Intraday Market Thoughts

JPY Strengthens Ahead Of ADP and FOMC Minutes

by Patrik Urban
Jan 3, 2013 12:39

USD and JPY gain; UK construction sector contracted; German unemployment rose less than expected; Swiss KOF declined but PMI rose. Market turns to ADP, jobless claims and the latest FOMC minutes.

Despite the strong rally in US equities yesterday, the optimism from the fiscal cliff deal disappeared and risk aversion returned to markets during Asia. USD and JPY buying intensified during the London session, European equities declined over 0.5% and JPY pairs broke sharply lower.  

UK construction sector remained in contraction in December as the PMI index deteriorated to a six month low at 48.7 from prior 49.3. The housing activity declined at the fastest pace in two years and total new business fell at an accelerated pace. GBPUSD weakened to 1.6170 but EURGBP remained steady around 0.81.

German unemployment positively surprised as it rose only 3K in December, which is less than the market anticipated. The unemployment rate remained steady at 6.9%. Nevertheless, EURUSD declined to below 1.32.

Swiss KOF economic barometer declined in December to 1.28 from previous 1.5 but SVME PMI was above expectations at 49.5 from prior 48.5.

The US session begins at 8:15 am ET with the ADP report that is expected to rise in December to 134K from prior 118K. Jobless claims at 8:30 am are seen higher at 356K from previous 350K.

The key event will be the release of the latest FOMC minutes at 2:00 pm. The decision to announce QE4 seems to imply that the commission is more concerned about the labor market than price stability so it will be interesting to read details of the discussion that led to the decision.

Act Exp Prev GMT
Markit Manufacturing PMI (DEC)
54.0 53.2 52.8 Jan 02 13:58
ISM Manufacturing PMI (DEC)
50.7 50.3 49.5 Jan 02 15:00
KOF Leading Index (DEC)
1.28 1.35 1.50 Jan 03 8:00
49.5 48.5 48.5 Jan 03 8:30
Unemployment Rate s.a. (DEC)
6.9% 6.9% 6.9% Jan 03 8:55
Unemployment Change (DEC)
3K 10K 5K Jan 03 8:55
PMI Construction (DEC)
48.7 49.5 49.3 Jan 03 9:30
Challenger Job Cuts (DEC) (y/y)
32.556K 57.100K Jan 03 12:30
ADP Employment Change (DEC)
215K 133K 118K Jan 03 13:15
Continuing Jobless Claims (DEC 23)
3.245M 3.201M Jan 03 13:30
Initial Jobless Claims (DEC 29)
372K 355K 362K Jan 03 13:30
Markit Services PMI (NOV)
52.1 49.7 Jan 04 8:53
Markit PMI Composite (DEC)
47.3 46.5 Jan 04 8:58
Markit Services PMI (DEC)
47.8 46.7 Jan 04 8:58
Markit Services PMI (DEC)
50.5 50.2 Jan 04 9:28

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