Written by Key US data releases today
Despite the US government shutdown ending almost three weeks ago, there has been a period of scarce data releases, mostly referring to September. Fortunately, today’s calendar is crammed with key US data – just one week ahead of the critical Fed meeting – partly compensating for the absence of Friday’s nonfarm payroll report.
The focus will firmly be on the ADP employment report and the ISM Services PMI survey. The main reason behind the current Fed easing stance is the labour market, hence today’s data will provide the most updated picture for the jobs sector.
Keeping in mind that these data prints are still affected by the US shutdown, which means that they are not fully representative of the underlying economic trends and potentially subject to greater variability than usual, the ADP report is forecast to show a 10k increase, after October’s solid 42k rise, fully reversing the previous two consecutive negative prints.
The ISM Services PMI is expected to edge lower to 52.1, matching the drop seen in China’s RatingDog Services PMI earlier today. The ISM subindices, though, will attract strong interest; in particular, the prices paid component that printed at 70 in October – the highest level since November 2022 – and the employment subindex, which has been hovering below 50 since May 2025.
Will markets notice these data releases?
The market is currently pricing in an 85% probability of a 25bps Fed rate cut next week, despite several Fed members being on the hawkish side ahead of the blackout period, highlighting the need for clean data to make rate decisions. Should today’s data match forecasts or come in softer than expected, the market reaction will most likely be limited, preserving the current status quo.
Therefore, only significant upside surprises – for example, a triple-digit increase in the ADP and a small rise in the ISM Services prices paid subindex – could raise questions about the current Fed cut expectations. Risk markets might take notice, with equities weakening a tad, and the dollar finally getting a small boost. These reactive moves, though, might prove short-lived.
Overshadowing both today’s market reaction and the December Fed meeting is speculation that Trump has picked Chair Powell’s replacement. NEC director Hassett appears to be the favorite, potentially opening the door to more aggressive easing next year than the 67bps currently priced in.
Fragile rally in equities; dollar weakness persists
US equity indices finished Tuesday’s session in the green, but recent moves lack conviction ahead of today’s data prints and the Fed meeting. Meanwhile, the AI race is heating up as, after Google’s TPU developments, Amazon announced its Trainium3 chip, adding another challenger to Nvidia’s dominance.
In the FX space, the dollar’s weakness is the main theme this week. Apart from euro/dollar climbing to 1.1640 and trying to post a higher high above the mid-November peak, the aussie managed to shrug off the weaker Q3 GDP print, outperforming once again the mighty US dollar after hawkish remarks from RBA Governor Bullock. Meanwhile, the recent dollar/yen decline appears to have stabilized around 155.60, with investors potentially having second thoughts about the realistic chances of a December BoJ rate hike.
Cryptos climb, oil and gold in anticipation mode
The cryptocurrency market is finally showing some signs of life, with bitcoin climbing above $92k, miles above its late-November low. That said, cryptos’ troubles, particularly the impact from Saylor’s Strategy developments, linger.
In the meantime, gold and oil are hovering north of $4,200 and $58 respectively, awaiting news about the Ukraine-Russia conflict. A series of US meetings with both sides confirmed the disagreements over the treatment of the frozen Russian assets and Russia’s demands to annex the currently occupied eastern Ukrainian regions, points that could easily torpedo the current US-led effort.
By XM.com
