ADP NFP Quick Analysis: Too good to be true? That is unlikely to stop markets, nor help the dollar

ADP, America's largest payrolls' provider, published another devastating jobs report – 2.76 million jobs were lost in May. However, that is far better than a plunge of nine million that was on the cards.

Moreover, the figures for May come on top of an upgrade for April. According to the updated figures, 19.557 million people lost their positions in the previous month, better than 20.236 originally reported. 

Markets have been impressively – or shockingly – resilient to bad news. Stocks have surged on a mix of hopes for a vaccine, opening optimism – despite only gradually improving coronavirus statistics – and plenty of support from the Federal Reserve.

The reaction to April's ADP and official NFPs – both above -20 million job losses – has been relatively muted. Since then, equities continued advancing and teh safe-haven dollar saw diminishing demand.

The upbeat data has pushed S&P futures above 3,100, extending its gains and the greenback is under marginal pressure. However, some suspect that the magnitude of the shock to the job market make calculations hard. Missing the mark by so much – after hitting the nail on the head last time – may cause investors to shrug off the report.

More volatility likely on Friday

Does ignoring ADP's figures mean a much-needed downward correction for equities and a bounce for the greenback? That will probably have to wait for Friday's official Non-Farm Payrolls from the Bureau of Labor Statistics. Investors will believe it when they see it.

At the moment, ADP's figures only cause confusion, with one camp encouraged and the other suspects. Higher uncertainty means a more volatile reaction on Friday. 

If the private-sector statistics are well-correlated with officials' ones, the trend is your friend. However, if it is too good to be true, it may trigger a reckoning – significant, even if temporary.