The ADP was (for once) right! The miss by a wide margin suggested the employment data would not be rosy and they got it right this time! This low number suggests that there’s going to be more stimulus from the Fed. The unemployment rate met the expectations (5.2% vs. 5.2% expected). The average hourly earnings saw a big jump higher (0.6% vs. 0.3% expected, 0.4% prior) and suggest that hiring recovered the most in higher-paying sectors of the jobs market. This also indicates that some of the lower-paying jobs have been lost. The participation rate stayed the same (61.7%). By reading further you agree with our disclaimer at the end of this report and acknowledge that we do not provide investment advice.
Now the question is whether the September taper announcement will be forgotten and that the Fed will continue supporting the economy. At the time of writing this, the initial reaction of the markets is to sell the USD (-0.17%), while the commodity currencies are being bid higher. The markets are (at the moment) betting that the Fed will have to keep the support on. It could well be that the Fed will postpone taper by one month to get more information on the economy and the labour market.
Chief Market Analyst
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