FXStreet (Barcelona) – According to Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, the latest ADP employment report signals that the Nonfarm payrolls ahead might see a robust outcome.
Key Quotes
“The US dollar is still performing relatively well in the near-term especially against emerging market currencies. The ongoing adjustment higher in euro-zone yields is also prompting a sharp adjustment higher in US yields offering support for the US dollar and tightening external financing conditions which is placing currencies of countries with elevated current account deficits under downward pressure such as the rand and Turkish lira.”
“Higher US yields are deriving support as well from building evidence that the US economy has returned to more solid growth in Q2. It was revealed yesterday that US trade deficit narrowed sharply in April. It follows the exaggerated drag on growth from net trade in Q1 which is likely to be partly reversed in Q2.”
“The release of the latest ADP survey also signalled that another solid non-farm payrolls report is likely for May which would further reinforce confidence that employment weakness recorded in March was transitory.”
“Still solid employment growth is seen as a more reliable indicator of the underlying strength of the US economy.”
“The one dampener was the weaker than expected ISM non-manufacturing survey which signalled that the economy may have lost some momentum after the initial bounce back in early in Q2 although it remains at relatively healthy levels.”
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