With an ADP Employment Change report that showed an addition of a mere 162K jobs within the US private sector in July, as opposed to 4314K (upward revision) job additions in June, it is clear that private-sector employment in the US is in troubled waters. The markets had expected an addition of 1200K private-sector jobs. However, the markets have been met with an unpleasant surprise from the job numbers. This is not totally unexpected, as private businesses in the US are having to deal with loss of business due to the world’s worst coronavirus situation.
Details of the ADP employment change for July showed that large businesses (129K) added most jobs, while small businesses added a fewer number (63K). Medium businesses saw 25K jobs melt away. The sector-by-sector analysis shows that 166K of those jobs were added by service providers, leaving only 1K posts to goods-producing companies in what can be described as a shocker for the private sector manufacturing.
Consequently, the US Dollar has taken a further hit from the report. The US Dollar Index is down 0.53% on the day, and 0.74% on the week to trade at 92.76 currently.
Technical Outlook for USD Index
The US Dollar index has resumed its downward slide and has started August on a shaky footing. With stimulus bets weighing heavily on the US Dollar and the situation in the employment sector worsening once more, the USD Index is on course to make another dip towards the 92.50 support level (last week’s low). A breakdown of this level opens the pathway for the DXY to attempt a push as 90.97, a level not seen since May 2018.
On the flip side, the USD Index may look for some support from other fundamentals to initiate a bounce on the 92.50 support, which would help it to recover some ground. A recovery move could target 93.17 or 94.62 at the initial instance. 95.03 and 95.19 are starting to look quite distant, but a positive NFP on Friday could be the catalyst for such recovery.
Again, the sentiment remains bearish, and any recoveries could be opportunities to sell on rallies. The market would now be looking towards the US ISM Non-Manufacturing PMI data scheduled for 2 pm GMT for further direction.
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