Looking Through Jobs Data Confusion
June NFP is expected to show a rise of 3.06 mln, but several prominent economists anticipate a jump to a new record of 4.0 mln, following May's 2.5 mln. The unemployment rate is expected to dip to 12.5% from 13.3%. Yesterday's ADP survey release of June private sector showed a rise of 2.37 mln, undershooting forecasts of 2.9 mln gain, following a jump in May revision to 3.07 mln from the initial 2.76 mln.
Date collection is among the issues at hand in today's reports as the collection rate is seen around 69%, well below the normal rate of 85% before the Covid19 pandemic. This opens the possibility for considerable revisions (upward and downwards), especially as several US states slowdown their re-opening.
Classification of workers is another major issue. The last 2 reports were said to be inflated by classifying employed people absent from work as unemployed or as a temporarily laid off.
As for the likely USD reaction, a higher than expected NFP may trigger a short-term bounce in the currency, before a gradual decline later on -- as was seen in the aftermath of yesterday's upside surprise in services ISM. The rationale behind USD declines following strong US data would be explained by the notion that stabilizing growth would mean less need for USD demand non-US corp and bank issuers in light of improved capital market conditions.
Gold stabilizes around 1767 after an earlier decline following the release of the FOMC minutes showing officials not a in a hurry to commit to yield-curve control.
As always, we watch oil's 37 support as one of our 4-point check list to assess risk-appetite and positioning in the major indices. Our Premium longs in DAX30 and DOW30 deepen in the green.
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