had been climbing overnight with the S&P driving on to a new all-time high and the Dow climbing to within 100 points of its own high. Gold had also been rebounding on bargain hunting and short covering, but all of these advances were stopped dead in their tracks by today’s ADP payrolls report.
Private sector payrolls increases by 191K, just short of the 195K street estimate but showing that hiring is accelerating out of a difficult winter. More importantly, this increase was over a higher bar as last month’s increase was revised sharply upward to 178K from 139K.
This news has offset Fed Chair Yellen’s remarks from Monday as shifted speculation back toward a more hawkish Fed that could start to raise (normalize) interest rates sooner rather than later after tapering ends later this year. Increased hiring can eat away at slack in employment over time. It’s also important for traders to note that the Fed will likely need to move on rates before reaching full employment. There always needs to be some slack in the system otherwise people start demanding higher wages and boosting inflation pressures.
In reaction to the news, USD has taken off again, gold has completed a short term double top on the 1 minute chart, US indices have stalled and silver has levelled off near the $20.00 level. Crude oil has been dropping back overnight and easing Ukraine fears while copper has rallied on improving attitudes toward China. NZD has underperformed in currency trading with traders using a soft commodity price report to take profits off the table after a big rally.
Later today, we could see some activity around the US factory orders and energy inventory reports, plus positioning for the rest of the week with service PMI and an ECB meeting tomorrow as the run up to Friday’s North American employment reports continues.
Economic reports released overnight and this morning include:
US ADP payrolls 191K vs street 195K, previous revised up to 178K from 139K
Spain unemployment (16K) vs street (14K)
UK construction PMI 62.5 vs street 63.0
UK Nationwide house prices 9.5% vs street 9.7%
Eurozone producer prices street (1.6%)
NZ commodity prices (0.1%) vs previous 0.9%
Australia building permits 23.2% vs street 27.9%
Economic reports due later today include:
9:45 am EDT US ISM New York previous 57.0
10:00 am EDT US factory orders street 1.2%
10:30 am EDT US crude oil inventories street 2.5 mmbbls
10:30 am EDT US gasoline inventories street (2.0 mmbbls)
9:30 am EDT Singapore PMI street 51.1
9:30 am EDT Singapore Electronics Index street 51.6