Wednesday, July 1, 2015

All systems go for the US dollar | …but beware 4th of July holiday trader adjustments

While it does not always correctly predict the outcome of the official Non-Farm Payroll figures released by the US Bureau of Labor Statistics, the private firm, ADP, always brings its figures out before the government report each month. Both sets of numbers are advanced by one day this time (Official NFP figures are normally on the first Friday of each month) to take account of the fact that tomorrow (Friday) is an official holiday in the US, making the 4th of July weekend a three day break.

Official government Non Farm Payrolls will be released later today (Thursday) in consequence.

The auguries are good. Not only did the ADP report indicate healthy growth in employment, but separate reports yesterday, for Manufacturing Purchasing Managers Indexes (PMIs), from both Markit and the Institute of Supply Managers (ISM), and Construction Spending from the Census Bureau, all showed increases.

…but beware 4th of July holiday adjustments

The EURUSD pair is currently marking time, but we can expect the usual fireworks on the NFP release. Bi-directional, short-term volatility could be exacerbated on this occasion because of the upcoming US holiday weekend, which also sees the Greek referendum on bailout proposals, due to take place on Sunday. The confluence of all of these events means that many large trading institutions will be adjusting, closing or hedging their positions later in the trading day today.

This makes it a good day for us to stand aside.


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