Broadening USD selloff after the US ADP survey on pvt sector payrolls posted its 2nd biggest decline in 3 years, falling to 67K from 121K vs an expected 135K. Broad GBP strength exploited USD selling to hit the 1.31 for the 1st time in 7 months. The latest swings in economic data highlight the opacity in the global economy in the second half of 2019. As USDX breals below its 100 DMA, Aussie slides after GDP. The BOC decision and ISM non-manufacturing are due up next. The English Premium video is posted below, recoding during the release of the ADP, focusing on the  latest FX and index trades.

A clear narrative has developed in markets: Global economies were slipping in Q2 but the Fed and other central banks halted the decline with rate cuts. In addition, hopes for a US-China trade truce have set the stage for a pickup in global growth in early 2020.

What undermines the narrative is how spotty the data is on all of it. It's clear there was a slowdown that accelerated in Q2 but it's overwhelmingly a manufacturing slump in the global context. It makes sense that it's tied to the trade war but China has also kept policy relatively tight over the past two years and made efforts to curb excess capacity.

In China and the US household spending and other parts of the economy have held up. On Wednesday, China's November Caixin services PMI rose to 53.5 from 51.1. Unlike manufacturing, it never fell below 50.

At about the same time, Australia reported that Q3 GDP was up 0.4% q/q. That was softer than +0.5% expected but Q2 was revised a tick higher so it essentially netted out. Within the data trade was robust and added 0.2 pp which is not what you would expect in a global industrial slowdown. At the same time, household spending slowed and that was a probably related to the murky housing picture.

Ultimately, we're stuck with the incomplete picture and trying to sort out what's sentiment-driven and what's real. It's natural for businesses to pullback with all the trade war headlines but ultimately if growth and demand holds up, they will put money to work. Markets are also still struggling to adapt to a world where bonds yield nothing – a factor that skews every signal.

In the short-term we will continue to focus on incoming economic data along with trade headlines but stepping back and taking a broad survey is a reminder of how much of the current market narrative is built on flimsy data.

Up next is the Bank of Canada decision and ISM non-manufacturing reports. USD bulls need services ISM to come in within expecations of 54-54.7 after today's poor ADP print and Monday's release of manuf ISM showing a deepening contraction in that sector. Look for the BOC to take a page out of the RBA's book by retaining a dovish bias while promising nothing.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD retreats after strong NFP, weak German data

EUR/USD is trading below   1.11 after US Non-Farm Payrolls beat expectations with 266K and mixed wage growth. Earlier, weak German data weighed on the euro. Updates on trade are awaited.


GBP/USD shrugs off strong NFP, focuses on UK elections

GBP/USD is trading below 1.3150 but off the post-NFP lows. The US gained more jobs than expected. The Conservatives remain in the lead ahead of the debate between PM Johnson and Labour leader Corbyn.


US recession? Not so fast, a calm look at the economy and currencies ahead of the NFP

Recent US economic indicators have been downbeat, but they include silver linings and are backed by robust consumption. Valeria Bednarik, Joseph Trevisani, and Yohay Elam...

Read more

Gold drops to fresh multi-day lows on upbeat NFP report

Gold faded an intraday bullish spike to the $1480 area and tumbled to fresh multi-day lows, around the $1465 region in reaction to upbeat US monthly jobs report.

Gold News

USD/JPY: bearish ahead of US employment figures

Japanese data missed the market’s expectations, triggering fresh concerns about the economy. Focus on US employment figures, market players anticipate dismal numbers. USD/JPY is technically bearish could break below the 108.00 level.


Forex Majors