Intraday Market Thoughts

Stuck in the Mushy Middle

by Adam Button
Feb 5, 2014 22:21

The market was looking for a signal one way or the other on the US economy but ADP and ISM data didn't send a strong signal. The overall changes on the day were small with JPY leading and AUD lagging. Australian retail sales and trade balance are up next on the calendar.  

The January ADP employment report showed 175K new jobs compared to 185K expected. December figures were revised slightly lower while the November data was boosted by 50K. It was the softest ADP number since August and it briefly sent USD/JPY to a retest of Tuesday's lows.

Still the data wasn't bad enough to leave a lasting mark. Instead, traders waited for the ISM non-manufacturing survey. The 54.0 reading was slightly better than 53.7 expected and both the employment and new orders numbers climbed.

Overall, the trend in the ADP and ISM non-manufacturing numbers don't point to any kind of swift drop in the economy so those worries will probably ebb. The final verdict will come after non-farm payrolls and a good number with solid revisions could send USD/JPY higher.

AUD/USD traded in a narrow range but it continues to show some positive signs. There was virtually no retracement from Tuesday's post-RBA gains despite the choppy sentiment in markets. The next hurdle is the 100-day moving average, which has so far limited gains.

China re-opens after three days of holidays and that could make waves in Australian dollar trading but economic data is the main threat. Trade balance and retail sales are due at 0030 GMT. A trade deficit of $200m is expected and sales are expected to rise 0.5%.

The latest Premium Insights include trades on USDCAD, AUDCAD, and EURUSD, GBPUSD, AUDJPY and gold. All focus shifts to Thursday's ECB announcement and press conference, before moving onto Friday's US and Canada jobs figures.
Act Exp Prev GMT
ADP Employment Change (JAN)
175K 180K 227K Feb 05 13:15
Retail Sales (DEC) (m/m)
0.4% 0.7% Feb 06 0:30
Trade Balance (DEC)
$-36.00B $-34.25B Feb 06 13:30
ISM Non-Manufacturing Prices
57.1 54.5 54.7 Feb 05 15:00
ISM Non-Manufacturing Employment
56.4 55.8 Feb 05 15:00
ISM Non-Manufacturing New Orders
50.9 49.4 Feb 05 15:00

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