All eyes today will be on the awaited non-farm payroll report which may change speculations for June’s FOMC meeting. The majority of investors expect Fed to tighten the monetary policy on June 13-14, if the published macro-economic data by then, are in line or better to the expectations.
The ADP employment report beat market expectations by jumping to 253K in May against 185K expected whilst last month, 174K people employed. The data boosted the U.S. dollar, as well as the three most popular U.S. indices, Dow Jones Industrial Average, S&P500 and Nasdaq, printed new record highs. Dow Jones added +135.53 points, or 0.65% to close at 21,114.18 while the high-tech index gained +48.21, or 0.78% to end the day at 6,246.83. S&P 500 rose +18.26 points, or +0.76% to 2,430.06. Greenback was traded mixed against the G10 since Monday, though it was broadly positive against the majors on Thursday and early Friday, ahead of the U.S. employment report. The ISM manufacturing PMI also picked up to 54.9 versus estimations 54.5.
Non-farm payrolls are expected to be 183K in May from 211K in April while the unemployment rate is expected to rise slightly to 4.5% from 4.4%. The average hourly earnings are expected to rise only 0.2%, below last month’s increase of 0.3%. Better than expected figures and especially NFP number above 180K will heighten probabilities of Fed to raise rates in June’s policy meeting. The CME FedWatch tool shows that the probabilities of a rate hike in the meeting coming up in less than two weeks is 95.8%. In the dot plot, Fed forecasted three gradual rate hikes this year, and after March's rate hike to 1.0% from 0.75%, investors stuck to the two more left. On the other hand, a weak figure can pull the U.S. dollar sharply lower and disappoint the market participants who expect a tightening move from Fed...
Read the full daily market report on JFD Research.