The Week Ahead: Global PMIs, JOLTS, non-farm payrolls

It will be a holiday-shortened trading week in the US due to the 4 July holiday. As a result, US markets will be open for just half a day on 3 July and closed on 4 July, making it a hectic period, with a packed schedule of economic data over just three and a half days. On the earnings front however, it’s a notably quiet week. During this brief week, key US economic data releases include the ISM manufacturing and services reports, ADP private payrolls, job openings, and US unemployment figures. Additionally, global PMI data from Europe and the UK will also be published.

Global PMIs

Tuesday 1 & Thursday 3 July
Global manufacturing purchasing manager indices (PMI) data will be released on 1 July, followed by services PMI data on 3 July. However, the actual economic data appears increasingly less influential, particularly in FX markets, where the dollar seems to be trading weaker against most major currencies. GBP/USD is no exception. 

Initially, GBP/USD looked as if it might break down, but it suddenly reversed course and snapped back. Now, GBP/USD is very close to breaking out and moving significantly higher. The relative strength index (RSI) has broken above its recent downtrend, and the FX rate itself has risen above key resistance levels. Given this momentum, it seems increasingly possible that GBP/USD could return to $1.42

US JOLTS report

Tuesday 1 July
The US job openings and labour turnover survey data has generally been trending lower for some time. These figures can be notoriously difficult to predict, and are often subject to substantial revisions, which can create considerable market volatility. Typically, interest rates and the US dollar experience the greatest impact.

From an FX perspective, EUR/USD appears most likely to be influenced by this data. The euro has strengthened materially against the dollar in recent weeks, particularly now that ECB rate cuts seem to be either complete or nearing completion. EUR/USD has recently broken above resistance at $1.17, which could position the euro for a potential move higher towards around $1.22 against the dollar in the coming weeks.

US jobs report

Thursday 3 July
The US jobs report is expected to show that 129,000 non-farm payrolls jobs were created in June, down from 139,000 in May. Meanwhile, the US unemployment rate is expected to remain unchanged at 4.2%, although whether that proves accurate is another matter entirely. Recent data suggests that the unemployment could indeed rise in June, based on the increasing number of continuing claims over the past few weeks.

If the unemployment rate does rise, it could lead to Treasury yields falling sharply, narrowing interest rate differentials. The yen poses the most significant risk to the dollar, with USD/JPY currently attempting to break below ¥142 and potentially targeting a move below ¥140. The spread between the 5-year US Treasury and the Japanese Government Bond (JGB) yield is very close to breaking lower, and if that occurs, USD/JPY may following suit.

Technically, USD/JPY is showing renewed downward momentum, suggesting potential further yen strength. The RSI has fallen below a short-term uptrend, indicating momentum may continue lower. However, the pair first needs to break through support at ¥142. This has been a strong support level dating back to mid-May. For now, it may take weaker-than-expected US data for the yen to strengthen meaningfully beyond the ¥142 mark. 

Economic and company events calendar

Major upcoming economic announcements and scheduled US and UK company reports include: 

Monday 30 June

• China: Manufacturing, non-manufacturing PMIs (June)

• Japan: Industrial production (May)  

• UK: Gross domestic product (Q1, final)

• Results: Porvair (HY)

Tuesday 1 July

• Australia: S&P global manufacturing PMI (June)

• China: Caixin manufacturing PMI (June)

• Eurozone: HCOB manufacturing PMI (June)

• Japan: Tankan manufacturing/non-manufacturing index (Q2)

• UK: S&P global manufacturing PMI (June)

• US: ISM manufacturing PMI (June), JOLTS job openings (May), S&P global manufacturing PMI (June)

• Results: Constellation Brands (Q1), MSC Industrial Direct (Q3)

Wednesday 2 July

• Canada: S&P global manufacturing PMI (June)

• Eurozone: Unemployment rate (May)

• US: ADP employment change (June) 

• Results: UniFirst (Q3)

Thursday 3 July

• Australia: S&P global services PMI (June), trade balance (May)

• China: Caixin services PMI (June)

• Eurozone: HCOB services PMI (June)

• UK: S&P global services PMI (June)

• US: Factory orders (May), ISM services PMI (June), jobs report – Average hourly earnings (June), non-farm payrolls (June), unemployment rate (June); S&P global service (June)

• Results: Baltic Classifieds Group (FY), Currys (FY), Watches of Switzerland Group (FY)

Friday 4 July

• Eurozone: producer price index (May)

• UK: S&P global construction PMI (June)

• US: Independence Day public holiday

• Results: No major announcements

Note: While we check all dates carefully to ensure that they are correct at the time of writing, the above announcements are subject to change.

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