Markets remain calm ahead of the US nonfarm payrolls data
The Japanese yen was unchanged in the Asian session after the country released the household spending data. In May, spending rose by an annualized rate of 4.0%. This was better than the consensus estimate of 1.4% and April’s increase of 1.3%. On a MoM basis, spending increased by 5.5%, which was better than the expected 1.2% and the previous decline of -1.4%. The increased spending is a welcome thing for Japan, a country whose population is aging and where consumption is not all that common.
Today, the focus among market participants will be the US nonfarm payrolls, which will be released by the Labor Department. Data is expected to show that the economy added more than 160k jobs in June. This will be a bigger number than the 75k jobs that were created in May. The private payrolls are expected to be at 153k while the unemployment rate is expected to have remained at 3.6%. The average hourly earnings are expected to increase by 3.2%, which will be higher than the previous 3.1%. On Wednesday, ADP released its own data, which showed that the economy added more than 103k jobs in June. Continued weakness in the employment market could increase the case for more than one rate cut.
In Europe, investors will receive the factory orders from Germany. Numbers are expected to show that factory orders declined by -0.1% in May. This will be lower than the previous gain of 0.3%. Industrial production is expected to have declined by -0.4%, which will be better than the previous decline of -1.9%. In France, the trade deficit is expected to have remained unchanged at EUR 5 billion and in Spain, the industrial production is expected to have declined by -0.1%. In the UK, the Halifax house price index is expected to have increased by 5.9% in June. Meanwhile, in Canada, investors expect the economy to have added 10k jobs while the unemployment rate is expected to increase slightly from 5.4% to 5.5%.
Over the past few days, the EUR/USD pair has remained in a holding pattern as investors wait for the June jobs data. The pair is now trading at 1.1283, which is between the 50% and 38.2% Fibonacci Retracement levels. As a result of the consolidation, the price is along the short and medium-term moving averages. The pair will likely remain on this level ahead of the jobs data. The key levels to watch will be the 23.6% and 61.8% Fibonacci Retracement levels of 1.1235 and 1.1.1320.
The AUD/USD pair too was relatively unchanged in the Australian session. The pair is now trading at the 0.7025 level, which is above the weekly low of 0.6955. On the hourly chart, the price is slightly above the 25-day and 50-day moving averages. The 14-day triple exponential average moved lower to below the neutral line. Like with the EUR/USD pair, the AUD/USD pair will likely remain along this level ahead of the US jobs data.
The USD/JPY pair moved slightly higher today after Japan released the household spending data. The pair is now trading at the 107.83 level, which is above the weekly low of 107.52. The current price is above the 50% Fibonacci Retracement level and between the Envelopes indicator. As with the other two pairs, the price will likely remain along these levels ahead of the US jobs data. The key points to watch will be the weekly low of 107.50 or the 61.8% Fibonacci level of 107.95.