Non-farm Payroll In Limelight

Daily Brief, Sep 5: Economic Events Outlook – Advance NFP on the Cards

Posted Thursday, September 5, 2019 by
Arslan Butt • 3 min read

Good morning, traders.
On Thursday, the dollar index slipped for a second consecutive session, while the yen, which is supported over geopolitical stress, dropped for the first time in four days against the greenback.
Well, the fun begins from today in the wake of top tier fundamentals such as the ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI, EIA Crude Oil Inventories from the United States and, most importantly, SNB Chairman Jordan speech during the US session.
Investors will also be focusing on the US advance nonfarm to predict the nonfarm payroll releasing on Friday. So, it’s kind of a very busy day and we need to be very careful without trading decisions.

Watchlist – Key Economic Events to Watch Today

ADP Non-Farm Employment Change – 12:15 GMT

For all the newcomers, the ADP (Automatic Data Processing) is also known as an advance NFP. It shows an estimated change in the number of employed people during the previous month, excluding the farming industry and government. The Automatic Data Processing, Inc. releases the figure in the first week of a new month, particularly on Wednesday.
Typically, the ADP figures signal about the Nonfarm payroll figures, whether it’s going to be positive or negative. Which is why both data share a positive correlation.
Anyway, the ADP nonfarm employment change is due at 12:15 GMT.
Back in July, the private sector report from ADP beat expectations for 150K jobs while releasing a reading of 156K jobs, setting higher standards for the upcoming NFP figures. However, August’s report may be somewhat more moderate as economists are expecting an increase of 150K, which is not as strong as of July’s figure. The greenback can stay under bearish pressure today.

ISM Non-Manufacturing PMI – 14:00 GMT

Although it’s a bit less important event than ADP Non-farm payroll data, in case of less surprising or neutral ADP report, investor focus will turn to ISM Non-manufacturing event.
What’s ISM Non-Manufacturing / Services PMI?
ISM Non-Manufacturing is a leading indicator released by the Institute for Supply Management to report the economic health of a country. Businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company’s view of the economy.

The ISM Survey of about 400 purchasing managers asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.
This month’s ISM non-manufacturing is likely to surge from 53.7 to 54.0. Two things, the figure is above 50, the minimum threshold level, and it’s also expected to upbeat previous month figure. So the dollar may find some support on the release.

Crude Oil Inventories – 15:00 GMT

The Energy Information Administration will report the stockpile data at 15:00 GMT today. During the previous week, the EIA report shocked the market, causing a massive buying in crude oil. As per the report, the EIA stockpile fell by 10M vs. forecast of 2.4M draw.
On Wednesday, the American Petroleum Institute (API) has reported a surprise crude oil inventory build of 401,000 barrels for the week ending Aug 29, compared to analyst expectations of a 3.50-million barrel draw.
Well, builds in the crude oil stockpile take away from last week’s draw in crude oil inventories of 11.1 million barrels. Build of crude oil inventories can be due to ongoing tensions between the US & China as tit-for-tat retaliation is hurting both nations. Thus, traders are lowering their holdings of crude oil stocks.
The draw of 2.4 million barrels is on the cards and we may see strong price action only in case of a surprisingly high build or draw in EIA report.

All the best, traders. See you soon with another update on technical trade setups.

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