Daily Brief, Feb 5: Economic Events Outlook – Advanced NFP on the Cards

Posted Wednesday, February 5, 2020 by
Arslan Butt • 2 min read

Good morning, traders.

The US dollar persevered gains versus the Japanese yen on Wednesday in the wake of the unwinding of safe-haven positions as China’s acknowledgments to the coronavirus break boosted investor confidence, even as deaths and fresh cases soared.

The coronavirus eruption declared its first life in Hong Kong on Tuesday, as the region, China’s death toll grew by 65 to 490, and the number of cases increased to 24,324.

On the fundamentals side, the Final Services PMI figures from the UK will be in highlights to capture movement in the GBP related pairs. Economists are expecting no change in the data, which means impact can be slightly bullish for GBP. ECB President Lagarde is due to speak in Paris, although the agenda isn’t clear yet, any discussion on monetary policy is likely to drive movement in EUR pairs. Chances are, Lagarde will only refer to general stuff instead of policy, which may drive a muted impact on the market.

Lastly, US ADP will be worth watching as it gives us an idea about NFP figures, which will be coming out on Friday. Expectations are negative, which means the dollar can trade weaker ahead of the news while keeping GOLD bullish.

Watchlist – Key Economic Events to Watch Today

ADP Non-Farm Employment Change – 13:15 GMT

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.

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.

The ADP nonfarm employment change is due at 13:15 GMT. Back in January, the private sector report from ADP beat expectations for 160K jobs while releasing a reading of 202K jobs, setting higher standards for the upcoming NFP figures.

However, the current month’s data may be somewhat more moderate as economists are expecting an increase of 157K, which is not as strong as Janiary’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 Nonfarm 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 55.1 to 55.0. Two things, the figure is above 50, the minimum threshold level, and it’s also expected to upbeat the previous month figure. So, the dollar may find some support on the release.

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