The July 4 week in the US is shortened by the holiday on Monday. Even so, the data calendar is light, and most of the focus in markets will remain on the upcoming employment report on Friday. Forecasters are going to be on the lookout for the June ADP National Employment Report on Wednesday. Last month the unexpectedly soft reading caused some to revise their estimates lower. The lacklustre 54,000 increase in non-farm payrolls justified the revision. While the ADP number has had some big misses, the last four months have been a good indication of the direction of the government report. The June data on payrolls and the unemployment rate on Friday will solidify perceptions of whether the labor market is experiencing a transitory softening in trend, or if the more downbeat data seen in May is going reflect some more fundamental deterioration in job growth. Forecasters are going to be cautious in their estimates for increases in non-farm payrolls and any downward movement in the unemployment rate. But an above-expectations report could bolster the Fed's economic outlook. At this writing, market estimates are for around up 100,000 for payrolls, and for a 0.1 downtick in the unemployment rate to 9.0%.
The ISM Non-Manufacturing Index for June is due on Wednesday and could mirror the slowing in the manufacturing sector, although expansion continues. Spending on services may see some benefit from lower gasoline prices, but the generally more restrained economic environment will mean moderation in activity. Three major central banks are scheduled to release routine monetary policy announcements this coming week. The Reserve Bank of Australia decision is expected in the overnight hours of Monday-Tuesday. No change in policy is anticipated. The Bank of England Monetary Policy Committee holds a...Read more
