FOREX TRADING

USD Lower, ADP Employment Unexpectedly Declines

• USD: Lower, ADP employment posts unexpected decline, Chicago PMI drops
• JPY: Lower, housing starts and construction orders decline, Postal Bank to buy less JGB’s
• EUR: Higher, EU inflation rises more than expected, Irish government plans to recapitalize Irish banks
• GBP: Higher, consumer confidence dips, election polls suggest Conservative victory
• CAD and AUD: AUD lower & CAD higher, Australian retail sales decline, Canada’s GDP beats expectations

Overview

USD traded mostly lower in Wednesday’s trade pressured by speculation that an unexpected drop in ADP employment will encourage the Fed to maintain a dovish policy bias. EUR was supported by report of above expectation EU inflation and announcement that the Irish government plans to recapitalize Irish banks. GBP traded higher despite report of weaker UK consumer confidence. CHF traded higher supported by report of above expectation Swiss KOF index. CAD traded higher supported by firmer energy prices as crude trades above $83 a barrel and metals prices are firmer. Canada’s GDP came in above expectation. AUD traded lower and underperformed pressured by report of a sharp drop in Australia’s February retail sales. The decline in Australia’s retail sales may dampen RBA rate hike speculation. JPY traded at a three month low versus the USD pressured by liquidation ahead of Japan’s fiscal year end. US economic data was mixed. March ADP employment posted an unexpected decline. The ADP report suggests that the US recovery has not yet strengthened enough to create jobs. The unexpected decline in the March ADP report suggests that Friday’s US nfp may not be as strong as anticipated. Estimates for March nfp have been rising all week with some analysts looking for a number as high as 200k. Consensus for Friday’s March US NFP may not be significantly altered by today’s ADP report. The ADP said that the report does not include the impact of bad weather in February or an estimate of the addition of new government census workers that were hired in February. Chicago PMI came in weaker than expected and factory orders were in line with expectations.

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ADP Report Dissapoints, USD/JPY Slides in Aftermath

Market forecasts were proven wrong as the ADP employment change showed a decrease of 23K private sector jobs, when expectations were calling for a 40K increase.

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