Today’s economic data releases have had a significant impact on the markets, particularly affecting the US dollar. Key reports included the ADP Non-Farm Employment Change, Unemployment Claims, and ISM Services PMI. The disappointing figures from both the ADP and PMI reports have led to a heavy sell-off of the US dollar, driving major currency pairs like EUR/USD and GBP/USD higher.
ADP Non-Farm Employment Change
According to the latest ADP National Employment Report, private sector employment increased by 150,000 jobs in June. Despite showing growth, the figures fell short of market expectations, intensifying concerns about the robustness of the labor market. The report also noted that annual pay for job-stayers remained steady with a year-over-year increase of 4.9%.
ISM Services PMI
The ISM Services PMI for June came in at 48.8, indicating a contraction in the service sector. This was a significant drop from the previous month’s reading and well below the 50 threshold that separates expansion from contraction. The weak performance of the services sector added to the negative sentiment surrounding the USD.
Market Reaction
EUR/USD Climbs Above 1.0800 on Weaker US Dollar
The EUR/USD pair has preserved its bullish momentum, trading at its highest level in nearly three weeks above 1.0800 in the American session. The US dollar continues to face heavy selling pressure following the disappointing ADP and PMI data, fueling the pair’s rally.
The EUR/USD pair advanced throughout the first half of Wednesday, driven by reduced demand for the US dollar. Comments from Federal Reserve Chairman Jerome Powell at the European Central Bank Forum on monetary policy in Sintra also contributed to the USD’s weakness. Powell highlighted that the disinflationary trend is resuming, though emphasized the need for more confidence before any reduction in the policy rate.
GBP/USD Extends Rally Toward 1.2800
GBP/USD continues to push higher toward 1.2800, trading at its highest level since mid-June on Wednesday. The disappointing ISM Services PMI data has weighed heavily on the US dollar, allowing the pair to target new multi-week highs.
Gold Jumps Above $2,360
Gold has gathered bullish momentum, trading at its highest level in nearly two weeks above $2,360. Following the disappointing ADP Employment Change and ISM Services PMI data, the 10-year US yield declined sharply, helping XAU/USD extend its daily rally.
Conclusion
Today’s economic data releases have significantly impacted market dynamics, leading to a substantial sell-off of the US dollar. As traders digest these figures, attention will shift to upcoming data releases and policy announcements for further insights into the direction of the U.S. economy and global market trends. Next, traders will be on the lookout for the FOMC report expected in the American session.
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