Dollar Reaction to ADP Employment Report a Must Watch

Dollar Reaction to ADP Employment Report a Must Watch

4 May 2016, 14:54
Roberto Jacobs

Dollar Reaction to ADP Employment Report a Must Watch

ADP employment data to be released at 12:15 GMT is today’s most vital dockets from US to be watched by market participants. This report is of a time when dust of volatility has somewhat settled and economic dockets remained relatively strong.

What is ADP employment?

  • The report is a measure of non-farm private sector employment which is obtained by utilizing an anonymous subset of roughly 400,000 U.S. businesses which are clients of ADP.
  • This data is a very good measure of employment strength of the economy and a good precursor of Nonfarm payroll data.

Previous performance –

  • Non-farm private sector employment grew at 200,000 in March. In February payroll grew by 205,000.
  • Small business sector hiring at 86,000.
  • Employment in franchise increased by 22,000.
  • 3,000 jobs were added in manufacturing sector.
  • 9,000 jobs were added in goods producing sector.
  • Construction sector added 17,000 on payroll.
  • 14,000 jobs were added in financial activities.
  • Services sector remains job provider. Payroll added 191,000 people in March.

Expectation Today –

  • Headline number is expected to drop to 196,000 as per median estimate.

Market Impact –

  • Any gain above 200,000 will be considered to be very good and Dollar might gain some support, however impact of stronger report unlikely to be much, especially with NFP to be released on Friday.
  • Data below 150,000 likely to give rise to concerns regarding US economic prowess and might lead to risk aversion as well as slide in Dollar.
  • Odds of rate hike may also improve with better data

Whichever way, it will be vital to see Dollar’s reaction to good or bad report. Contrarian move will either reveal further strength or weakness.

Dollar index is currently trading flat for the day at 93.

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