Pound May Overlook PMI Data, US Dollar May Rise on ADP Report

Date

11/5/2014 5:36:53 AM

(MENAFN- DailyFX) DailyFX.com - r>

" style="text-align:justify">

" style="text-align:justify"> Talking Points:

British Pound May Broadly Overlook October’s Final Batch of PMI Figures
US Dollar Could Find Strength if ADP Figures Set a Positive Tone for NFP
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Another quiet day on the European economic data front will see October’s UK Services PMIreading in the spotlight withsector growth is expected to slow for a second consecutive month. The economy-wide Composite PMI will distill the range of sector-specific readings published over recent days to show that the overall pace activity expansion slowed to the weakest since June 2013 last month. The outcome’s implications for the British Pound may prove limited however considering the release’s limited ability to drive BOE policy expectations.

The hawks on the rate-setting MPC committee will almost certainly fail to muster a voting majority in favor of tightening at this week’s meeting even as their presence reinforces a bias toward hikes following the current standstill (whenever it ultimately ends). In this environment softer data is likely to be seen delaying normalization rather than fostering easing expectations. The markets have been busy trimming near-term rate hike expectations since July meaning this narrative could be getting close to being priced in thereby no longer a driver of big-splash volatility. Indeed futures markets suggest the priced-in timeline foreseeing the first increase in the benchmark lending rate by mid-2015 has been solidifying for the past three weeks.

Looking ahead the spotlight will shift to the US where traders’ focus will be on October’s ADP Employment report as well as the ISM Non-Manufacturing Composite reading. The former is expected to show private-sector job creation accelerated last month with firms adding 220000 to payrolls compared with a 213000 increase in September. The latter is seen revealing a slight slowdown in the rate of service-sector activity growth marking a second month of moderation following a nine-year peak in August.

Despite its spotty record at forecasting the much-anticipated official jobs data due on Friday the ADP figure still seems to command some attention. An upbeat outcome may reinforce other survey data suggesting labor markets did not deteriorate last month as consensus forecasts for Nonfarm Payrolls anticipate which could offer a boost to the US Dollar amid a re-pricing of the Fed rate hike outlook to favor action sooner rather than later. Meanwhile as we argued in our weekly forecast a modest pullback on the ISM print ought not significantly hurt the greenback considering the FOMC’s demonstrated willingness to look past near-term business cycle swings in setting the policy trajectory.

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Asia Session

" style="text-align:center"> GMT	" style="text-align:center"> CCY	" style="text-align:center"> EVENT	" style="text-align:center"> ACT	" style="text-align:center"> EXP	" style="text-align:center"> PREV
" style="text-align:right"> 21:45	NZD	Unemployment Rate (3Q)	" style="text-align:center"> 5.40%	" style="text-align:center"> 5.5%	" style="text-align:center"> 5.6%
" style="text-align:right"> 21:45	NZD	Employment Change (YoY) (3Q)	" style="text-align:center"> 3.2%	" style="text-align:center"> 3.0%	" style="text-align:center"> 3.7%
" style="text-align:right"> 21:45	NZD	Employment Change (QoQ) (3Q)	" style="text-align:center"> 0.8%	" style="text-align:center"> 0.6%	" style="text-align:center"> 0.4%
" style="text-align:right"> 21:45	NZD	Labor Cost Private Sector (QoQ) (3Q)	" style="text-align:center"> 0.5%	" style="text-align:center"> 0.5%	" style="text-align:center"> 0.6%
" style="text-align:right"> 21:45	NZD	Private Wages ex Overtime (QoQ) (3Q)	" style="text-align:center"> 0.5%	" style="text-align:center"> 0.5%	" style="text-align:center"> 0.6%
" style="text-align:right"> 21:45	NZD	Participation Rate (QoQ) (3Q)	" style="text-align:center"> 69.0%	" style="text-align:center"> 69.0%	" style="text-align:center"> 68.9%
" style="text-align:right"> 21:45	NZD	Average Hourly Earnings (QoQ) (3Q)	" style="text-align:center"> 1.4%	" style="text-align:center"> 1.1%	" style="text-align:center"> 0.5%
" style="text-align:right"> 22:30	AUD	AiG Performance of Service Index (OCT)	" style="text-align:center"> 43.6	" style="text-align:center"> -	" style="text-align:center"> 45.4
" style="text-align:right"> 23:50	JPY	Monetary Base (YoY) (OCT)	" style="text-align:center"> 36.9%	" style="text-align:center"> -	" style="text-align:center"> 35.3%
" style="text-align:right"> 23:50	JPY	Monetary Base - End of Period (OCT)	" style="text-align:center"> ¥259.5T	" style="text-align:center"> -	" style="text-align:center"> ¥252.6T
" style="text-align:right"> 0:01	GBP	BRC Shop Price Index (YoY) (OCT)	" style="text-align:center"> -1.9%	" style="text-align:center"> -1.7%	" style="text-align:center"> -1.8%
" style="text-align:right"> 1:30	JPY	Labor Cash Earnings (YoY) (SEP)	" style="text-align:center"> 0.8%	" style="text-align:center"> 0.8%	" style="text-align:center"> 0.9%
" style="text-align:right"> 1:45	CNY	HSBC China Services PMI (OCT)	" style="text-align:center"> 52.9		" style="text-align:center"> 53.5
" style="text-align:right"> 1:45	CNY	HSBC China Composite PMI (OCT)	" style="text-align:center"> 51.7		" style="text-align:center"> 52.3
" style="text-align:right"> 2:30	JPY	BOJ Governor Kuroda Speaks in Tokyo	" style="text-align:center"> -	" style="text-align:center"> -	" style="text-align:center"> -

