The US dollar was trading in the red this morning, shredding away previous gains after the release of the Automatic Data Processing Inc. (ADP) employment data. The data showed that private payrolls increased by 103,000 in the US during November, which was below market expectations and a 9.7 % decrease from the previous month’s reported figure of 113,000.

These ADP numbers came two days before the more largely watched non-farm payrolls data which will be released by the United States Department of Labor on Friday. After the ADP data release, the US Trade Balance data for October was released showing that the goods and services trade balance widened from a $61.5 billion deficit to a $64.3 billion deficit.

EUR/USD – Growth turned negative in Q3 when compared to Q2, highlighting the worsening trajectory of the European economy. However, the year-on-year comparison managed to avoid a contraction but did get revised lower from an anaemic 0.1% gain to end flat at 0%. On the data front, new German production orders dropped 3.7% in October against market expectations for a relatively flat performance. These figures were followed by the region’s services Purchasing Manager’s Index (PMI) which showed shrinking activity for the fourth consecutive month in November.

GBP/USD – The Pound remains depressed but is attempting to find support this morning after housing prices surprised to the upside MoM (see economic calendar below). FX markets are relatively muted with little high impact economic data scheduled ahead of tomorrow’s NFP report. After yesterday’s weak UK construction PMI figures and minimal impact from BoE Governor Andrew Bailey, focus now shifts to the US for guidance.

USD/CAD – The Bank of Canada (BoC) decided to maintain its key interest rate at 5% this morning for the third consecutive decision. This was widely expected by the markets. According to the BoC, the latest data “suggest the economy is no longer in excess demand.” The not so hawkish tone of this BoC statement indicated that there may be no rate hikes ahead. Oil prices continued to look bearish with West Texas Intermediate (WTI) oil trading near the 70.90 levels with expectations to drop lower as US supply hits the export market.

AUD/USD - Earlier on Thursday, China’s trade balance data failed to offset concerns about the financial stability of the Asian main economy triggered by Moody’s warning. Beyond that, Australian trade data has failed to boost investors' optimism. Exports nudged up 0.4% with Exports dropping 1.9% and the trade surplus increasing well below expectations. The weak domestic data and reactivated concerns about China’s economy are increasing the chances that the RBA will have to cut rates in 20224 creating headwinds for the Aussie.