Summary:
- ADP employment change 219k vs 186k exp
- USD edging higher on the day
- Traders await ISM manufacturing (3PM) and Fed rate decision (7PM)
Expectations for this Friday’s NFP report have been pushed a little higher after the most recent private payrolls came in better than forecast. The ADP employment change showed 219k jobs had been added in the month of July, comfortably higher than the 186k expected. The prior reading was revised higher by 4k to 181k for good measure, with the beat ending a run of consecutive disappointments for this indicator. The data was the best since March and given its historical correlation with the more widely viewed NFP, it could be seen to suggest that we may be in for an upside beat come Friday.
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The rise seen in this afternoon’s ADP release could be seen to bode well for Friday’s NFP report. Source: XTB Macrobond
The reaction in the markets to the release were fairly muted, with the USD remaining slightly higher on the day but not really making any further gains. Only the GBP, PLN and EUR are stronger than the greenback on the day, with the largest USD gains seen against the BRL. Having said that, it should be noted that the moves are pretty small with the vast majority of pairs only moving within 0.2% of the USD so far today.
USD is edging higher today, but the gains are measured. The biggest gainer is USDBRL, while only the GBP, PLN and EUR are stronger than the buck at the time of writing. Source: xStation
Looking ahead there are a couple of potentially key events for the US dollar before the day is out with the ISM manufacturing PMI scheduled for 3PM and the Fed rate decision at 7PM. Expectations are pretty high for the ISM release, with a consensus forecast of 59.4. The Fed rate decision is widely seen as announcing no change to the Fed funds rate, but as always this has the potential to have a significant impact on the Buck.
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