FX.co ★ Weak data from the US labor market may force the Fed to soften their hawkish attitude on the level of interest rates

Important figures on the number of new jobs in the American economy from ADP have been released today. According to data, in April the number of new jobs grew significantly less than the consensus forecast of 395,000. The American economy received only 247,000.

Is it a lot or a little?

We can say that this is not enough for the post-pandemic recovery phase. The foreign exchange market reacted to these figures with a local increase in the dollar exchange rate against all major currencies. Futures on major US stock indexes did not react to the disappointing figures.

In our opinion, if we follow the logic, one of the main tasks of the Federal Reserve is to maintain the volume of the labor market at an acceptable level. If the central bank again focuses on this important macroeconomic indicator and Fed Chairman Jerome Powell will make it clear that he will try to maintain the level of employment at the required level – this may be perceived by the market as a high probability that after raising the key rate to 1.00%, either a pause or a less vigorous further increase in the cost of borrowing may follow. If this is the case, then today we can see an increase in demand for company shares with a simultaneous weakening of the dollar in the Forex market.