The European session doesn't really have market-moving events on the agenda as we will just get the final readings on the Services PMIs and the Eurozone PPI report. The market generally moves the most on fresh news and especially on information that changes the future expectations.
Things will get more interesting in the American session as we have the US ADP, the BoC Policy Decision and the US ISM Services PMI. The ADP isn't a big market mover but the market generally reacts to it nonetheless. The data is a poor predictor of the NFP data but it might complement the overall jobs picture.
13:45 GMT/09:45 ET - BoC Policy Decision
The BoC is expected to cut rates from 5.00% to 4.75%. The market-based probability jumped to 80% chance following the soft Canadian GDP data last week. The expectations were already leaning toward a rate cut after the last Canadian CPI report where the BoC’s preferred underlying inflation measures surprised to the downside and finally fell inside the 1-3% target band. The central bank will likely refrain from pre-committing to another rate cut and state that it will be dependent on the data.
14:00 GMT/10:00 ET - US ISM Services PMI
The US ISM Services PMI is expected at 50.5 vs. 49.4 prior. The S&P Global PMIs surprised to the upside with the Services measure in particular beating expectations by a big margin. Overall, the report showed that business activity expanded to a two-year high. The details also showed that “both input costs and output prices rose at faster rates, with manufacturing having taken over as the main source of price growth over the past two months."
However, “the overall rate of selling price inflation remained below the average seen over the past year”. The focus will likely be on the employment sub-index ahead of the NFP report but the data we got until now suggest that the US economy is still doing pretty well, and the labour market remains resilient.