European Session

" style="text-align:center"> GMT	" style="text-align:center"> CCY	" style="text-align:center"> EVENT	" style="text-align:center"> EXP	" style="text-align:center"> PREV	" style="text-align:center"> IMPACT
" style="text-align:center"> 8:15	" style="text-align:center"> CHF	Consumer Price Index (YoY) (OCT)	" style="text-align:center"> -0.1%	" style="text-align:center"> -0.1%	" style="text-align:center"> Medium
" style="text-align:center"> 8:15	" style="text-align:center"> CHF	Consumer Price Index (MoM) (OCT)	" style="text-align:center"> -0.1%	" style="text-align:center"> 0.1%	" style="text-align:center"> Medium
" style="text-align:center"> 8:15	" style="text-align:center"> CHF	CPI EU Harmonized (YoY) (OCT)	" style="text-align:center"> 0.0%	" style="text-align:center"> 0.0%	" style="text-align:center"> Low
" style="text-align:center"> 8:15	" style="text-align:center"> CHF	CPI EU Harmonized (MoM) (OCT)	" style="text-align:center"> 0.0%	" style="text-align:center"> 0.4%	" style="text-align:center"> Low
" style="text-align:center"> 8:45	" style="text-align:center"> EUR	Markit/ADACI Italy Composite PMI (OCT)	" style="text-align:center"> -	" style="text-align:center"> 49.5	" style="text-align:center"> Low
" style="text-align:center"> 8:45	" style="text-align:center"> EUR	Markit/ADACI Italy Services PMI (OCT)	" style="text-align:center"> 49.4	" style="text-align:center"> 48.8	" style="text-align:center"> Low
" style="text-align:center"> 8:50	" style="text-align:center"> EUR	Markit France Composite PMI (OCT F)	" style="text-align:center"> 48.0	" style="text-align:center"> 48	" style="text-align:center"> Low
" style="text-align:center"> 8:50	" style="text-align:center"> EUR	Markit France Services PMI (OCT F)	" style="text-align:center"> 48.1	" style="text-align:center"> 48.1	" style="text-align:center"> Low
" style="text-align:center"> 8:55	" style="text-align:center"> EUR	Markit Germany Services PMI (OCT F)	" style="text-align:center"> 54.8	" style="text-align:center"> 54.8	" style="text-align:center"> Low
" style="text-align:center"> 8:55	" style="text-align:center"> EUR	Markit/BME Germany Composite PMI (OCT F)	" style="text-align:center"> 54.3	" style="text-align:center"> 54.3	" style="text-align:center"> Low
" style="text-align:center"> 9:00	" style="text-align:center"> EUR	Markit Eurozone Composite PMI (OCT F)	" style="text-align:center"> 52.2	" style="text-align:center"> 52.2	" style="text-align:center"> Low
" style="text-align:center"> 9:00	" style="text-align:center"> EUR	Markit Eurozone Services PMI (OCT F)	" style="text-align:center"> 52.4	" style="text-align:center"> 52.4	" style="text-align:center"> Low
" style="text-align:center"> 9:30	" style="text-align:center"> GBP	Official Reserves (Changes) (OCT)	" style="text-align:center"> -	" style="text-align:center"> -$1640M	" style="text-align:center"> Low
" style="text-align:center"> 9:30	" style="text-align:center"> GBP	Markit/CIPS UK Composite PMI (OCT)	" style="text-align:center"> 57.0	" style="text-align:center"> 57.4	" style="text-align:center"> Medium
" style="text-align:center"> 9:30	" style="text-align:center"> GBP	Markit/CIPS UK Services PMI (OCT)	" style="text-align:center"> 58.5	" style="text-align:center"> 58.7	" style="text-align:center"> Medium
" style="text-align:center"> 10:00	" style="text-align:center"> EUR	Eurozone Retail Sales (MoM) (SEP)	" style="text-align:center"> -0.8%	" style="text-align:center"> 1.2%	" style="text-align:center"> Low
" style="text-align:center"> 10:00	" style="text-align:center"> EUR	Eurozone Retail Sales (YoY) (SEP)	" style="text-align:center"> 1.4%	" style="text-align:center"> 1.9%	" style="text-align:center"> Low

Critical Levels

" style="text-align:center"> CCY	" style="text-align:center"> Supp 3	" style="text-align:center"> Supp 2	" style="text-align:center"> Supp 1	" style="text-align:center"> Pivot Point	" style="text-align:center"> Res 1	" style="text-align:center"> Res 2	" style="text-align:center"> Res 3
EURUSD	" style="text-align:center"> 1.2343	" style="text-align:center"> 1.2439	" style="text-align:center"> 1.2493	" style="text-align:center"> 1.2535	" style="text-align:center"> 1.2589	" style="text-align:center"> 1.2631	" style="text-align:center"> 1.2727
GBPUSD	" style="text-align:center"> 1.5893	" style="text-align:center"> 1.5944	" style="text-align:center"> 1.5973	" style="text-align:center"> 1.5995	" style="text-align:center"> 1.6024	" style="text-align:center"> 1.6046	" style="text-align:center"> 1.6097

" style="text-align:justify"> --- Written by Ilya Spivak Currency Strategist for DailyFX.com

" style="text-align:justify"> To receive Ilya's analysis directly via email please SIGN UP HERE

" style="text-align:justify"> Contact and follow Ilya on Twitter: @IlyaSpivak

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