USD has gone screaming into reverse this morning after a very disappointing ADP payrolls report. The March miss could have been discounted as a one-time event on weather and other factors but a second big miss in a row combined with downward revisions to previous months, indicates that the US job market is not as robust as previously thought. It also indicates that the US economy has not roared out of winter like last year as many had hoped. A sluggish US job market means that even though the Fed is now operating on a meeting to meeting basis, interest rate liftoff is now pretty much completely off the table for June and unlikely before September. Because of this, the main impact on trading from the ADP report has been on USD which has been breaking down again on the news. Interestingly, the flip side of a delay to interest rate hikes should have been a rally in US stocks but indices like the Dow and S&P have hardly responded at all. This suggests that stocks may be responding more to slowing sales and earnings growth than to monetary liquidity, having already been driven so high by the QE programs of the past. It also means with upside apparently limited, indices may continue to grind sideways for several months to come. The energy sector also remains active today. Both WTI and Brent crude are rallying again this morning ahead of the US weekly inventory report due later this morning. NOK has been rallying in tandem while CAD has been lagging after outperforming yesterday. The election of a New Democratic Party (similar to Labour in other countries) to a majority government in Alberta, Canada’s main oil producing province, sweeping out the Conservatives after 44 years in power could be part of the reason. The election could lead to significant changes to taxation, royalties and other policies related to energy exploration and production, so Canadian energy stocks could be active on the news today. Corporate News Electronic Arts $0.39 vs street $0.26, sales $896M vs street $852M, guides next Q earnings to breakeven below street $0.19, and sales to $640M below street $766M Sun Life $0.73 vs street $0.78, 5% dividend increase Loblaw $0.73 vs street $0.67, 2% dividend increase Enbridge $0.56 vs street $0.59 Economic News Economic reports released overnight and this morning include: US ADP payrolls 169K vs street 200K US ADP payrolls previous revised down to 175K from 189K UK BRC shop prices (1.9%) vs street (1.7%) Sweden service PMI 53.9 vs previous 57.2 Spain service PMI 60.3 vs street 57.4 Italy service PMI 53.1 vs street 52.0 France service PMI 51.4 vs street 50.8 Germany service PMI 54.0 vs street 54.4 Eurozone service PMI 54.1 vs street 53.7 UK service PMI 59.5 vs street 58.5 Eurozone retail sales 1.6% vs street 2.4% Greece unemployment rate 25.4% vs street 25 6% New Zealand Q1 employment change 3.2% vs street 3.3% New Zealand Q1 unemployment rate 5.8% vs street 5.5% New Zealand Q1 avg hourly earnings 0.2% vs street 0.9% vs previous 0.4% China HSBC service PMI 52.9 vs previous 52.3 India service PMI 52.4 vs previous 53.0 Australia new home sales 4.4% vs previous 1.1% Australia retail sales 0.3% vs street 0.4% Economic reports due later today include: 9:15 am EDT US FOMC Chair Yellen and IMF President Lagarde speaking 10:00 am EDT Canada Ivey PMI street 49.2 vs previous 47.9 10:30 am EDT US crude oil inventories street 1.35 mmbbls
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