- The Dollar picks up, supported by strong US employment and manufacturing data.
- Fed Powell reaffirmed his “wait-and-see” stance at a central bankers’ summit in Portugal.
- Investors expect the US ADP to confirm that the US labour market remains resilient.
The US Dollar is trading with a mild positive tone on Wednesday, supported by strong US jobs data and a moderate improvement in manufacturing activity that eases pressure on the Fed to cut interest rates.
The US Dollar Index, which measures the value of the Greenback against the world’s most traded currencies, bounced up from three-year lows, at 95.90 on Tuesday, and is trying to return above 96.50 at the time of writing.
A firm Powell and strong jobs data support the USD
On Tuesday, Fed Powell maintained that the bank needs to know more about the potential impact of Trump’s tariffs on inflation before cutting interest rates. Somewhat later, a larger-than-expected increase in US job openings highlighted a resilient labour market and endorsed Powell’s view.
Also on Tuesday, the US ISM Manufacturing Index improved beyond expectations with the output subindex returning to expansionary levels after having contracted for the last three months.
The focus today is on the US ADP Employment Change, which is expected to show a significant increase in new jobs and might improve the investor’s hopes for Thursday’s US Nonfarm Payrolls report. Such a scenario might help the USD to extend its recovery.
Economic Indicator
ADP Employment Change
The ADP Employment Change is a gauge of employment in the private sector released by the largest payroll processor in the US, Automatic Data Processing Inc. It measures the change in the number of people privately employed in the US. Generally speaking, a rise in the indicator has positive implications for consumer spending and is stimulative of economic growth. So a high reading is traditionally seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Next release: Wed Jul 02, 2025 12:15
Frequency: Monthly
Consensus: 95K
Previous: 37K
Source: ADP Research Institute
Traders often consider employment figures from ADP, America’s largest payrolls provider, report as the harbinger of the Bureau of Labor Statistics release on Nonfarm Payrolls (usually published two days later), because of the correlation between the two. The overlaying of both series is quite high, but on individual months, the discrepancy can be substantial. Another reason FX traders follow this report is the same as with the NFP – a persistent vigorous growth in employment figures increases inflationary pressures, and with it, the likelihood that the Fed will raise interest rates. Actual figures beating consensus tend to be USD bullish.
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