Nonfarm Payrolls Take Centre Stage
US jobs data will take centre stage Friday, providing a glimpse into the world’s largest economy. If Thursday’s ADP report is any indication, official jobs data could surprise to the upside.
The Labor Department will issue the jobs report at 12:30 GMT. Economists are projecting payroll growth of 185,000 for the month, based on a median estimate compiled by Bloomberg News. The unemployment rate is forecast to hold steady at 4.4%. Average hourly earnings are expected to grow 0.2% on month and 2.6% annually.
On Thursday, the ADP Research Institute said private payrolls surged by 253,000 in May, with services accounting for the vast majority of the gain. A separate report from the Labor Department also confirmed that initial jobless claims held below 300,000 for the 117th consecutive week.
Currency markets can expect heavy volatility in and around the 12:30 GMT release. The US dollar will be prone to wild swings in either direction should the data deviate from the median estimate in any meaningful way.
In a separate report at 12:30 GMT, the Commerce Department will release the trade balance for the month of April. Analysts are expecting the deficit to widen to $46.1 billion from $43.7 billion, much to the ire of one Donald Trump.
Ahead of the North American circuit, traders can also expect a steady stream of global economic data beginning in Japan at 05:00 GMT with the consumer confidence index.
In the United Kingdom, construction PMI will make headlines at 08:30 GMT. Elsewhere in Europe, Greece will issue first quarter GDP data at 09:00 GMT. The European Commission will release April producer inflation data at the same time. Producer prices are forecast to rise 4.5% year-over-year in April.
When it comes to the euro, traders are asking, how high can it go? The EUR/USD exchange rate appears to have reached an imminent ceiling around 1.1250. The pair was last seen trading in the 1.1220 region. Unlike previous sessions, where the euro dictated market direction, the US dollar will likely be the major catalyst on Friday.
The dollar regained the 111.00 levels on Thursday after a volatile mid-week session. However, any upside in the USD/JPY is expected to be limited to the 112.00 region in the coming weeks, given its recent test of the 110.50 support level. Rangebound is the name of the game for this pair in the medium term.
The euro has maintained a bullish tone against the yen in recent sessions despite falling toward 123.00 earlier this week. The pair is back to trading above 125.00, signaling continued bullish momentum. The euro has gained nearly 10% against the yen since mid-April, reflecting the common currency’s broadening appeal.