Forex relatively untouched by U.S. ADP employment

The ADP employment change in the world’s largest economy unexpectedly fell 39K in September after climbing 10K the month prior amid expectations of a 20K rise. The data does not bode well for Friday’s Nonfarm payrolls release as economists as of late are forecasting for no change in payrolls, while the unemployment rate is forecasted to advance to 9.7% from 9.6%.

Today’s decline in the ADP employment report marks the first drop since January of this year as the reading for August was revised to the upside. Also worrisome is the fact that the release does not include the effects of federal hiring/firing. This is concerning because census workers declined about 65,000 between the weeks of August and September. Going forward, traders will shift their focus to the monster.com report for further insight on the labor market in the U.S. ahead of Friday’s highly anticipated release.

Indeed, there was little reaction following the ADP report, but looking ahead, market participants are sure to keep a close eye on the EUR/USD, USD/JPY, and AUD/USD as these pairs remain at critical levels.

EUR/USD Daily Chart

CHART 1

Source: FXCM’s Strategy Trader

The EUR/USD continues to maintain its ascending channel but as of late, the pair is at the crossroads of the 61.8 percent Fibonacci retracement on the Dec. 3, 2009 to June 7 downswing. Failure to close above this level paired with a break below the narrow range may lead the pair to retest 1.3500 in the near term.

USD/JPY Daily Chart

CHART 2

Source: FXCM’s Strategy Trader

After the Bank of Japan intervention, the USD/JPY has returned to the 83 level and now looks poised to continue its southern journey, with the pair likely to test 82.50 by the end of the week as traders continue to seek safety amid uncertainty in the global markets.
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