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ADP and Weekly Claims both 250K

Market Analysis

USDJPY,H1

U.S. ADP reported private payrolls increased 250,000 in December after the 185,000 November gain (revised from 190,000). The goods sector added 28,000 jobs, including a 9,000 gain in manufacturing and a 16,000 jump in construction. The service sector added a robust 222,000. Education and health jobs climbed 50,000, with trade and transportation employment rising 45,000. Leisure/hospitality jobs increased 28,000. The data are stronger than expected (there’s likely some ongoing impact from disaster recovery) and could suggest some upside risk to the consensus  190,000 non-farm payroll forecast.  The ADP figures have historically shown particular volatility in December that reduces the significance of the big gain. Note that the “as reported” ADP figures have overshot private payrolls in every month since the methodology change of October 2016 except April, June, October and November of this year, leaving an average overshoot of 39,000 and an average monthly 2017 gain of a solid 208,000, versus 170,000 for Bureau of Labor Statistics (BLS)  private payrolls.

Meanwhile, U.S. initial jobless claims rose 3,000 to 250,000 too in the week ended December 30 after a revised 2,000 gain to 247,000 previously (was 245,000). That left the 4-week moving average at 241,000 versus 238,000  (revised from 237,000). Continuing claims dropped 37,000 to 1,914,000 for the December 23,000 after a 15,000 gain to 1.951 million (revised from 1.943 million). The 25,000 rise in initial claims over the past three weeks unwinds the 27,000 drop in the prior four weeks, and the current level is still near four decade lows.

The dollar shrugged off the higher jobless claims outcome, leaving EURUSD steady near 1.2070 and USDJPY at session highs of 112.78 over the key H1 and H4 200 period moving averages.

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Stuart Cowell

Senior Market Analyst

HotForex

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