000 versus +205,000 expected) and fell to their lowest level in 18 months.”
“Virtually all the job gains were in small and midsized businesses, and were almost all in the service sector with manufacturing losing a small number of jobs. It marks the second month that numbers were below expectation, which of course signified the U.S. government reports a big miss for March (+126,000).”
“The correlation between the two reports is historically not that strong, and has not swayed too many dealers’ opinions for tomorrow’s print. However, a miss would suggest there’s some evidence to add to downside risk. The report indicated that falling oil prices and a stronger dollar is taking a toll on hiring plans.”