ADP Data Shakes Markets
ADP Employment Report in Focus as Fed Rate Cut Bets Intensify
This week, all eyes are on U.S. labor data as the ADP Employment Change report for August takes center stage. Scheduled for release at 12:15 GMT on Thursday, the report—published by Automatic Data Processing Inc., the largest payroll processor in the U.S.—will offer key insights into private sector hiring trends and may shape expectations for the Federal Reserve’s next policy move.
Market Expectations and Dollar Reaction Economists forecast a gain of 68,000 new private payrolls in August, down from 104,000 in July. The U.S. Dollar Index (DXY), which tracks the greenback against a basket of major currencies, remains near four-week lows following July’s disappointing Nonfarm Payrolls (NFP) report.
Fed Policy at a Crossroads The ADP report arrives just ahead of the Federal Reserve’s September 16–17 meeting, making it a critical input for policymakers. July’s weak job numbers, coupled with downward revisions to previous months, rattled markets and forced the Fed to reconsider its hawkish stance.
Recent inflation data has eased concerns about price pressures, and Fed Chair Jerome Powell has acknowledged the temporary impact of trade tariffs. This shift in tone has strengthened the case for a rate cut in September.
Rate Cut Probabilities Rise According to CME Group’s Fed Watch Tool, markets are pricing in a nearly 90% chance of a 25-basis-point rate cut this month, with expectations for another cut before year-end. A weaker-than-expected ADP reading could accelerate the Fed’s easing cycle and even raise the possibility of a 50-basis-point cut.
Conversely, a stronger report may ease recession fears but is unlikely to derail expectations for Fed easing unless confirmed by Friday’s NFP data.
EUR/USD Technical Outlook Guillermo Alcala, FX analyst at FXStreet, notes that EUR/USD remains range-bound within a 150-pip horizontal channel since early August.
He identifies resistance near 1.1740: “The confluence of the descending trendline around 1.1730 and the August highs at 1.1740 presents a key challenge for bulls.”
On the downside, Alcala highlights support above 1.1575: “Euro bears will likely encounter strong support between 1.1575 and 1.1590, with further support at the 50% Fibonacci retracement level at 1.1560 and the August 5 low near 1.1530.”