Looking Through Jobs Data Confusion

All eyes turn to today's release of the US June employment report (Friday is an early US close due to US Independence Day), which will raise more questions than answers due to the fast-changing dynamics of data collection, workers classification and revisions (more on why many see an upside surprise below). Global indices extend their ascent with the DAX breaking short-term trendline above 12480s and DOW30 attempting to regain its 200-DMA. Since the start of the Asian session, Kiwi and sterling are the top gainers, while loonie and silver are the only losers against USD. The final target in our Premium long XAUUSD from April 20 remains at 1790 as we have not yet seen the exact print from most platforms (but most of you must have locked in some gains on the way from 1690 entry)

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.