THE TAKEAWAY: USD ADP Employment Data (MAY) > +135K versus +165K expected, from +113K (revised lower from +119K) > USDJPY BEARISH
The US ADP Employment (MAY) report was released at 08:15 EDT/12:15 GMT today, and showed jobs growth slowed last month, with the headline figure coming in at +135K, worse than the expected +165K mark, according to a Bloomberg News survey. Overall, the May figure is still an improvement in jobs growth over April report’s +113k figure. (Note: April’s figure was also revised downwards by -6K, from +119K to +113K.)
The ADP Employment data is of ‘medium’ significance on the DailyFX Economic Calendar as it serves as a precursor to Friday’s all-important NFP numbers. US economic releases have been mostly bearish as of late, and this has caused the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) to fall off its May 28 high of 10877, to its current 10697 level (-1.65%), at the time of writing.
Accordingly, the market is becoming increasling concerned with decelerating US economic growth as well as when QE tapering will begin. If economic data continues to disappoint, then the Fed will be pressured towards extending QE, which will continue to put downwards pressure on the USD.
USDJPY 1-minute Chart: June 5, 2013
Charts Created using Marketscope – prepared by Kevin Jin
The above chart (1-minute) of the USDJPY shows the sharp fall of the USDJPY to ¥99.10, before Yen bears came in to support price, provoking a complete recovery of the pair’s decline. Earlier in the day, the USDJPY broke below 100.00 after Japanese PM Abe’s answers concerning further easing were not enough to appease investors. However, USDJPY bears do not yet have enough momentum to keep the pair below 99.00, as USDJPY skirts around the all important 100.00 figure.
The EURUSD saw a rapid move as well following the ADP Employment miss and downward revision for April. The pair immediately saw a 50 pip rally and then retraced to end up just below $1.3100 – to 1.3070 at the time of writing.
Evidently, markets are becoming more worried about Friday’s NFP data after European GDP missed estimates today in addition to yesterday’s ISM data missing expectations as well. 10YR US Treasuries also dropped 2bps from 2.130% to a low of 2.095% (-1.64%) in the moments immediately following ADP data.
--- Written by Kevin Jin, DailyFX Research
