EUR/USD Advances as ADP Report Trails Forecasts

EUR/USD rose today as the ADP employment report showed smaller increase than traders have hoped for. Such data suggests that the Federal Reserve may postpone withdrawal of monetary stimulus. Yet it is important to remember that in the past months the ADP report was showing somewhat different picture than nonfarm payrolls, which are more important. The payrolls will be released on Friday.
ADP employment came out at 135k for May, below the forecast of 171k, but above the April’s 113k. (Event A on the chart.)
Nonfarm productivity rose 0.5% in the first quarter of 2013. It was expected to increase at the previous quarter’s rate of 0.7%. (Event B on the chart.)
ISM services PMI was at 53.7% in May. It was not far from the predicted value 53.4% and the previous month’s figure of 53.1%. (Event C on the chart.)
Factory orders grew 1.0% in April, less than analysts have expected (1.6%). Moreover, the March’s change of -4.0% was revised down to -4.9%. (Event C on the chart.)
Crude oil inventories decreased by 6.3 million barrels last week and are above the upper limit of the average range for this time of year. This is compared to the predicted drop of 0.8 million barrels and the previous week’s increase by 3.0 million. Total motor gasoline inventories decreased by 0.4 million barrels and are near the upper limit of the average range. (Event D on the chart.)
Yesterday, a report on US trade balance deficit was released, showing an increase to $40.3 billion in April up from $37.1 billion in March. It was still a better reading than the forecast $41.1 billion. (Not shown on the chart.)

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