European stock markets making small gains while Wall Street is eyeing a flat open on Wednesday, as investors eye up the jobs report later in the week.
The ADP data today may offer a peak at what’s to come later in the week, although as we always caution, it isn’t the most reliable precursor for Friday’s NFP. It may offer some insight into whether market expectations are overly optimistic or not nearly enough, but we can’t take a great deal away from the release.
As ever though, the more hype around the jobs report, the greater importance the ADP takes on. With members of the FOMC divided on the timing and pace of tapering, the next couple of jobs reports could swing the debate one way or another ahead of the September meeting.
US PMIs eyed after Monday’s disappointment
PMI reports have been closely monitored this week for any signs of weakness after all the talk of peak growth in Q2 and the worrying spread of the delta variant. The manufacturing data left investors a little nervous, with the Chinese and US survey’s missing expectations, pointing to slower growth in the world’s largest economies.
The services PMI reports so far today have displayed no such weakness. The Caixin reading rebounded strongly overnight, while the euro area posted its best readings in 15 years, thanks to easing restrictions and the ramping up of its vaccine rollout.
The US survey’s are up next and we all saw how markets responded to Monday’s disappointment. With services accounting for more than three quarters of US output, the PMIs could set the tone heading into Friday’s jobs report. While the manufacturing data was softer on Monday, the employment sub-index rebounded which could bode well for the jobs report on Friday, especially if supported by the services data.
Cooling off period for bitcoin
Bitcoin is slightly in the red again today, extending its losing streak to a fifth consecutive session. This comes after it finally broke USD 41,000 which is why I’m not particularly concerned about the run of losses. The move feels like nothing more than a cooling-off period and I would be surprised if the decline gathers any real momentum.
If risk appetite improves into the end of the week, I’d expect bitcoin to surge once more and perhaps this is what we’re waiting for. Technical support below lies around USD 36,000, which is around the peaks we saw late June/early July. It’s also a 50% retracement of the move from the July lows to the August highs. A move below here could shake confidence a little.
For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/
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