Traders Are Hoping for a Strong ADP Nonfarm Employment Release

The ADP will Set the Groung for Friday’s Nonfarm Payrolls

The Greenback had rebounded since the beginning of the week from a sharp sell-off prompted by an aggressive Federal Reserve interest rate cut last month and expectations of monetary consolidation. The moderate USD appreciation continued today as investors are seeking for more clues on the health of the U.S. economy. Yesterday was also characterized by quite a subdued trading as many investors sat on the sidelines before the release of the ISM Non-Manufacturing Index later in the session and the most anticipated and important jobs report on Friday.
Last month’s U.S Pending Home Sales indicator dropped 6.5%, but the U.S equity markets showed little reaction to yesterday’s report. The EUR/USD dropped only 0.3% to 1.4173 at 7:30 a.m. in London from 1.4154 in New York yesterday. But that was no surprise at all. With Thursday’s ECB and BOE monetary policy meetings as well as Friday’s U.S non-farm payrolls report still due to be released, traders are expecting the news to shed more light on the current U.S economy situation.
The ADP Nonfarm Employment Change is on tap today along with the ISM Non-Manufacturing Index. The Non-Manufacturing Index is expected to release at 55.0, just 0.8 points weaker then a previous month’s figure. On the contrary, the expectations for the ADP Nonfarm Employment Change release are currently standing at 53K, significantly higher than last month’s figure of 38K.
Along with the economic data and positioning, market participants have also been taking notice ahead of the G7 meeting.

The following two day are expected to be quite volatile and full of sharp price movements. Beyond the expectations for volatility, Friday’s NFP will probably be more important than ever, as the greenback future is still very much unclear. A higher than expected release could be a great beginning for a much anticipated positive sentiment that might pull the US economy out of its dark corner.