Coming Up Today (all times GMT)
- GBP Services PMI (08:30)
- USD ADP Non-Farm Employment Change (12:15)
- USD ISM Non-Manufacturing PMI (14:00)
- USD Crude Oil Inventories (14:30)
- NZD Employment Change q/q (22:45)
- NZD Unemployment Rate (22:45)
Asian equities were lower on Wednesday, influenced by declines on Wall Street, after consumer product heavyweight Procter & Gamble posted weaker than expected results. The Nikkei was lower by about 2%, as the yen benefitted from the risk aversion play, hurting Japanese exporters. Gold was also seeing gaining on Wednesday, as investors sought refuge from declining stock values and dollar weakness. Also, speculation of further monetary easing from the Fed in its next FOMC meeting, could bring back the inflation concern amongst investors, and might benefit the precious metal even further in this respect.
Quite a few releases on the news front are due on Wednesday. Highly in focus today will be the ADP jobs number, which is often highly correlated with the most important economic news release of the month coming up this Friday; the US Non-Farm Employment Change. An improved ADP number could reverse the recent negative trend on US economic data. Furthermore, it could help alleviate the latest concerns of investors about the sustainability of the US economic recovery, and as such boost the greenback against its main rivals.
The pair has been consolidating just above 1.32, after trading as high as around 1.3260 on the previous session. Technically, it is still trading in a nice up trending canal formation and well supported by its 50-hour moving average. Fundamentally, the ADP jobs number could have some impact by forming expectations for the Friday's Payroll figure. As such, significant deviations on the upside could boost the dollar and lead to declines on the pair. In the other scenario, where the number is below or in line with expectations, then technical patterns will likely dominate the pair's direction.
The pound has been recently a top performer amongst the majors. After trading as high as around 1.5965, the cable has given back some gains to consolidate around 1.59. Today's release of the Services PMI, although not as significant as the corresponding manufacturing number, could either act as a confirmation to the overall positive sentiment on the pound or as a small setback. In any case, this week's main fundamental driver for the pair will be Friday's Non-Farm Employment Change report, with similar implications as to the eur/usd case.