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All eyes are beginning to focus solely upon Friday's Employment Situation Report

06 May 2015 Written by 
This morning on the ADP employment report. The ADP  is "Fingers are on the pulse
 of the economy." as goes the ADP number so too shall go the Labor Department's 
figures, within reason. They rise and fall together, but if not in perfect tandem.
Last month the ADP reported 189,000 new jobs were created and this month's number
is, by consensus, expected to be a bit better. Let's call it +202 thousand and today's
number to be released at 8:30.
Also at 8:30 the government will release its figures on productivity and Labor Costs
for the 1 st quarter, with the consensus looking for non-farm productivity to have
fallen a bit... perhaps -2.0%... compared to the -2.2% figure for the 4th quarter of last
year. These are not good numbers!
At the same time... and rather surprisingly... unit labor costs are expected to have risen by 4.6%, up from +4.1%. THE US DOLLAR IS Weak "ACROSS THE BOARD" this morning, falling quite sharply relative to all currencies ,the dollar's weakness is pretty much the result of recent less-than-stellar economic activity and bad data points, noting yesterday's much worse-than-expected increase in the US trade deficit as reported by the government. The deficit was reported as -$51.4 billion and this was not only far above expectations and it was far above even the most bearish figures by anyone on The Street. The highest estimate we saw was for a deficit of $46 billion, so this was truly a surprising number. The worst aspects of this huge increase was that the US' trade deficit in oil was much smaller than had been forecast,so the entire increase was predicated upon other areas of the economy, requiring everyone everywhere to take down their estimates of 1st quarter GDP accordingly . Hence, where the government had only just forecast 1 st quarter GDP to be +0.5%, now we have to estimate this to have become -0.5%... or even worse. If we are reading the trade data correctly, the USA was in recession during the 1 st quarter and that shall and is weighing upon the dollar.. KIWI Dollar the "Kiwi" dollar took a hit in the overnight following a report from the government that although economic activity remains stable, wages are under pressure. Wages are closely followed by the RBNZ, and weak wage growth... or in this case almost non-existent wage growth... has raised the spectre of further monetary ease. Making matters worse for the Kiwi was the other report that global dairy prices are under pressure. Given New Zealand's preeminence as a dairy exporter this was Bad news Aussie This is a classic case of" Bad News and Good Action" which took everyone by surprise , the stregnth of the Aussie dollar light of the fact that the Reserve Bank moved to cut its base rate by 25 basis points yesterday .A rate cut would normally have the currency weakening, but this time the market has come to believe that this shall be the last of the RBA's easier monetary actions and that tighter policies are the future. There is a serious short covering rally in the Aussie






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