ADP Nonfarm Numbers and the USD in Focus

Earlier in the Day:

Key macroeconomic data released through the Asian session was limited to China’s December service sector PMI figures, which came in at 53.9, well ahead of a forecasted 51.8 and November 51.9, to stand at the highest level since the summer of 2014.

The figures come off the back of the manufacturing PMI numbers released on Tuesday, which were also upbeat, though the PMIs sit well below the levels being seen in Europe and the U.S.

For the Kiwi Dollar, the release of the figures could not have come at a better time, with the Kiwi having fallen to an intraday low $0.7073 before bouncing back into positive territory upon release of the data. At the time of writing, the Kiwi Dollar was up 0.38% to $0.7119.

The Aussie Dollar was also on the rise off the back of the China service PMI numbers, recovering from an intraday low $0.7815. At the time of writing, the Aussie Dollar was up 0.17% to $0.7849, with the less dovish than expected FOMC meeting minutes having weighed in the earlier part of the day.

With Japanese markets opening for the first time this year, the Yen was down 0.03% to ¥112.54 against the Dollar, with the Asian equity rally in full swing following the gains in the U.S on Wednesday.

In the equity markets, the Nikkei played catch up through the session, rallying 3.26% to the close, with the CSI300 and Hang Seng continuing their solid runs this week, with gains of 0.10% and 0.52% at the time of writing. The ASX200 ended the day up 0.11%, with mining and oil & gas stocks amongst the leaders on the day.

The Day Ahead:

Economic data out of the Eurozone this morning includes December’s finalized service sector PMI figures, which are unlikely to have a material impact on the EUR at current levels.

The markets have already priced in the upbeat figures and the positive sentiment towards the Eurozone economy, so any immediate gains will likely be short lived ahead of key stats out of the U.S this afternoon.

At the time of the report, the EUR was up 0.12% to $1.2029, with news of progress on coalition talks between Merkel and the SPD a positive for the EUR.

For the Pound, macroeconomic data out of the UK includes December’s service sector PMI. Following softer manufacturing and construction PMI numbers this week, today’s stats are particularly important, with the service sector a key contributor to the UK economy. While the Pound has remained relatively resilient considering the softer numbers, today’s stats could well have a more material influence this morning.

At the time of writing, the Pound was up 0.07% to $1.3526, with forecasts suggesting that the stats will be UK Sterling positive.

Across the Pond, it’s a big day for the Dollar, with key stats out of the U.S including December’s ADP nonfarm employment change and weekly jobless claims numbers, along with finalized service sector PMI figures. Focus will be on the ADP numbers, which will provide some further direction for the Dollar, following Wednesday’s FOMC meeting minutes.

As we have seen on numerous occasions in the past, the ADP numbers provide little guidance on the official government numbers due out on Friday and, with labour market conditions continuing to tighten, this week will be more about wage growth than payrolls, barring any especially weak numbers.

At the time of writing, the Dollar Spot Index was down 0.08% to 92.085, giving up gains from early in the Asian session, with the 2^nd half of the week key for the Dollar from a data perspective.