The ADP Non-Farm Employment Change measures the change in the number of employed people in the US, excluding workers in the farming industry. A reading which is higher than the market forecast is bullish for the dollar.
Here are the details and 5 possible outcomes for EUR/USD.
Published on Wednesday at 14:00 GMT.
Indicator Background
Job creation is one of the most important leading indicators of overall economic activity. The publication of the ADP release precedes the official Non-Farm Employment Change, which is highly anticipated by the markets and is one of the most important economic indicators.
The ADP release dropped sharply last month, coming in at 217 thousand. However, this was enough to beat the estimate of 214 thousand. The downward trend is expected to continue in the upcoming release, with the estimate standing at 211 thousand.
Sentiment and Levels
A month after the ECB announced a historic negative deposit rate and other monetary steps, the euro is still too strong and this is weighing on inflation and potential growth. While the ECB is not likely to introduce anything new, we could see Draghi try to talk down the euro. In the US, the “spring bounce” in the economy could now result in a 5th month of +200K job gains, strengthening the US dollar, which managed to weather the dismal Q1 GDP release. So, the sentiment is bearish on EUR/USD towards this release.
Technical levels from top to bottom: 1.3785, 1.3740, 1.370, 1.3677, 1.3650 and 1.3585.
5 Scenarios
- Within expectations: 205K to 217K: In this scenario, EUR/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
- Above expectations: 218K to 223K: A reading above expectations would signal economic expansion, and could push the pair below one support level.
- Well above expectations: Above 223K: A sharp rise in employment numbers could hit EUR/USD and a second support level could be broken.
- Below expectations: 199K to 204K: A weak reading could pull the pair upwards, with one resistance level at risk.
- Well below expectations: Below 199K: Such a scenario would be bearish for the dollar, and EUR/USD could break a second resistance level.
For more on the euro, see the EUR/USD.