ADP Failure, Bank of England and Gold Records

6 Agu 2020

The main event of yesterday was the frankly disastrous data on employment in the US from ADP. With the forecast of 1.2-1.5 mln new jobs and the previous value of 4.3 mln, in fact + 167K came out. This evidences in favor of the deepest depression in the US labor market and its inability to recover quickly. It is a very alarming signal ahead of the publication of official statistics on the labor market on Friday.

This failure looks especially challenging against the background of the US PMIs, which go above 50 and show an increase in economic activity. Such situation can be explained by the fact that with its weekly payments of $ 600, the US government completely deprived most low-paid workers of the incentive to look for new jobs or return to old ones.

So, it is quite interesting to see the new stimulus package. Recall that the Republicans want to reduce the amount of payments from $ 600 to $ 200, while the Democrats want to leave it at $ 600. A compromise is expected by the end of the week and it seems to be the dollar's last hope for at least a local correction. Otherwise everything looks extremely unfavorable for the American currency.
Among other events, it is worth noting new historical highs in gold. We have already discussed the reasons for this growth before. As for the prospects, in the current reality, absolutely everything contributes to the further growth of gold.

Another piece of news yesterday was the agreement between the United States and China to meet in mid-August to discuss the results of the first phase of the trade agreement and other contradictions. Negotiations can end very badly, up to the breaking of the first phase agreement.

Today the main event of will be the announcement of the decision of the Bank of England on the parameters of monetary policy. Analysts and experts are not expecting any changes or surprises. Accordingly, the pound is unlikely to receive a positive injection.