ADP Research Institute today publishes data on private sector employment in the US for October. Economists expect +69 thousand jobs after +90 thousand a month earlier.
ADP is the largest payroll processor in the US. It calculates the change in the number of private sector employees based on its client base. NFP is the official employment report from the US Department of Labor.
For a trader, this is the first labor market figure this week. Next comes NFP on Friday, and it is more important.
When it comes out and what it shows
Publication at 16:15 MSK. Traders read the report as a hint toward the official data.
- 16:15 MSK - release time of the October report.
- +69 thousand - consensus for new jobs.
- +90 thousand - actual figure for September.
- Two days - the usual gap between ADP and NFP; the series generally correlate, but in individual months they diverge strongly.
What the labor market is saying now
Hiring has slowed. September NFP came in at just +29 thousand after +133 thousand in August.
At the same time, the economy as a whole is not collapsing:
- +3.4% - preliminary estimate of third-quarter GDP on an annualized basis.
- Above forecast - the ISM manufacturing business activity index on Monday.
- ISM services - comes out today, a few hours after ADP; a slight slowdown is expected there, but growth is expected to persist.
Why the reaction may be muted
December is already priced in. CME FedWatch futures estimate the probability of a 0.25-point Fed rate move in December at 75%. A single ADP figure is unlikely to shift that picture.
Market attention is currently split between the US midterm elections and NFP on November 6. Both dates are in the economic calendar.
Francesco Pesole, FX strategist at ING, believes a convincing Democratic victory is moderately negative for the dollar.
What to watch and what's next
The DXY dollar index is holding in the lower part of its range since the start of October.
- 101.50 - support, the lows of October 22 and November 2.
- 101.00-100.90 - the zone that opens below support.
- 102.00 - first resistance, the October 30 high.
- 102.50 - next resistance, above which sits the 18-month high of 102.95 from mid-October.
Two scenarios are possible next:
- Scenario A: the figure is close to 69 thousand. A brief impulse in dollar pairs and gold, then the market switches to ISM and waits for Friday.
- Scenario B: a strong deviation from forecast. A sharp widening of spreads in the first minutes and a recalculation of NFP expectations, with increased volatility until the end of the US session.
For such sessions it makes sense to pick a challenge to suit your trading style.
Have you watched how a move plays out on data?
Three days of statistics in a row means three windows where the market moves fast. The size of the move is predictable, the direction is not. Plenty of people can already trade such windows; the question is always different: thirty points on DXY on a personal two thousand dollars is dinner, on a hundred-thousand-dollar account it is the result of the week. In prop trading, the company provides the capital to trade: you pass the evaluation, keep to risk limits and take your share of the profit. The mechanics are worth understanding before Friday, not after.