💲EURUSD tests 1.08 ahead of ADP

Today at 1:15 PM GMT, we will find out about the employment change in the United States for November in the private sector, according to ADP. This is an indication of how the official government NFP report on Friday might turn out, although, of course, in recent months, the correlation between these two reports has been "varied." What will today's report show? Is it important for the Fed? How will the markets react?

Moderate expectations:

• The ADP report for November is expected to show an employment increase of 130,000, compared to the report at 113,000 in October.
• Meanwhile, the NFP report for October showed a change in private employment at 99,000, but including the government sector, the employment change was 150,000.
• For Friday's report, expectations indicate an employment increase of 160,000 in the private sector and 185,000 including the government sector.
• However, seasonality suggests a possible slightly worse reading than the previous one.

Source: ADP for several months indicated excessive employment growth, but in October, the difference between the reports was very small. Source: Bloomberg Finance LP, XTB

Looking at expectations among economists, these indicate a still quite significant increase in employment in the United States, which shows a strong job market, though not as heated as in 2022 or the first part of this year. Unemployment benefit claims remain low, and the employment sub-index from the ISM report for services rose to 50.7 points from 50.2 points. On the other hand, yesterday we could see a clear decline in JOLTS, i.e., newly opened job positions. Nevertheless, this report did not show weakness, only a normalization of the current situation. Only a JOLTS decline to around 6 million could indicate excessive cooling of the job market.

JOLTS continues to fall, although current levels are consistent with the trend from 2010-2018. Only a decline to around 6 million could lead to a stronger slowdown or even a halt in new employment in the USA. Source: Bloomberg Finance LP, XTB

Before the ADP publication, the dollar index holds back its growth and remains in consolidation. On EURUSD, we observe an attempt to maintain the 1.08 level. If the employment increase turns out to be higher than market expectations, it could be a catalyst for the continuation of declines on EURUSD. Otherwise, weaker data will confirm stabilization in the job market in line with Fed expectations. Certainly, the market will be looking for confirmation of the approaching pivot, and if such confirmation is received, it could be another growth impulse on the EURUSD pair.

Source xStation 5