Summary:

  • ADP employment change 241k vs 208k exp and 246k prior
  • USD edging higher on the day
  • ISM at 3pm (BST) next on the calendar

The latest ADP release has shown a better than expected reading and increased expectations ahead of Friday’s NFP. The non-farm employment change for March came in above expectations of a 208k print at 241k and makes it four consecutive 200k+ prints now for this indicator. Furthermore the last 4 reading have all beaten forecasts, as have 6 of the last 8, and this provides further evidence of a strong US labour market. The prior reading of 235k was also revised higher for good measure and now stands at 246k. 

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 The ADP and NFP have had a fairly good positive correlation and today’s number could be seen as a promising sign ahead of Friday’s NFP release. Source: xStation

 Whilst there is little doubting that today’s number was strong, it has not had too big an impact on the markets with the US dollar already trading higher on the day. The biggest gains (if we ignore cryptos) can be found against emerging markets currencies with ZAR (-0.8%) TRY (-0.6%) and MXN (-0.5%) seeing the biggest losses against the Buck.

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 The USD is trading a little higher today, with not much seen by the way of a reaction to the data release. Source: xStation

One USD pair to keep an eye on for the remainder of the week may be the GBPUSD with not only US data but also the UK services PMI due out (Thursday 9:30AM BST). The cross has drifted towards the bottom of its recent range today but despite the ADP beat the support at 1.4010 has been defended for now. 1.4090 is a possible resistance level to watch to the upside and a break outside this range (1.4010-1.4090) could well lead to a sustained move in that direction. 

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 The GBPUSD pair has respected support at 1.4010 and remains in its recent range. Source: xStation

Looking ahead there’s the ISM non-manufacturing PMI due out at 3PM (BST) before all eyes look to the NFP report on Friday at 1:30PM (BST). The headline reading is seen by many as being strong once more but traders may choose to focus more on wage growth as this component has usurped the number of jobs added in terms of importance in recent months.