Asia Forecast: What Happened in the U.S. Session?

Asia Forecast: Explore the impact of U.S. economic data on Asian markets. The dollar weakens, and gold rises—updates on currencies and oil.

The U.S. session saw significant economic updates that sent ripples through the financial markets. The ADP employment report for June revealed the addition of 150K jobs, falling short of the 163K estimate. This marks the third consecutive month of slowed job creation. As Chief Economist at ADP, Nela Richardson, noted, “Job growth has been solid, but not broad-based. Had it not been for a rebound in hiring in leisure and hospitality, June would have been a downbeat month.” This highlights that private employment is beginning to show signs of initial cracks.

Unemployment claims also rose slightly to 238K, exceeding the estimate of 234K and the 4-week average of 235.5K. The elevated levels of claims for June raise concerns that this metric could continue to increase in the coming months, particularly after the recent ADP report.

Asia Forecast: What Happened in the U.S. Session?

Furthermore, the ISM Services PMI missed market expectations, falling from 53.8 in May to 48.8 in June, indicating contraction. Sub-components such as business activity, new orders, and backlog of orders declined into contraction territory. The employment sub-component has now contracted for the fifth straight month, underscoring the ongoing weakness in the U.S. labor market.

Lastly, the minutes from June’s FOMC meeting revealed that “the vast majority of participants assessed that growth in economic activity appeared to be gradually cooling, and most participants remarked that they viewed the current policy stance as restrictive.” Policymakers also noted that “they did not believe it is appropriate to lower the target range for the federal funds rate until additional information had emerged to give them greater confidence that inflation was moving sustainably toward the 2% target.”

Despite the somewhat hawkish tone from the minutes, the weaker-than-anticipated macroeconomic data triggered a sharp sell-off in the dollar, causing the dollar index (DXY) to plummet from 105.65 to as low as 105.04 overnight. With U.S. markets closed for Independence Day celebrations, the index will remain suppressed today.

Implications for the Asia Session

As Asian markets digest the latest U.S. macroeconomic data, the DXY is trading around 105.30 while spot prices for gold edged higher towards $2,365/oz. Trading volume should remain steady during the Asian and European trading hours but is to thin out later in the day.

Key Market Updates

Dollar Index (DXY):
Key News Events Today: Independence Day (U.S. National Holiday)
Expectations:

• Support: 104.30
• Resistance: 106.10
• Next 24 Hours Bias: Medium Bearish

Gold (XAU):
Key News Events Today: Independence Day (U.S. National Holiday)
Expectations:

• Support: $2,320/oz
• Resistance: $2,390/oz
• Next 24 Hours Bias: Medium Bullish

Australian Dollar (AUD):
Key News Events Today: No major news events.
Expectations:

• Support: 0.6685
• Resistance: 0.6740
• Next 24 Hours Bias: Medium Bullish

Kiwi Dollar (NZD):
Key News Events Today: No major news events.
Expectations:

• Support: 0.6075
• Resistance: 0.6145
• Next 24 Hours Bias: Medium Bullish

Japanese Yen (JPY):
Key News Events Today: No major news events.
Expectations:

• Support: 160.30
• Resistance: 162.00
• Next 24 Hours Bias: Weak Bearish

Euro (EUR):
Key News Events Today: No major news events.
Expectations:

• Support: 1.0770
• Resistance: 1.0850
• Next 24 Hours Bias: Medium Bullish

Swiss Franc (CHF):
Key News Events Today: CPI (6:030 am GMT)
Expectations:

• Support: N/A
• Resistance: N/A
• Next 24 Hours Bias: Weak, Bullish

Pound (GBP):
Key News Events Today: Parliamentary Elections (All Day)
Expectations:

• Support: N/A
• Resistance: N/A
• Next 24 Hours Bias: Medium Bullish

Canadian Dollar (CAD):
Key News Events Today: No major news events.
Expectations:

• Support: 1.3610
• Resistance: 1.3650
• Next 24 Hours Bias: Medium Bearish

Oil:
Key News Events Today: No major news events
Expectations:

• Support: N/A
• Resistance: N/A
• Next 24 Hours Bias: Weak Bearish

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