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August 04, 2021 @ 17:16 +03:00
The dollar came under pressure after the ADP US employment data. The private company estimated a 330K rise in private sector employment in July, roughly half of expectations and that of the previous month.
The ADP estimates that private sector employment is 6.5M below its pre-pandemic peak. Since last July (after the initial spike), we have seen a relatively stable recovery, averaging 430k per month, and it will take another 15 months before full employment returns.
The latter figures are even weaker than average. And that’s not to mention the natural growth of the labour market at around 150-180K per month.
Such weak data two days before the official report makes it doubtful that the Fed will be able to go for a rollback of crisis measures in the coming months.
The ADP report in recent months methodically showed values significantly weaker than expected and underperforming the official figures, setting the markets overly pessimistic ahead of NFP. Nevertheless, as of today, we regularly see speculative momentum in response to this release.
The dollar has come under pressure on a reassessment of the pace of Fed policy normalisation and this overvaluation could intensify further if confirmed on Friday by the official NFP data.
The FxPro Analyst Team