ADP Nonfarm Preview: Even a minimal beat could trigger a greenback comeback

  • ADP´s private-sector labor report is forecast to show a modest increase of 420,000 jobs.
  • The payrolls firm has been mostly missing the mark after coronavirus broke out.
  • Even a minor beat could be sufficient to trigger a dollar bounce after the massive sell-off.

Setting achievable goals – a charitable of saying a low bar – makes beating it easy and could trigger a positive market reaction. Is the dollar set to jump?

Economists seem to have gotten used to disappointing figures from ADP's jobs report and now expect a modest increase. The calendar is pointing to an increase of 420,000 private sector positions in November, a slower pace of job restoration. 

As the chart below shows, the actual figures published by ADP fell below estimates in five out of seven last publications. 

Source: FXStreet

The data also reveals another actionable phenomenon – the figures are significantly revised to the upside every month and to round numbers. Since the coronavirus pandemic broke out early in the year, ADP has been struggling to assess the number of workers in the US economy.

The sharp fluctuations and various furlough schemes have tested statistical models and wreaked havoc. The company has tended to report relatively low numbers in comparison to the official Nonfarm Payrolls report from the Bureau of Labor Statistics (BLS) and was forced to adapt. 

For traders, it means that any beat would be surprising in two ways – varying from the trend of missing estimates and suggesting an even higher increase in the official number of jobs. 

Dollar reaction

The US dollar has been on the back foot in recent weeks, as demand for the safe-haven dollar fell. Political certainty in the US and several encouraging covid vaccine announcements have pushed investors into riskier assets. 

This trend may have been overstretched, resulting in multi-month and nearly multi-year lows for the greenback against its major peers. EUR/USD, GBP/USD and AUD/USD are some of the examples.  

Oftentimes, it only takes a small spark to trigger a correction. Such a phenomenon was seen in late November when Markit's Purchasing Managers' Indexes beat estimates. America's leading PMIs come from ISM, not Markit, yet the news triggered a rush into greenbacks. 

Will the same knee-jerk reaction return? The chances are high, even if the upside surprise is small, or perhaps in case of a minor miss such as 400,000 jobs gained in November. 

Conversely, a minor miss of estimates will likely be shrugged off by markets as yet another disease-distorted figure. The dollar is unlikely to suffer, as long as ADP prints a figure above 300,000. Only a substantial shortcoming would cause a pause for thought. 


The bar is low for ADP's NFP to beat estimates, and given previous disappointments, any beat would seem promising for the US labor market. With the dollar stretched to the downside, the ground seems ripe for an upwards bounce in the dollar. 

More Markets return to normal, and traders may be loving it

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