US Markets Wrap

US Markets Wrap

US dollar strengthened Thursday as solid data from the US economy made June’s rate hike almost certain. What’s more, the final stamp could be put tomorrow if the NFP report comes close to market expectations.

Two economic releases from the US this afternoon have given mixed signals on the labour market. With the ADP non-farm employment change for May showing 253k jobs added whilst the initial jobless claims also rose - indicating a worse than expected outcome for the employment reading. The ADP print is monthly and perhaps takes precedence in terms of importance of the weekly jobless data. The reading here was well above both the consensus forecast of 181k and the prior reading of 174k and is a strong positive signal for the US labour market.

The U.S. manufacturing index inched slightly higher, hitting 54.9, in May, the Institute for Supply Management, or ISM, announced on Thursday.This, as manufacturers show continued signs of making gains amid times of economic growth both domestically and abroad.

Brent Oil has moved off its lowest level of the day after the weekly DOE inventories showed a larger than expected drop of 6.4M. Whilst this figure was still higher than the API last night, it represents the largest week on week drop since the start of the year. Brent was trading at almost exactly the same level for this afternoon’s DOE as it was prior to last night’s API at 50.66 and the market has moved back into the green on the day after a rise of around 70 ticks since the data was announced.

The UK100 has enjoyed a strong run of late with the leading UK stock market making an all time high of 7570 on the 31st May. This represents a gain of more than 7% in less than 6 weeks since the French election saw a large gap higher. Despite making a record peak during yesterday’s session there was some notable weakness into the close with the daily candle printing an inverted hammer.

Federal Reserve Governor Jerome Powell says he still sees a “couple” more interest-rate increases this year, taking the total to three, though the central bank must be careful to keep inflation moving up toward its 2 percent target. Powell said the gradual inflation rise "appears to have paused" due in part to temporary factors, "and there are good reasons to expect that inflation will resume its gradual rise." That is why the speech is rather positive for the dollar.
Our morning wrap that describes data from the EMU and UK can be found here.

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