Summary:

• ADP employment change: 204k vs 200k exp and 241k prior
• USD pulling back after recent gains
• FOMC this evening at 7PM (BST)

The US labour market continues to go from strength to strength according to the latest data just released, with the ADP showing a 5th consecutive 200k+ reading. The figure itself for April came in at 204k, marginally higher than the 200k expected but below the prior print of 228k (revised lower from 241k). 

 ADP employment change for April dropped a little but remains above the 200k mark. This could be seen as a positive sign ahead of Friday’s NFP release. Source: XTB Macrobond

The ADP release doesn’t typically have a large immediate reaction in the markets with Friday’s NFP far bigger in market-moving terms. However, the ADP does exhibit a fairly strong correlation with the NFP release – albeit with dampened levels of volatility – and therefore could be seen to set the scene for Friday. 

Last month’s NFP showed an unexpectedly large drop, coming in at 103k despite the ADP for March showing 241k (before today’s revision). Analysts are looking for a rebound this time out with the consensus calling for 189k.

 The USD is pulling back a little today, after a strong run higher in recent weeks. Source: xStation

One other potentially major event to look out for before Friday’s NFP is tonight’s Fed rate decision. The bank are not expected to change rates or announce anything major – with this belief largely due to the absence of a press conference following the decision – but as always, this event does have the potential for a surprise. A closer look at the announcement and what it could entail can be found here.