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ADP data has pushed the dollar closer to the critical point, and the real game has just begun!
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Official Website]: ADP data pushes up the US dollar to approach the critical point, and the real game has just begun!". Hope this helps you! The original content is as follows:
The U.S. ADP employment report released at 21:15 on Wednesday (November 5) showed that 42,000 new jobs were created in the private sector in October, significantly higher than the revised -29,000 jobs last month, and also exceeded market expectations of 37,500 jobs. With the U.S. government shut down for more than 35 days and official employment data delayed, this report has attracted much attention. After the data was released, U.S. stock futures fluctuated slightly, the U.S. dollar and U.S. bond yields rose simultaneously, and gold came under short-term pressure.
Changes in data background and market expectations
This data release is in a www.xmaccount.complex macro environment: the ongoing situation between Russia and Ukraine, pressure on the global supply chain, renewed tariff talk, and the data vacuum caused by the government shutdown, making investors particularly sensitive to employment indicators. ADP data in September once triggered concerns about economic stalling, and the market's expected probability of an interest rate cut by the Federal Reserve in December exceeded 80%. Although October's weekly employment data has shown signs of stabilizing, market expectations are still conservative, with new jobs generally expected to be only between 25,000 and 40,000.
The better-than-expected performance of actual data pushed the market narrative from "recruitment continues to shrink" to "the beginning of a moderate recovery." However, the structural differentiation between industries and the sustainability of wage growth will still be the focus of future attention.
Market reaction: The linkage between the U.S. dollar, gold and U.S. debt
After the data was released, the U.S. dollar index quickly rose 8 basis points from 100.15 to 100.23, turning from a decline to an increase, showing investors' recognition of the resilience of the economy. Spot gold fell from the intraday high of $3,973 to $3,966, with gains narrowing and short-term pressure evident. U.S. bond yields rose simultaneously, with the two-year and ten-year yields rising by 1 basis point each, reflecting the market's concern about inflation.Alertness may rise again.
The pre-market reaction of U.S. stocks was relatively restrained. S&P 500 futures fell slightly by 0.05%. Technology stocks continued to be weak, while the financial and cyclical sectors strengthened slightly. This trend is similar to the market performance when employment data exceeds expectations in the first half of 2025, forming a classic pattern of "strong US dollar, weak gold".
Policy Dilemma under Structural Differentiation
Although ADP data eased recession concerns, it did not change the Fed's easing tone. The report shows that the salary growth rate of retained employees was stable at 4.5%, and the salary increase of job-changers was 6.7%, which shows that the supply and demand of the labor market are becoming balanced and inflationary pressure is limited, but it also restricts the Fed's room for further aggressive interest rate cuts.
From an industry perspective, trade, transportation and public utilities added 47,000 people, becoming the main driving force; financial services rebounded by 11,000, reversing last month's decline. However, manufacturing and professional business services decreased by 3,000 and 15,000 respectively, highlighting the uneven hotness and coldness between industries. If this differentiation continues, it may affect the overall economic momentum through consumption channels, which will in turn affect the Federal Reserve's trade-off between "soft landing" and "structural risks."
Market sentiment: expectations diverge
Before the data was released, market sentiment was cautious. Institutions such as TD Securities predict an increase of 45,000 people, but emphasize that ADP is not a reliable leading indicator of non-farm payroll data. Retail investors are more concerned about seasonal factors and worry that temporary employment during the holidays will cover up the real weakness.
After the data was released, institutions turned neutral and optimistic. MacroMicro pointed out that the 42,000 increase was the highest since July, supporting the strength of the US dollar; mrDIndicators suggested that gold may be under pressure. The reaction of retail investors was more emotional, with some viewing it as a "gold selling pressure signal", while others warned that it might fall back in January after a seasonal rebound. Overall, the discussion shifted from "recession concerns" to "confirmation of moderate recovery", but the difference between institutions focusing on policy impact and retail investors focusing on immediate fluctuations is still obvious.
The resonance of technical and fundamental aspects
The U.S. dollar index is currently quoted at 100.23, close to the recent high. From a technical point of view, the support is located in the 99.80-100.00 range (based on the October low and Fibonacci retracement), while the resistance is in the 100.50 area. Whether it can break through needs to be confirmed by ISM service industry data. If the 10-year U.S. Treasury yield further rises above 3.60%, it may strengthen the upward momentum of the U.S. dollar; conversely, if gold holds steady support at $3,960, it reflects that safe-haven demand is still there.
www.xmaccount.compared with the panic at the low of 99.50 at the end of September, this round of dollar rebound is more orderly, showing that the market is adapting to the Fed's "gradual easing" policy rhythm.
Outlook: Hidden worries amidst resilience
In the short term, the government shutdown has delayed the release of non-agricultural data, and the ISM service industry PMI (expected to be 50.7) will become the next market focus. If its employment sub-indicator continues to be weak, it may reignite expectations of interest rate cuts and push the dollar back to test below the 100 mark.
In the medium to long term, the structural differentiation of the job market still needs to be resolved through policies. Recovery in trade and finance is expected to support consumption, but continued weakness in the manufacturing sector will test the Fed's ability to balance. In the future, investors should focus on the transmission path of wage growth to consumption momentum, as well as the marginal impact of global geopolitics on the supply chain.
Overall, although this ADP data did not change the main line of easing, it provided the market with breathing space. Short-term fluctuations are expected to be within control, and long-term trends still depend on the quality of the recovery in official employment data and policy responses.
The above content is about "[XM Foreign Exchange Official Website]: ADP data pushes up the US dollar to approach the critical point, and the real game has just begun!" It is carefully www.xmaccount.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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