Weak ADP Payrolls Renew Bets On Fed Cuts

The private payrolls report from ADP/Moody’s Analytics showed another weak month. Private hiring rose by just 102,000 jobs in June. This was below the estimates of 140,000.

Data for May was revised higher from 27,000 to 41,000. Meanwhile, the ISM’s non-manufacturing PMI fell from 56.9 in May to 55.1 in June. The data renewed hopes that the Fed will respond with a rate cut as early as July. The US markets are closed today.

Euro Stays Subdued on Services PMI

The euro was trading flat on Wednesday although the bearish momentum was evident. The June services PMI report published by Markit showed a slightly better than expected headline print. Services activity rose to 53.6, beating estimates of 53.4. The data did not help the euro which remained biased to the downside.

EURUSD Could Decline to 1.1250

The current bearish momentum could keep the EURUSD biased to test the 1.1250 level of support once again. However, we expect price to remain flat in the short term, in the run-up to Friday’s payrolls report. There is scope for the common currency to potentially post a reversal off the current lows above 1.1250 handle on a weaker payrolls report.

Sterling Slips as Services Sector Falls Closer to 50

The UK’s monthly services activity saw another weak month, tracking the slowdown across the manufacturing and construction sectors. Data from Markit saw the UK’s services sector easing to 50.2 in June. This was down from 51.0 estimates and the same level in May. The services activity caps a weak month of June which saw all three sectors showing a slowdown in the economy.

Can the GBPUSD Reverse Losses?

The currency pair has been posting solid declines for three consecutive days. Price action is now close to June 16, 17^th lows of 1.2532. If this level is breached, then the potential inverse head and shoulders pattern is likely to become invalid. GBPUSD will need to post a daily close above 1.2600 in order to confirm any potential upside move.

Gold Trades Flat on Risk Off Sentiment

After paring losses, gold prices closed Wednesday on a somewhat flat note. Investors sought risk assets which saw the equities pushing to fresh all-time highs. Expectations of a Fed rate cut led to increased risk appetite. However, in the short term, gold is likely to remain in favor amid easy monetary policy.

Is Gold Due to Correct Lower?

The recent price action in gold saw a retest to the previous six-year high before closing somewhat bearish. The Stochastics oscillator on the daily chart signals a lower high, indicating a possible move to the downside. Price will need to close below 1404.00 in order to confirm the downside bias. The next downside target is seen at 1354.00.