ADP Payrolls Reaction and Bank of Canada Preview

It’s a big day for economic news. US ADP private sector payrolls came in below expectations (152K vs street 173K) but so far this has had little impact on US index futures which are up 0.2% to 0.5% this morning, building on yesterday’s US market gains.

European markets have been strong today with London up 0.4%, while Paris, Frankfurt and Milan are all up 1.0% to 1.2%. Traders in Europe appear to been getting encouragement from today’s Service PMI reports which have generally been coming in above 50 in expansion territory and in many cases, above expectations. US ISM Service PMI is due at 10:00 am EDT (street 50.8 vs previous 49.4).

Investors in Europe also appear to be anticipating a 0.25% interest rate cut when the European Central Bank meets tomorrow. This speculation may be solidified or eroded by today’s Bank of Canada decision at 9:45 am EDT. Canada’s central bank is widely expected to announce a 0.25% interest rate cut, which could impact trading in the Canadian Dollar, Canadian bonds, and interest rate sensitive stocks, such as Utilities and Real Estate. Also potentially of interest if they do cut is if they hint toward additional cuts or announce any changes to the bank’s Quantitative Tightening program.  

Energy and metal prices have stabilized following two days of selling. US Crude Oil is up 0.5%, while Natural Gas is up 1.5%. In metals action, Copper has stopped going down, while Gold is up 0.3% and Silver is up 0.4%.  

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