U.S. Job Openings New Low, Manufacturing Orders Rise

Market focus: U.S. job openings hit a new low while manufacturing orders rise; dollar index and global markets react.

Job openings in the United States continued their downward trend in April, as the JOLTS report revealed vacancies fell to 8.06 million, the lowest level since 2021. This figure missed market expectations of 8.37 million and highlighted a cooling labor market. The March job openings were revised from 8.49 million to 8.36 million, further emphasizing the slowdown.

Conversely, new orders for manufacturing goods rose by 0.7% month-over-month in April, aligning with market forecasts. However, the growth rate decreased significantly in March from 1.6% to 0.8%. Although April marked the third consecutive month of growth, the sharp downward revision for March raises doubts about the sustainability of this trend.

In response to these mixed economic signals, the dollar index (DXY) dropped from 104.30 to 104.04, as softer data increased the likelihood of a potential Federal Reserve rate cut.

Impact on the Asia Session

As the U.S. economic data trickles down, the Australian economy is under the spotlight with a GDP growth of 0.2% quarter-on-quarter in Q4 2023, missing the market forecast of 0.3%. This marks the ninth straight period of growth but at the slowest pace in five quarters, driven by muted household spending and declining government expenditure and fixed investment. A similar 0.2% growth estimate for Q1 2024 suggests steady yet modest expansion. A stronger-than-expected GDP print could boost demand for the Australian dollar (AUD).

U.S. Job Openings New Low, Manufacturing Orders Rise

Anticipated Economic Reports and Their Implications

Dollar Index (DXY):

Key Events:

• ADP Employment Report (12:15 pm GMT)
• ISM Services PMI (2:00 pm GMT)

April’s ADP report showed 192,000 jobs added, surpassing the estimate of 175,000. However, the forecast for May is lower at 175,000, suggesting a slowdown. The ISM Services PMI is forecast to rebound from 49.4 to 51.0, indicating expansion. Positive results from these reports could strengthen the dollar later today.

Gold (XAU):

• Next 24 Hours Bias: Weak, Bullish

Gold prices could be affected by the dollar’s performance, particularly if the ADP and ISM reports exceed expectations. This could push the dollar higher and gold prices lower.

Australian Dollar (AUD):

• Key Event: GDP (1:30 am GMT)
• Next 24 Hours Bias: Weak, Bullish

More robust GDP data could increase demand for the AUD, reflecting a resilient economy despite slower growth.

Japanese Yen (JPY):

• Next 24 Hours Bias: Weak, Bullish

The yen strengthened overnight, and USD/JPY traded around 155.33 as Asian markets opened. Key support and resistance levels are 153.70 and 156.60, respectively.

Euro (EUR):

• Key Event: S&P Global Composite PMI (8:00 am GMT)
• Next 24 Hours Bias: Weak, Bullish

A positive PMI reading could support the euro, reflecting continued expansion in the Euro Area’s economy.

Swiss Franc (CHF):

• Next 24 Hours Bias: Weak Bearish

Yesterday’s inflation data steadily rose, strengthening the franc and lowering the USD/CHF.

Pound (GBP):

• Key Event: S&P Global Composite PMI (8:30 am GMT)
• Next 24 Hours Bias: Weak, Bullish

Continued expansion in PMI activity could keep the pound elevated.

Canadian Dollar (CAD):

Key Events:

• BoC Rate Statement (1:45 pm GMT)
• BoC Press Conference (2:30 pm GMT)
• Next 24 Hours Bias: Weak Bearish

A potential rate cut by the Bank of Canada could lead to selling pressure on the CAD, boosting USD/CAD.

Oil:

• Key Event: EIA Crude Oil Inventories (2:30 pm GMT)
• Next 24 Hours Bias: Weak, Bullish

With a surprise build-in of API stockpiles and OPEC+ signaling possible production cutbacks, oil prices remain under pressure. Further increases in EIA inventories could exacerbate this trend.

Central Bank Notes

Federal Reserve:

• Maintained Federal Funds Rate at 5.25% to 5.50%.
• Monitoring inflation and employment goals, with potential adjustments based on economic data.

Reserve Bank of Australia:

• The cash rate target is unchanged at 4.35%, with inflation expected to return to target by 2025.

Bank of Japan:

• Maintained policy framework, with minor adjustments in economic forecasts.

European Central Bank:

• Key interest rates are unchanged, focusing on converging inflation to the 2% target.

Swiss National Bank:

• The central bank eases the policy rate to 1.50%, forecasting stable inflation.

Bank of England:

• Maintained the Official Bank Rate at 5.25%, monitoring inflation persistence.

Bank of Canada:

• Expected to cut overnight rate by 25 basis points, with a dovish outlook.

As these economic indicators unfold, their impact on global markets will be closely watched, especially regarding currency and commodity movements.

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