Nonfarm Payrolls – It May Take More Than 1 Bad Reading to Force a Rate Cut

U.S nonfarm payrolls and wage growth will be the main event of the day. Outside of the stats, will be there any trade chatter to rile the markets?
Bob Mason
Non-farm employment change, payrolls or NFP.

Earlier in the Day:

The economic calendar was on the quieter side through the Asian session this morning. Japan’s April household spending figures provided direction in the early part of the session.

Later on in the morning, Australia’s home loan figures failed to influence as the markets looked ahead to the U.S nonfarm and wage growth figures due out later in the day.

For the Japanese Yen,

Household spending slid by 1.4% in April, month-on-month, which was far worse than a forecasted 0.3% decline. Spending had increased by 0.1% in March. Year-on-year, household spending rose by 1.3%, falling short of a forecasted 2.6% and March 2.1% increase.

According to the Statistic Bureau,

  • Spending on transportation & communication (+12.1%), culture & recreation (+5.7%), food (+1.9%) and medical care (+1.9%) supported spending.
  • Dragging on spending, however, were falls in spending on housing (-10.5%), furniture & household utensils (-6.6%), clothing & footwear (-4.1%) and fuel, light & water charges (-3.2%).

The Japanese Yen moved from ¥108.444 to ¥108.468 against the U.S Dollar upon release of the figures. At the time of writing, the Japanese Yen was down by 0.06% to ¥108.47 against the U.S Dollar.

For the Aussie Dollar,

According to the ABS, homes loans fell by 1.2% in April, month-on-month, which was worse than a forecasted 0.2% decline. In March home loans had fallen by 2.5%.

The Aussie Dollar moved from $0.69743 to $0.69759 upon release of the figures. At the time of writing, the Aussie Dollar was flat at $0.6977, with the markets ignoring the home loan figures early on.

Elsewhere,

At the time of writing, the Kiwi Dollar was down by 0.06% to $0.6616.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead for the EUR.

German industrial production and trade data are due out later this morning, ahead of French industrial production and trade data.

While we expect the French numbers to influence, the market focus will be on Germany’s numbers. Following an upward revision to March factory orders, industrial production figures could come in better than a forecasted 0.4% fall in April.

Outside of the numbers, any trade chatter will also influence on the day.

At the time of writing, the EUR was down by 0.06% to $1.1269.

For the Pound

It’s a quiet day on the economic calendar, with May house price figures likely to have a muted effect on the Pound.

On the political front, it’s Theresa May’s last day as the leader of the Conservative Party. It remains to be seen whether there will be any negative chatter to weigh on the Pound.

At the time of writing, the Pound was up 0.01% to $1.2695, which has been resilient in spite of the political uncertainty ahead.

Across the Pond

It’s a big day for the Greenback.

U.S nonfarm payrolls and wage growth will be the key drivers on the day. Following particularly disappointing ADP numbers released earlier in the week, pressure on the FED would mount of similar numbers are released later today.

Steady wage growth and 180K plus nonfarm payroll figures would ease immediate concerns over labor market conditions.

Outside of the stats, we can expect more chatter on trade throughout the day. Updates from Mexico – U.S trade talks will also have an impact on market risk sentiment. The U.S was due to impose tariffs on Monday…

At the time of writing, the Dollar Spot Index was flat at 97.042.

For the Loonie

It’s a relatively busy day ahead.

May employment figures are due out of Canada. While the markets will focus on the employment change figures, the unemployment rate will need to hold steady to provide support.

Outside of the stats, progress on U.S – Mexico trade talks and the direction of crude oil prices will also influence on the day.

The Loonie was up by 0.07% to C$1.3353, against the U.S Dollar, at the time of writing.

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