Date: 03 Oct 2019

The U.S equity markets eroded early weekly trading gains on Wednesday, following a string a data misses, ahead of Friday monthly payrolls job number. Yesterday’s ADP private-sector report came in much weaker-than-expected alongside a bearish revision to the August ADP jobs report headline number.

Markets reacted negatively, as the August ADP number was revised to 157,000, which was much lower than initial reading, of 195,000. Data inside the report showed the U.S service sector provided most of the job gains inside the September private-sector report.

The latest U.S data miss comes on-the-heels of the ISM manufacturing report, which showed that the U.S manufacturing sector contracted for a second straight month. The 47.8 number for the September manufacturing report was officially the weakest ISM reading in over a decade, spurring fears that the American economy is slowing.

Data and commentary inside the ISM report provided an insight into what is driving the ongoing downturn in the United States manufacturing sector. The report stated that new orders and demand contracted as concerns over the Sino-U.S trade war continued to cause major disruption to the sector.
U.S equity markets turned lower after the data miss, with S&P 500 and the Dow Jones Industrial Average slumping lower by around two percent on the day. Financial analysts also started to speculate that U.S GDP growth may be under two percent this quarter.

Gold briefly spiked towards the $1,500 level on the ADP headline number miss, while the U.S dollar headed lower against the Japanese yen as traders moved back into perceived safe-haven asset classes.

The data misses set-the-stage for Friday’s payrolls job report, with most economists predicting that 140,000 jobs were added to the economy last month. The U.S unemployment rate is expected to remain at 3.7 percent, while average earnings are forecast to increase by 0.3 percent.

 

Gold Daily Candlestick Chart | Source: ActivTrader

Gold Daily Candlestick Chart | Source: ActivTrader

 

Gold has recently started to recover higher after finding strong technical support from just above the $1,460 level, although bulls are struggling to gain momentum above the $1,500 level. Key medium-term resistance above the $1,500 level is found at the $1,525 and $1,560 levels, while the $1,477 and $1,450 levels provide critical near-term support.

 

Written by Nathan Batchelor, External Analyst, ActivTrades

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