Contents
The Automatic Data Processing (ADP) Research Institute is set to release its US ADP Employment data for February on Wednesday. This report, which estimates private-sector job growth, often serves as a precursor to the official jobs report from the Bureau of Labor Statistics (BLS), which includes Nonfarm Payrolls (NFP) data.
Market Attention on US ADP Employment
While the US ADP Employment and NFP figures don’t always perfectly correlate, market participants closely watch the ADP data as part of a series of employment-related releases leading up to the NFP report.
January ADP Employment and Market Response
In January, the ADP report indicated private-sector employment growth of 107,000, falling short of the expected 145,000. However, the subsequent NFP data revealed a significant increase of 353,000, exceeding analysts’ estimates of 180,000. This positive surprise from the NFP report contributed to the delay in the Federal Reserve’s policy pivot and bolstered the US Dollar against other currencies in early February.
US ADP Employment Report Release and Potential Impact on EUR/USD
- Release Date: Wednesday, March 6, 2024
- Market Expectation: 150,000 new jobs added in the private sector
Impact Scenarios
- Below 100,000: This could signal a weakening labor market, potentially hindering the US Dollar’s demand.
- 150,000 to 200,000: This range could provide immediate support for the US Dollar.
- Near Market Consensus: In this case, wage inflation figures might hold greater sway over the US Dollar’s value. An increase of 5.5% or more in annual pay could benefit the US Dollar.
Market Caution and Short-Lived Reaction
Given the upcoming testimony by Fed Chair Jerome Powell and the official jobs report on Friday, investors might be cautious about taking significant positions solely based on the US ADP Employment data. Therefore, the market reaction could be temporary.
Technical Outlook for EUR/USD
- The 100-day and 200-day Simple Moving Averages (SMAs) form a crucial support level for the EUR/USD at 1.0830.
- If this support holds, technical buyers might stay engaged.
- On the upside, potential resistance exists at 1.0950 (Fibonacci 23.6% retracement of the October-December uptrend) and 1.1000 (psychological level and static level).
- A break below 1.0830, with the level turning into resistance, could expose potential support at 1.0800 (Fibonacci 50% retracement) before 1.0700 (Fibonacci 61.8% retracement).
