With all the hoopla surrounding the Fiscal Cliff, little attention has been focused on US economic data in the last 48 hours. However, that is all about to change when traders get a glimpse into 3 major US economic releases tomorrow. The surveys are expected to inject some more short term volatility in the greenback against the Euro.
ADP Non-Farm Employment Change (8:15 EST)
For the month of November, private payrolls company ADP is expected to show a slowing rate of growth in the employment sector. Survey expectations are in the area of a gain of 129,000 – lower than October’s 158,000. This would be the first dip in payrolls below 150,000 for the report since a 133,000 post in the month of May, and wouldn’t be too unsurprising given the recent surges in jobless claims and disruptions due to Hurricane Sandy. However, a lower than expected figure could be reflective of overall weakness in the labor market – which would exacerbate already heightened nervousness surrounding the impending Fiscal Cliff debate. It would also depress expectations for Friday’s non-farm payroll report, which is already anticipated to show a mild addition of 91,000. Expect EURUSD technical resistance at 1.3150 to be tested to the upside should that happen.
US ISM Non-Manufacturing PMI (10:00 EST)
In similar fashion to the Purchasing Managers Index of manufacturing, the non-manufacturing survey is anticipated to show a slowdown for the month of November. Index readings are forecasted to dip to 53.6 from 54.2 in October. This would be the second decline in the last three months, and likely be reflective of seasonality rather than structural changes. But, a caveat remains in a sub estimate or contractionary index reading. A contractionary, or below a benchmark 50 reading, would be reflective of a severe pullback in the sector – the first time since 2009. This would spell disaster for the world’s largest economy and likely lead to US dollar weakness ahead of 1.3000 against the Euro.
Factory Orders (10:00 EST)
Month over month factory orders are expected to remain relatively unchanged for October. According to analysts’ estimates US factory orders are anticipated to gain by 0.1% in the month. This would be in stark contrast to the 4.8% surge seen in September and confirm evidence of a manufacturing slowdown. Signs of the slump have already been seen in previous ISM manufacturing reports that reflected a slowdown in new orders and tenuous business confidence readings.