US Data: Ugly figures to extend gold rally, dollar depressed
ADP reported an increase of only 167,000 private-sector jobs in July while the manufacturing employment remains depressed according to ISM. The broader services sector also looks depressed. A negative NFP looks more likely with gold extending its upward trend, FXStreet’s analyst Yohay Elam reports.
Key quotes
“The ISM Non-Manufacturing Purchasing Managers' Index's headline figure rose to 58.1 points against a projected fall. However, the employment component in America's services sector – consisting of around 70% of the economy – is suffering. The gauge fell to 42.1, well below estimates of 51.1, under June's score of 43.1, and pointing to contraction.”
“ADP, America's largest payroll provider, reported a meager increase of 167,000 private-sector jobs, substantially below 1.5 million projected. While the firm has been finding it hard to hit the nail on the head – missing the official numbers – it does point to the general trend. In pre-pandemic times, an increase of 167K would be considered average, but now it points to the stalling of the recovery.”
“The US dollar will likely extend its falls after these numbers and as fresh Non-Farm Payrolls come in. EUR/USD's flirt with 1.19 may turn into a breakout and GBP/USD may be eyeing 1.32. Gold, which topped $2,000 on Tuesday, could extend its gains.”
“Even if NFP is positive like ADP's figure, the chances of a "big number" are falling. In case America's labor market squeezes after only two positive months, the effect that would exacerbate the dollar's decline and potentially push gold to even higher ground.”
Author
FXStreet Team
FXStreet
