ADP Employment Change for March was 184k, above the 150k estimate. ADP is the precursor view on labor conditions in the U.S. ahead of Friday’s Nonfarm Payrolls. The two data points aren’t always in sync but today’s higher than expected jobs gains, combined with February’s upwards revision, was enough to lift U.S. treasury yields in anticipation of a strong Nonfarm report on Friday. A resilient labor market is a key focus for the Fed in determining its future rate policy, with rising wage pressures keeping inflation above the Fed’s long-term 2% target.
U.S. Treasury yields are higher in the 6mo-30yr tenors with the far-dated tenors up the most, +0.04%. But despite the higher yields, the U.S. dollar is trending lower today, down vs. 9of10 of the G10 pairs. The biggest dollar declines are -0.58% vs. NOK, -0.49% vs. SEK, -0.32% vs. EUR and -0.23% vs. CAD. The dollar’s lone gain is vs. JPY, +0.14% at 151.82 as speculators continue to test the Bank of Japan’s resolve to defend the JPY above 152.00.
NOK, SEK and CAD gains are correlated to higher crude oil prices which are +0.76% today at $85.80/barrel, the 5th consecutive daily gain and the highest level in 6 months. OPEC+ production cuts now have oil on track to try $88.00 initially, followed by resistance at $90.75, and long-term speculators looking at last September’s high at $95.03.
