ADP’s jobs report due this week is drawing particular attention from economic analysts. Although its impact on financial markets remains limited, it provides an interesting perspective on the health of the US private sector.
The ADP report: an early overview of employment
The American private sector would have generated 139,000 new positions in Decemberaccording to estimates. Published two days before the official Non-Farm Payrolls (NFP) report, the ADP document is often seen as a leading indicator. However, its link with official figures remains uncertain and varies depending on the period.
Employment: a pillar of Fed policy
Employment trends directly influence the Federal Reserve’s strategies. Responsible for maintaining price stability and promoting maximum employment, the Fed carefully observes labor market data.
After the inflationary pressures observed during 2024, employment has become a central indicator for adjusting key rates. In September, the Fed initiated a series of cuts accumulating 100 basis points by the end of December, while signaling a slowdown in this pace in 2025.
The economic outlook under the Trump presidency
The election of Donald Trump to the White House and the Republican takeover of Congress have reignited fears of increased inflation. These concerns have reinforced the Fed’s prudence in its monetary decisions.
The upcoming ADP report, like the NFP report due Friday, seems unlikely to change expectations. The chances of a further rate cut remain low before June, according to current forecasts.
The impact on the US dollar
The Dollar Index (DXY) has recently corrected its overbought levels, stabilizing around 108,00 after peaking at 109.56 in early January. An ADP report in line with expectations would have a limited effect on the index, while a higher result could revive the greenback’s strength.
Valeria Bednarikanalyst at FXStreet, notes that the DXY’s uptrend is based on solid technical supports. A possible decline in the DXY could find a point of support at 107,74while a rebound beyond 108,55 would re-expose the multi-year summit.
The role of the dollar and the Fed
What is the United States dollar (USD)?
The US dollar is not only the currency of the United States, but also a global benchmark. Used in 88% of global transactionsit remains a pillar of the international financial system since the Bretton Woods agreement.
How does the Fed influence the value of the dollar?
The Fed’s decisions on interest rates, aimed at controlling inflation or stimulating employment, directly modify the value of the dollar. A rise in rates strengthens the greenback, while a fall tends to weaken it.
Economic indicators: focus on non-agricultural wages
The NFP report, due Friday, will provide a comprehensive analysis of U.S. employment. Intended to show 160,000 job creationsthis indicator is closely watched by currency traders to anticipate future directions from the Fed.
Next meeting: January 10, 2025 at 1:30 p.m..
