The ADP report for private sector jobs exceeded expectations with a rise of 238K. It was expected to show a gain of around 200K positions in the month of December after reporting a gain of 229K in November (revised up from 215K). The figure serves as a hint for the official Non-Farm Payrolls release on Friday.
Before the publication, EUR/USD traded lower, under 1.36, while GBP/USD was stable at around 1.6430 and USD/JPY dropped from the highs to trade around 104.80. EUR/USD is now extending the drop and falling towards 1.3570. GBP/USD is down to 1.6405. USD/JPY is getting closer to 105, but hesitates. The dollar is stronger across the board on the significant surprise and the upwards revision.
The gain of 238K is the highest in nearly two years. The US dollar is rising across the board. AUD/USD is now dropping in range down towards 0.89. NZD/USD is down to 0.8280.
While the figure implies a strong NFP which means more tapering soon, the dollar’s gains could be limited due to fear of dovish FOMC meeting minutes. In the past, relatively dovish announcements were sometimes followed by seemingly hawkish minutes.
So far, the keys for the Non-Farm Payrolls were positive: the employment component of the ISM Non-Manufacturing PMI came out better than November, hinting at more hiring, even though the headline fell short of expectations. Also the manufacturing sector enjoyed a healthy jobs component.
The last indicator towards the NFP will come on Thursday with the weekly jobless claims. However, the market’s attention will likely shift to the release of the FOMC meeting minutes later today. This was the meeting in which QE tapering was decided upon.