ADP® national employment report for May shows the private sector created 128,000 jobs from April to May, compared to the 300k expected increase. The previous month’s ADP number was also revised lower, further undermining the bullish outlook. Midsized businesses hired 97,000 new employees, while large companies hired 122,000. Job creation at small firms declined by 91,000. 104,000 new jobs were created in the service sector, while 24,000 were created in the manufacturing sector.
The US dollar index sank into a previous range but found some buyers at $101.90. The weaker US dollar helped lift the euro and pound, but this could be undone tomorrow after the governments survey of non-farm payrolls are released.
According to OPEC, the group will increase oil production by a total of 648,000 barrels per day in July and August. OPEC and allies will meet again on June 30. Today’s announcement from OPEC+ goes some way to closing the gap from the loss of Russian oil, though China could and will absorb a lot of what Russia sells. We all hope that OPEC+ can meet the quotas but the heavy lifting will be done by the lead countries like Saudi Arabia. Russian Deputy Prime Minister Alexander Novak warned that European consumers will be the first to suffer the negative consequences of the sanctions on Russian oil.
The reaction level on Brent August Contract is $112, so if we see price come back down on demand worries or possibly over supply issues in the future, this is the level that would see an acceleration lower from.
The EURUSD is currently still within yesterday’s trading range but has ended the London session at the day’s highs. This also has confluence with the lows from 30th of May which formed the swing high. There will be stops above their, including mine, so a run above 1.07866 could accelerate. The USDJPY is still trading near the highs of yesterday, so I am thinking this is a temporary reaction in the US dollar crosses as the markets prepare for possibly a lower-than-expected NFP figure tomorrow. Though I am expecting a bullish surprise still based on the very low daily unemployment benefits in May.