Economic News Today

Market Overview

Yesterday, data release on the ADP NFP Employment change showed a contraction from last month's 188k to today's 152k. While the expectation was a slowdown, the actual went lower than expected. The markets did not react much to this data as right after this, ISM Services PMI showed an expansionary services sector at 53.8, more than the expected expansion levels. This data release caused a slight recovery for the dollar but was quickly retracted away from said recovery point. 

Other analysts reacted positively, too quickly, to the ISM. They said that the April Data is overstated and that the slowdown is not happening. For others, while they mention that the US economy 'is' slowing down, they are doubtful if they must sell the dollar as is. However, other than the data released last night, it is important to connect everything in a string to allow for a more accurate reading of market conditions. 

We look into last week's release of data on Prelim GDP q/q which showed a slowdown at 1.3% from last quarter's 1.6%, a rise in the unemployment claims to 219k from 216k, the largest recorded drop in Pending Home Sales from 3.6% to -7.7% m/m which was the largest drop in 18 months, and a slowdown Core PCE Price Index m/m to 0.2%. Not to mention, there was the release of the ISM Manufacturing PMI showing a contraction for the second month in a row this quarter, along with the steady decline of the JOLTS Job Openings from 8.36M to 8.06M. 

A single good release from the ISM Services PMI is not enough to overrule the overall conditions of the markets. Thus, we still look into a weak Dollar and account for the strength coming from other currencies. We do switch our attention toward the Unemployment claims to be released later, along with the wages and employment change tomorrow, Friday. 

On the other hand, we see expansion happening in the indexes as traders bet on FED rate cuts after weakening data. The Dow recorded a 0.22% increase, the S&P 500 showed a 1.18% rise, the Nasdaq a 1.96% and the Russel at 1.46%. 

Benchmark 10-year note yields were last down 5 basis points at 4.289% and got as low as 4.287%, the lowest since April 1. Two-year note yields fell 4 basis points to 4.731% and reached 4.726%, the lowest since May 16. The inversion in the two-year, 10-year yield curve was little changed on the day at minus 44 basis points.

GOLD - The GOLD has shown a slight increase from 2332.174 and has stayed lower than 2365.443. This range has lasted for a while and we expect the market to stay as is until further confirmations on the US data are released.

SILVER - The market has failed to lower further and has returned back above the 29.900. While it's still early to call the invalidation of the M formation, we have shifted our attention toward data release before calling the Silver market anything. However, technical-wise, the chart has shifted its momentum to the selling market with several bullish structures stopping the market from falling further.

DXY -After a slight rise caused by the expansionary ISM Services PMI release, it failed to reach key structure at 104.607 and is seemingly looking to resume its downward trend. With this, we call the dollar to be weaker against its peers.

GBPUSD -In line with our expectations, the pound has risen above 1.27938 and appears set to continue its bullish momentum. We expect the price to maintain this volume and momentum, with no major structures impeding its progress. Therefore, we consider this market bullish.

AUDUSD -The market has shown sufficient respect for the bullish structure and is now trending upwards toward 0.67142. A successful breakout of this level may indicate the completion of the W formation.

NZDUSD - The market has traded according to expectations and has risen above 0.61983. We expect the price to continue trading with strong momentum, facing no significant resistance. Therefore, we consider this market bullish.

EURUSD - The market has failed to drop below 1.08543 and is expected to rise above 1.08950. If trading continues with this momentum and volume, it will confirm the formation of the W pattern.

USDJPY -The yen has recovered and is taking advantage of market conditions against the dollar. It is now trading below 155.704 and is showing proper bearish momentum and volume. We expect the price to move toward 154.658, with the possibility of breaking below this level.

USDCHF -The CHF has shown strong momentum and volume in its decline, and the market appears poised to drop below 0.88886. We consider this market bearish.

USDCAD - The CAD has demonstrated strength against the dollar, despite experiencing losses against other currencies such as the Yen. Consequently, dollar weakness is apparent across the board. However, the definite direction of the USDCAD remains uncertain as the price hovers within the range of 1.37435 and 1.36052. While our bias leans towards a bearish outlook in this market, we are awaiting clearer confirmation of the trend before considering selling opportunities.