Economic data will hog the headlines on Thursday, with an advance report on US employment set to drive the markets at the top of the North American trading session.
Action begins at 08:15 GMT with a steady stream of European PMI reports courtesy of IHS Markit. The data will cover the service economies of Spain, Italy, France, Germany and the broader euro area. The Eurozone Composite PMI, which tracks the region’s manufacturing and service economies, is forecast to come in at a strong 58 in December.
Payrolls processor ADP Inc. will report on private sector payrolls at 13:15 GMT. The monthly report is expected to show the creation of 190,000 private sector jobs during the holiday-filled month of December, following an identical gain in November. The ADP report is widely considered an accurate precursor of the upcoming nonfarm payrolls report issued by the Labor Department.
Just 15 minutes later, Labor economists will report on initial jobless claims for the week ended 30 December. The number of Americans filing for first-time unemployment benefits is forecast to fall to 240,000 last week from 245,000.
IHS Markit will issue headline PMI data at 14:45 GMT, including reports on the US services sector and broader economy. The PMI Composite index is projected to rise to 53.7 in December from 53.0 the month before.
Earlier in the day, Markit said China’s services industry gathered pace in December, growing at the fastest pace for a year. The services business activity index jumped 2 points to 53.9 at the end of the year, outpacing forecasts calling for a slight drop.
On the monetary policy front, St. Louis Federal Reserve President James Bullard will deliver a speech at 18:30 GMT. On Wednesday, the minutes of the December FOMC policy meeting revealed that most officials agreed that gradual rate hikes would be warranted for 2018.
The Australian dollar, which is highly sensitive to developments in China, was little changed on Thursday. The AUD/USD exchange rate hovered around 0.7833, as the pair continued to find support near 0.7800. A weaker US currency received some support on Wednesday following a mostly hawkish reading of the FOMC minutes.
After a strong start to the year, the euro backtracked on Wednesday, with the EUR/USD exchange rate consolidating around 1.2020. The technical outlook remains bullish, with the pair eyeing December settlement highs near 1.2080. On the flipside, the pair is supported at the psychological 1.2000 region.
After a sharp rally, cabled pulled back sharply on Thursday, with prices consolidating in the 1.3520 region. The GBP/USD currency pair briefly traded above 1.3600 on Tuesday as the dollar fell to multi-month lows. With the December high breached, investors can expect further upside momentum in the near term.