June 5th D Day For US Jobs, Greek Default And OPEC
June 5th is a new kind of triple witching day, with the US nonfarm payroll report due in the North American session, the OPEC meeting on production and quotas and the Greek IMF payment due. Markets will be volatile today and tomorrow influenced primarily by global headlines.
On Wednesday ADP payroll processor reported that private sector employment payrolls rose by 201,000 in May versus April. The firm’s ADP National Employment Report is derived from ADP’s actual payroll data and is said to measure the change in total nonfarm private employment each month on a seasonally adjusted basis. Of the ADP contributions, 122,000 were from small businesses. Another 65,000 were reported to be from midsized businesses, and about 13,000 came from large businesses. Several analysts have projected that the U.S. economy added some 273,000 jobs in the month of May. This marked the 11th straight month in which markets projected that employment growth exceeded 200,000 jobs. Bloomberg has forecasts from economists showing the employment situation consensus readings as being 220,000 in nonfarm payroll additions, with 215,000 being from the private sector. The unemployment rate is expected to remain static at 5.4% for the month of May. Traders will have to wait and see after a mixed bag of economic data this month.
The US dollar as well as gold are expected to be volatile if the report beats or misses expectations by more than 10K. The US dollar recovered in the morning session to trade at 95.50 but is down a significant amount for the week trading just above the 97 level as June opened.
The euro on the other hand has soared over 200 points in just two days reaching 1.1274 at the close on Wednesday. On Thursday morning the euro dipped 18 points as traders corrected yesterday’s over reaction. On Wednesday the ECB held rates and policy but Mario Draghi’s press conference was the wild card. The euro surged against its crosses as the ECB Director noted that the bank has no plans of either front-loading or tapering its QE program. Draghi also mentioned that they might extend their program past September 2016 if the euro zone economy fails to meet their inflation targets then. Data from the euro zone was mostly stronger than expected, with significant gains in the jobs sector, allowing the euro to advance against its rivals. The Greek scenario continued to play out as the German’s and Greek’s worked the headlines. The European Commission, the European Central Bank and the International Monetary Fund agreed on the terms of a cash-for-reform deal to be put to Greece in a bid to conclude four months of debt negotiations. It was not clear whether the leftist government of Prime Minister Alexis Tsipras, which put forward a rival plan and has vowed not to accept more austerity, would accept the creditors’ plan. Eurogroup chief Jeroen Dijsselbloem said: “We are not far from reaching a deal.” Dijsselbloem noted that there is no a specific proposal, but a wide package on budget, public administration, pensions and the labour market.
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