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ADP Shocks the Market

Last updated 1/7/2009 9:14 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

ADP Employer Services gauge showed a shocking -693K contraction in employment versus estimates of -495K in job losses. The news sent the dollar tumbling against euro with the pair hitting 1.3737 in post release trade. The ADP  figures confirmed the dollar bears worst nightmare nearly hitting the -700K barrier suggesting that the US labor situation has deteriorated significantly over the  past month.  

Although the ADP numbers can be notoriously unreliable in forecasting NFP results, the survey tends to be a generally good predictor of the severity of job losses. To that end, if this Friday’s Non Farm payrolls do confirm the ADP result, the dollar could see some additional weakness. However, given the negative sentiment already prevailing in the currency market any reading close to -500K could be seen as dollar positive  and the greenback could actually gain as a result. For the time being however, dollar bearish sentiment clearly reigns as the currency markets absorb the negative economic surprise and await Friday’s data.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.