THE TAKEAWAY: USD ADP Employment Change (DEC) > +215K versus +140K expected, from +148K (revised from +118K) > USD Initial Jobless Claims (DEC 29) > 372K versus 360K expected, from +362K (revised from +350K) > USD/JPY BEARISH
One day ahead of the hallowed Nonfarm Payrolls report is scheduled to be released a swath of labor data bunched together due to the holiday-shortened schedule has offered a less-than-clear picture on the state of the US labor market. The December payroll estimate, as per the ADP Employment Change report, showed that the economy added +215K jobs, well-above to +140K estimate, and crushing the estimate for NFPs tomorrow at +150K.
However, the ADP and NFP figures haven’t been significantly correlated, during 2012 or since January 2009. In 2012 (withholding the December NFP), the ADP figure and the NFP have had a correlation of +0.267; since January 2009, it is +0.430. Put another way, the ADP Employment Change report, despite its impressive result, offers little guidance on what to expect for tomorrow.
Also released this morning was the Initial Jobless Claims report for the week ending December 29, which showed that claims rebounded back to their 2012 average of 372K. Although the ADP print initially caused the US Dollar to strengthen, the soft claims figure boosted the Yen, allowing the USDJPY to pullback towards its lowest levels of the day.
USDJPY 1-minute Chart: January 3, 2013
Charts Created using Marketscope – Prepared by Christopher Vecchio
Following the ADP release, the USDJPY traded up from 86.95 to 87.08, but soon fell back to 86.90 after the claims report. Yen strength has been observed across the board all morning, as concerns over the upcoming fight over the US debt limit are already starting to become a main conversation piece among investors.
--- Written by Christopher Vecchio, Currency Analyst
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