US PAYROLLS DATA IN THE SPOTLIGHT ON WEDNESDAY
US employment data is in the headlines on Wednesday, kicking off a highly active second half of the week that will be dominated by American releases. The conclusion of the Federal Reserve’s two-day policy meeting will also draw interest from traders all over the world.
The economic calendar picks up at 07:15 GMT with a report on Spanish manufacturing PMI. Over the next hour, investors can expect final April PMI numbers for Italy, France, Germany and the broader Eurozone.
The Eurozone manufacturing PMI is forecast to come in at 56 for April. Germany’s manufacturing gauge likely registered 58.1.
Eurostat, the European Commission’s statistical agency, will report on gross domestic product at 09:00 GMT. Eurozone GDP is forecast to grow 2.5% annually in the second quarter compared with 2.7% in Q1. On a quarterly basis, the euro area economy is forecast to grow 0.4% compared with 0.6% in Q4.
Shifting gears to North America, the ADP payrolls institute will report on US private sector job creation at 12:15 GMT. Employers are forecast to have added 215,000 private sector jobs last month, compared with 241,000 in March.
ADP numbers are considered an accurate gauge of the official nonfarm payrolls report due 48 hours later.
The Federal Open Market Committee (FOMC) will conclude its policy meeting on Wednesday, where officials are widely expected to leave interest rates on hold. The official rate statement is due at 18:00 GMT. Although no change in policy is expected, the Fed could provide some guidance on its plans for June and beyond.
Last week, the Commerce Department reported the biggest quarterly surge in core inflation since 2007, all but assuring investors that higher interest rates are looming over the horizon.
Europe’s common currency fell further into correction on Tuesday, as the EUR/USD broke below 1.200 for the first time since January. The pair, which is now trading around 1.2004, has crossed below the 200-day simple moving average (SMA). For traders, this is a strong signal that further downside risks are in store.
Cable also fell on Tuesday as the dollar extended its recovery against a basket of global peers. GBP/USD was last trading around 1.3615, which is not far from Tuesday’s swing low. The pair is currently hovering at three-month lows, having declined a staggering 750 pips from last month’s high.
The USD/JPY made a strong push toward 110 on Tuesday but failed to cross that psychological barrier. The pair is currently trading at 109.66, where it has declined 0.2% from the previous session. At the time of writing, the pair remains rangebound in the 1.0900 region with fundamental factors needed to drive prices significantly higher or lower.