- Traders are processing the disappointing US ADP report, while the euro remains steady around 1.1750.
- The looming threat of a US government shutdown is putting pressure on the dollar and creating uncertainty ahead of Friday’s NFP report.
- Attention will shift to the upcoming US S&P Global and ISM Manufacturing PMI data later on Wednesday.
The euro (EUR) has shown stability against the US dollar (USD) on Wednesday. It has regained some ground after traders reacted to weaker-than-expected US private sector employment data.
At this moment, the EUR/USD pair was trading at approximately 1.1754 during the US session, marking a profit for the fourth consecutive day, up about 0.18%. Meanwhile, the US Dollar Index (DXY), which measures the dollar against a group of six major currencies, dipped to around 97.61, a weekly low.
The dollar seems widely offered as investors contemplate the economic impacts of a potential US government shutdown. This situation may delay the release of crucial economic indicators like Friday’s Non-Farm Payroll (NFP) report, which has already disrupted a number of federal operations.
With the NFP release in jeopardy, investors are now looking at the changing ADP employment figures as a substitute for gauging labor market trends. Recent ADP data was notably disappointing, showing that the US private sector lost 32,000 jobs in September—well below the expected gain of around 50,000. In addition, August’s data was revised sharply, now indicating a loss of 3,000 jobs instead of the initially reported 54,000 gains.
This lackluster employment reading raises concerns about the cooling US labor market, reinforcing calls for more interest rate cuts from the Federal Reserve. According to the CME FedWatch tool, there’s currently a 96% likelihood of a 25 basis point reduction in October, with the odds of another cut in December increasing from about 78% to 87% following the ADP report.
Looking ahead, traders will turn their attention to the S&P Global Final Manufacturing Purchasing Managers Index (PMI) and the ISM Manufacturing PMI, which are set to be released later on Wednesday.
