Something for Everyone But More for the Bears

It's getting tougher to find signs the US economy is accelerating toward a 3% growth pace. The Australian dollar was the top performer while the loonie lagged after the BOC brushed off higher inflation numbers. Up next is Aussie trade balance, China's services PMI and BOJ comments. A new set of EURUSD Premium Insights wil be issued tonight ahead of Thursday's ECB press conference.

A busy US data calendar had something for everyone but it was more likely to leave the skeptics feeling more skeptical and the optimists feeling uncomfortable.

ADP employment grew just 179K in May compared to 210K expected. GDP estimates were also trimmed after the April trade deficit rose to $47.2B versus $40.8B expected along with a $4B downward revision to the March figure.

Those numbers put a sour tone into US dollar trading and USD/JPY sunk to 102.43 from 102.63 but hope was renewed by the next release and the dollar climbed all the way back. The ISM non-manufacturing index rose to 56.3 versus 55.5 expected. It's seen as a better leading indicator than the other data points and the market was also apprehensive to pick sides ahead of the ECB and NFP.

The other main event on the day was the BOC decision. Some traders were looking for a slightly more hawkish slant after inflation rose to 2.0% from 1.5% in April but Poloz brushed it off as a product of temporary factors and retained a slightly dovish bias. USD/CAD moved up 30 pips but gave most of it back to finish at 1.0938.

Looking ahead the focus shifts to Australian April trade data at 0030 GMT. The disappointment in US data weighed on USD Wed and a miss of the $510M surplus expected will do the same to AUD. At the same time BOJ member Sato delivers a speech. Look for comments on the inflation outlook.

At 0045 GMT the May HSBC China services PMI is due. There is no consensus estimate because it's a less-followed indicator but it's slowly gaining clout and a small improvement on the 51.4 reading from April would affirm positive sentiment about China.