The U.S. dollar was mostly flat overnight, hanging on to two days of gains.
Overview
This morning’s job data looks to allow the greenback to extend those gains. ADP reported that private payrolls increased 978K in May, smashing expectations of an increase of 650K. A separate report showed the weekly jobless claims dipped below 400K, besting estimates. The two reports show improved labor market conditions, but the biggest test will be tomorrow’s Non-Farm Payrolls data. Last month’s print vastly underwhelmed. Economists expect that the economy added 661K jobs last month but that expectation might be upwardly revised following ADP’s private print.
Later, U.S. May services and composite PMIs are due out at 9:45 a.m. and ISM services out at 10 a.m. There is a slew of Fed speakers on today’s docket and market participants will continue to look for signs as to when policymakers will being contemplating an eventual tapering to their easy monetary policy. Yesterday Philadelphia Fed President Patrick Harker said that the U.S. central bank should begin discussing the time frame for paring back its bond purchases. Further such mentions today would be dollar positive.
What to Watch Today…
- Service PMI and ISM out later this morning
EUR ⇓
The Euro is slightly lower against the U.S. dollar again this morning, strengthening the argument that the Euro’s recent run-up may have peaked. The modest decline comes even after Spain and Italy posted better than expected service PMI. The European Central Bank’s next policy decision will come one week from today.
GBP ⇑
The British pound stopped the bleeding against the U.S. dollar overnight after falling to begin the month. The modest pop for the sterling is likely due to service PMI data that beat estimates. The sterling’s gains will be limited on the continued expectation that a new wave of infections will slow the reopening process. U.K. Prime Minister Boris Johnson is likely to keep tight limits on international travel for the weeks ahead, according to Bloomberg News. The souring expectations put a damper on the aviation and tourism businesses.
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