ADP numbers don’t shock
Overnight, US ADP National Employment printed largely around the mark at 135k vs an estimated 140k. Markets weren’t sensitive to the print though with the upcoming US ISM Non-Manufacturing PMI and NFPs generally more important for implications about weakness in the broader economy. Leading into Europe/New York crossover, USDJPY slumped to a 60pip fall (-0.6%) with bears testing 107 off the back of renewed global growth concerns. USDJPY now consolidates around 107.1-2 at time of writing but could go lower if it breaks 106.95-99. Retain USDJPY bearish bias.
PMI and Trade data up ahead for locals
Local traders see a couple of data points in early Asia. They’ll serve as important yardsticks into the domestic Aussie economy but expect them to draw mild reactions given focus shifts to the highly anticipated US Non-manufacturing PMI and NFPs print, out from tonight.
First up we see Aussie September Service PMIs due at 9.00am AEST, a measure issued by CBA. The print has consensus at 52.5 which serves as an expansionary sign for the services dominated Australian economy. Notably though, in a week of sluggish PMIs in which the significant miss in US ISM Mfg on Tuesday originated the week’s risk-off flows, it could be the case that traders pay a little more attention to this print than usually do. A contractionary print <50 could further fuel the narrative of a global slowdown.
Later onwards, AUD participants see September Trade Balance due at 11.30am AEST with Reuters consensus set for a current account surplus at 6bn. Since early 2018, Australia’s trade balance has climbed steadily driven by a weaker Aussie Dollar. A weaker AUD makes AUD denominated products cheaper and therefore drives stronger exports. Given the Aussie Dollar sits around multi-year lows, expect Trade Balance to remain elevated in positive territory showing a strong appetite for Aussie goods and services.
Elsewhere, Japanese PMI surveys for the services industry also see light of day at 10.30am AEST. While no forecast is given, the data point has managed to stay elevated above 50 since its genesis in late 2016. I don’t expect a reaction given prevailing risk aversion and more pressing data prints.
Having bounced twice from August lows since the RBA’s 25bps rate cut and dovish outlook, AUDUSD could stay range bound between 0.672 and 0.667 leading into US PMIs and NFPs.
ASX Futures down over 200pts overnight
It was a slippery slide for most benchmark indices as equities carried over the momentum from Tuesday’s weak US ISM Mfg print which amplified concerns around slowing growth. Downside support levels to watch for ASX 200 cash at 6623, 6607 and 6596. Markets look to see if ASX Dec Futures can meaningfully breach 6500.
