US NONFARM PAYROLLS IN THE SPOTLIGHT ON FRIDAY
Investors can expect a steady flow of market-moving events on Friday, culminating in the US Labor Department’s monthly nonfarm payrolls report. Arguably the most closely watched calendar event of the month, nonfarm payrolls provides a timely snapshot of the US labor market and the overall economy.
IHS Markit is scheduled to release a deluge of Eurozone PMI reports beginning at 07:15 GMT covering Spain, Italy, France, Germany and the broader euro area. For the 19-member currency region, Markit’s manufacturing PMI is forecast to read 55.5 for the month of May.
The Italian government is scheduled to release revised first-quarter GDP numbers at 08:00 GMT. The Italian economy is projected to rise 1.4% on the quarter.
US nonfarm payrolls are scheduled for distribution at 12:30 GMT. The May reading is expected to show a net gain of 188,000 jobs for May, compared with 164,000 in April. The jobless rate is projected to hold steady at 3.9%.
Average hourly earnings, a proxy for wage inflation, likely rose 0.2% on month and 2.7% annually.
Elsewhere on the economic calendar, the Institute for Supply Management (ISM) will release its US manufacturing gauge at 14:00 GMT. The manufacturing purchasing managers’ index (PMI) likely strengthened to 58.1 in May from 57.3 in April.
The Commerce Department will round out the data wire with a report on construction spending, which is scheduled for 14:00 GMT.
In terms of monetary policy developments, Federal Open Market Committee (FOMC) member Neel Kashkari will deliver a speech at 12:55 GMT.
Europe’s common currency extended its rally on Thursday, with prices briefly trading above 1.1700 USD. At the time of writing, EUR/USD was valued at 1.1686, where it was little changed. US nonfarm payrolls will play a major role in how the euro as well as other dollar pairs are priced heading into the weekend. Better than expected results will encourage the bulls while a slower than expected rise may compel the bears to take control. EUR/USD faces immediate support at 1.1660. On the upside, 1.1700 presents an immediate hurdle.
USD/CAD snapped back to health on Thursday after suffering a 150-pip selloff at the hands of the Bank of Canada. The pair is back to trading in the mid-1.2900 region. A strong jobs report on Friday could generate bids closer to the psychologically important 1.3000 region.
Cable also backtracked on Thursday after posting large gains the previous session. GBP/USD fell from a high near 1.3350 back down to the 1.3280 region. The pair faces renewed downside risks, with Tuesday’s low of 1.3200 back in focus. On the opposite side of the spectrum, a convincing break above 1.3310 could generate renewed support for cable.