The ADP Employment Report for March, due to be released at 2:15 p.m., is one of two key US data to be released today (ISM Services Index at 4:00 p.m.). The report will be one of the last clues ahead of the March NFP report, which is scheduled for this Friday at 2:30 p.m. The report will be closely watched as the US jobs market may reach an inflection point. Up to this point, deterioration was mostly limited to leading indicators such as the ISM employment sub-indices. More recently, however, the hard data has also shown worrying signs. The data on job vacancies (JOLTS) published yesterday showed a sharp decline. A drop in job vacancies is a strong signal that the US economy is indeed slowing and the effects of this slowdown may soon be felt in the job market.
The market reaction Today’s ADP release should be limited as most attention is focused on Friday’s NFP report. However, markets may react if we see a large deviation from the expected 200k gain. The direction of market reaction will depend on how the data will influence Fed decisions. However, a positive ADP report would be taken as positive as it would indicate that there is no reason to change policy just yet. In this case he would USD upgrade and the indices would fall. On the other hand, a weaker than expected report could trigger a bullish reaction in indices and a pullback in USD.
The Nasdaq (US100) is in an interesting technical position. The index recently broke the upper boundary of the overbalance structure at 13,160 points, hitting its highest level since August 2022. However, the bulls failed to continue the move after the breakout, so a small pullback is seen this week. Source: xStation5 by XTB
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