ADP data for September deepens concerns about the US labor market

The September ADP report indicating a 32-job decline in private sector employment reinforces the narrative of a significant weakening of the US labor market. Although these data often differ from official BLS statistics and their methodology is sometimes criticized, the market treats them as a pre-emptive signal before the publication of government reportsOf particular concern are the broad declines in key sectors—from hospitality and leisure, through finance, to manufacturing and construction—suggesting that the weakness is not sector-specific but more general in nature.

From the point of view of financial markets, such data favors the scenario of further easing of monetary policy by the FedTreasury bond yields have already fallen, with the dollar index falling to 97.60 points. EUR / USD It currently trades at 1.1755. Meanwhile, the SP500 is at a historic high of 6734 points due to expectations of further monetary easing from the Fed. The situation is clearly ambivalent for the dollar. On the one hand, weaker labor market data and falling bond yields are limiting the attractiveness of the US currency, which could lead to its weakening against its main competitors.

On the other hand, uncertainty about the reliability of the ADP data and the lack of official BLS statistics may prevent investors from aggressively selling the dollar, especially since it remains a safe-haven currency during periods of growing economic concerns. In summary, the ADP release increases pressure on the Fed and supports a short-term sell-off in indices and the dollar, but the future direction of markets will depend on whether government data—whenever released—confirms the picture of a genuine slowdown in the US labor market.

Source: Krzysztof Kamiński, OANDA TMS Brokers