On Wednesday, the U.S. printed a bunch of economic data that may give the markets clues on the results of Friday’s anticipated U.S. non-farm payrolls report:
The Challenger Report showed that U.S.-based employers announced 48,786 job cuts in June, which is 23.6% lower compared to May but is still 19.8% higher compared to June 2023
The ADP report reflected a 150K net job additions in June, which came in lower than the expected 163K uptick and May’s 157K increase.
Details revealed that annualized pay for those who stayed in their jobs only grew by 4.9%, the lowest since August 2021, while wages for those who changed their jobs slowed down from 7.8% to 7.7%.
A separate report showed the weekly initial jobless claimants climbing from 234K to 238K in the week ending June 29, outpacing market estimates of only a 234K increase.
Not surprisingly, the closely watched four-week moving average rose, up by 2,250 to 238,500 from the previous week.
The S&P Global services PMI provided a bit of relief, as the final reading for June was revised higher from 55.1 to 55.3 even as it comes in lower than May’s 54.8 reading.
The report detailed that “the rate of job creation was solid and the sharpest since May 2023,” and that service providers increased their prices at a “solid, albeit slightly softer” pace than recorded in May.
Finally, ISM’s services PMI, which many consider a slightly more accurate leading indicator, surprised the markets with a sharp drop from May to June.
The report came in at a contractionary 48.8 reading in June, much lower than the expected 52.6 print and May’s 53.8 figure.
And if that’s not weak enough, closely watched components like Prices and Employment also weakened compared to the previous month.
Market Reactions
U.S. dollar vs. Major Currencies: 5-min
The U.S. dollar, which was just getting rejected from the early European session’s highs, saw fresh and broad bearish pressure at the release of the Challenger and ADP reports.
Shortly after, the huge miss in the ISM’s services PMI report caused a more notable downswing for the Greenback that took the currency to new July lows against its major counterparts.
Luckily for USD bulls, the dollar also pulled back some of its post-ISM PMI losses ahead of the FOMC meeting minutes release and a U.S. July 4th bank holiday.