London session has been calm with traders sitting on their hands, waiting for “the mother of all releases” NFP. USD is mixed, down against EUR that is partially supported by higher PMI, CHF and JPY and up against other majors, especially GBP that was sold after disappointing PMI.
EURUSD continues to trade near session highs as EZ May final services PMI came out at 56 vs. 55.4 expected. UK services PMI for May deteriorated from 54.3 to 53.8 while analysts expected an improvement to 54.4. Both indicators marked a third straight monthly decline.
New York session kicks off with eagerly awaited Non farm payrolls and unemployment figures for May; both due at 8:30 am EDT. NFP is expected at 194K, down from previous 244K and unemployment rate is expected to stay unchanged at 9%.
Payrolls have been increasing for the past three months. However, given the poor ADP result from Wednesday and eight straight weeks of unemployment claims above 400K a weak NFP print would not come as a big surprise. ADP proved to be not so reliable when it comes to predicting the actual NFP number. However, it can help to predict the direction that NFP is likely to take.
Over the past few days analysts were trying to outdo one another by providing lower and lower NFP estimates. Because weak print is broadly expected, only a slight deterioration or a reading in line with expectation could actually be perceived as USD positive. Traders should also be aware of a “whipsaw” effect that frequently occurs after NFP release.
Patrik Urban
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